Financial statements and disclosures

Year ended March 31, 2018

Download CIRA’s fiscal year 2018 financial statements.

Accessible version follows:

Table of contents


Canadian Internet Registration Authority

INDEPENDENT AUDITORS’ REPORT

To the Members of the Canadian Internet Registration Authority

We have audited the accompanying financial statements of the Canadian Internet Registration Authority, which comprise the statement of financial position as at March 31, 2018, the statements of operations, changes in net assets and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Canadian Internet Registration Authority as at March 31, 2018, and its results of operations, changes in net assets and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations.

KPMG LLP

Chartered Professional Accountants, Licensed Public Accountants
Ottawa, Canada
July 25, 2018


Canadian Internet Registration Authority

Statement of Financial Position

March 31, 2018, with comparative information for 2017

Assets

Table 1: A table reporting CIRA's Current assets
Current assets 2018 2017
Total of Current assets $ 7,893,588 $ 6,507,775
Cash $ 4,246,791 $ 3,175,297
Accounts receivable (note 3 and 11) $ 2,029,723 $ 1,749,699
Prepaid expenses $ 1,617,074 $ 1,582,779
 
Table 2: A table reporting CIRA's Restricted investments
Restricted investments 2018 2017
Restricted investments (note 4) $ 23,915,834 $ 22,570,624
 
Table 3: A table reporting CIRA's Capital assets
Capital assets: 2018 2017
Property and equipment (note 5) $ 4,030,329 $ 4,338,551
Intangible assets (note 6) $ 358,885 $ 271,925
Total of Capital assets $ 4,389,214 $ 4,610,476
 
Table 4: A table reporting CIRA's Total Assets
Total Assets 2018 2017
Total Assets $ 36,198,636 $ 33,688,875

Liabilities and Net Assets

Table 5: A table reporting CIRA's Current liabilities
Current liabilities: 2018 2017
Total of current liabilities $ 19,666,349 $ 17,545,750
Accounts payable and accrued liabilities (note 7 and 11) $ 3,487,752 $ 3,169,370
Customer deposits $ 544,012 $ 597,428
Current portion of deferred revenue $ 15,601,510 $ 13,745,877
Current portion of lease inducement (note 8) $ 33,075 $ 33,075
 
Table 6: A table listing CIRA's Long-term liabilities
Long-term liabilities 2018 2017
Deferred revenue $ 6,705,254 $ 6,833,287
Lease inducement (note 8) $ 540,225 $ 573,300
 
Table 7: A table reporting CIRA's Net assets
Net assets: 2018 2017
Internally restricted (note 9) $ 4,897,594 $ 4,126,062
Invested in capital assets (note 9) $ 4,389,214 $ 4,610,476
Total of Net assets $ 9,286,808 $ 8,736,538

 

 

Table 8: A table reporting the total of CIRA's Liabilites and Net assets
Total sum of Liabilities and Net assets 2018 2017
Total Liabilities and Net assets $ 36,198,636 $ 33,688,875

See accompanying notes to financial statements.

On behalf of the Board:

Andrew Escobar,
Chair, CIRA Audit Committee

Helen McDonald,
Chair, CIRA Board of Directors


Canadian Internet Registration Authority

Statement of Operations

Year ended March 31, 2018, with comparative information for 2017

Table 9: A table reporting CIRA's Revenue
Revenue: 2018 2017
Total revenue $ 23,496,622 $ 21,567,670
Registration (note 11) $ 22,535,370 $ 20,860,784
DNS, registry and other service revenue $ 779,252 $ 526,886
Certification and application $ 182,000 $ 180,000
 
Table 10: A table reporting CIRA's Expenses
Expenses: 2018 2017
Total expenses $ 23,729,825 $ 22,228,346
Salaries and benefits $ 11,859,330 $ 10,647,724
Computer operations and networking $ 3,477,863 $ 3,090,201
Amortization of property and equipment $ 1,664,988 $ 1,598,076
Consulting $ 1,380,333 $ 1,462,908
Community investment programs $ 1,370,523 $ 1,373,656
Office and general administration (note 8) $ 1,328,473 $ 1,282,947
Communications awareness and education $ 1,178,353 $ 1,332,137
Travel $ 597,371 $ 583,721
Staff training and development $ 381,087 $ 398,688
Industry memberships $ 268,317 $ 257,241
Amortization of intangible assets $ 223,187 $ 201,047
 
Table 11: A table reporting CIRA's Deficiency of revenue over expenses before the undernoted
Deficiency of revenue over expenses before the undernoted 2018 2017
Total deficiency of revenue over expenses before the undernoted $ (233,203) $ (660,676)
 
Table 12: A table reporting CIRA's Other income
Other: Investment income, net 2018 2017
Total investment income, net (note 10) $ 783,473 $ 956,846
 
Table 13: A table reporting CIRA's total Excess (Deficiency) of revenue over expenses
Excess (Deficiency) of revenue over expenses 2018 2017
Total Excess (Deficiency) of revenue of expenses $ 550,270 $ 296,170

See accompanying notes to financial statements.


Canadian Internet Registration Authority

Statement of Changes in Net Assets

Year ended March 31, 2018, with comparative information for 2017

Table 14: A table reporting Changes in Net Assets
  Unrestricted Internally restricted Invested in capital assets 2018 Total 2017 Total
Net assets, end of year $ – $ 4,897,594 $ 4,389,214 $ 9,286,808 $ 8,736,538
Net assets, beginning of year $ – $ 4,126,062 $ 4,610,476 $ 8,736,538 $ 8,440,368
Excess (deficiency) of revenue over expenses for the year $ 550,270 $ – $ – $ 550,270 $ 296,170
Net investment in capital assets $ (1,666,913) $ – $ 1,666,913 $ – $ –
Amortization of capital assets $ 1,888,175 $ – $ (1,888,175) $ – $ –
Interfund transfer $ (771,532) $ 771,532 $ – $ – $ –

See accompanying notes to financial statements.


Canadian Internet Registration Authority

Statement of Cash Flows

Year ended March 31, 2018, with comparative information for 2017

Cash provided by (used in).

Table 15: A table reporting Operating activities
Operating activities: 2018 2017
Total Operating activities $ 4,083,617 $ 3,865,118
Cash receipts from customers $ 25,224,222 $ 22,682,073
Investment and interest received $ 757,760 $ 748,460
Cash paid to suppliers and employees $ (21,898,365) $ (19,565,415)
 
Table 16: A table reporting Investing activities
Investing activities: 2018 2017
Investing activities $ (3,012,123) $ (2,887,929)
Purchase of property and equipment $ (1,356,766) $ (1,699,845)
Purchase of intangible assets $ (310,147) $ (147,100)
Proceeds on sale of restricted investments $ 2,627,740 $ 17,998,392
Purchases of restricted investments $ (3,972,950) $ (19,039,376)
 
Table 17: A table reporting CIRA's net change in cash for the year
Net change in cash for the year 2018 2017
Total net change in cash for the year $ 1,071,494 $ 977,189
 
Table 18: A table reporting CIRA's cash, beginning of year
Cash, beginning of year 2018 2017
Total cash, beginning of year $ 3,175,297 $ 2,198,108
 
Table 19: A table reporting CIRA's cash, end of year
Cash, end of year 2018 2017
Total cash, end of year $ 4,246,791 $ 3,175,297

See accompanying notes to financial statements.


Canadian Internet Registration Authority

Notes to Financial Statements

1. Purpose of the Organization:

The Canadian Internet Registration Authority (“CIRA”) is a not-for-profit entity incorporated on December 30, 1998, under the Canada Corporations Act. On October 3, 2012, CIRA received its Certificate of Continuance from Industry Canada to continue under the Canada Not-for-profit Corporations Act as required by the legislation. CIRA is responsible for operating the .CA Internet country code Top Level Domain (“ccTLD”) as a key public resource for all Canadians in an innovative, open and efficient manner. CIRA may carry out other Internet-related activities for the Canadian Internet community in a similar manner.

CIRA is registered as a not-for-profit entity under the Income Tax Act (Canada) and accordingly is exempt from income taxes.

2. Significant accounting policies:

The financial statements have been prepared by management in accordance with Canadian accounting standards for not-for-profit organizations in Part III of the CPA Canada Handbook – Accounting. Outlined below are those policies considered particularly significant.

3. Accounts receivable:
Table 21: A table reporting Accounts receivable
Accounts receivable: 2018 2017
Total Accounts receivable $ 2,029,723 $ 1,749,699
Trade receivables $ 1,924,613 $ 1,671,461
Investment and interest receivable $ 68,204 $ 49,452
Other receivables $ 36,906 $ 28,786
4. Restricted investments:

Investments are restricted by the Board of Directors to fund ongoing and future operations in accordance with the Restricted Investments Policy, as approved by the Board.

Table 22: A table reporting Restricted investments
  Cost Fair market value 2018 Unrealized gain 2017 Fair market value
Total $ 23,585,938 $ 23,915,834 $ 329,896 $ 22,570,624
Guaranteed investment certificates $ 650,000 $ 713,524 $ 63,524 $ 796,125
PH&N Enhanced Total Return Bond Fund O $ 14,970,527 $ 14,748,813 $ (221,714) $ 13,284,518
PH&N Short Term Bond and Mortgage Fund O $ 45,809 $ 45,533 $ (276) $ 1,517,567
PH&N Canadian Equity Value Fund Series O $ 3,327,620 $ 3,406,908 $ 79,288 $ 3,400,474
PH&N Mortgage Pension Trust – O $ 1,570,822 $ 1,552,236 $ (18,586) $ –
RBC Global Equity Focus O $ 1,428,918 $ 1,855,767 $ 426,849 $ 1,793,518
RBC QUBE Low Volatility Global Equity Fund O $ 1,592,242 $ 1,593,053 $ 811 $ 1,778,422

Cost and unrealized gain as at and for the period ending March 31, 2017, amounted to $22,181,076 and $389,548 respectively.

Income from investments measured at fair value as recorded on the statement of operations is the net change in the closing unrealized gain balance from the prior year to the current year.

CIRA will invest its restricted investments and any funds in excess of normal daily operating requirements in vehicles that management believes will maximize yield while minimizing exposure to undue risk (note 14).  The Board of Directors approves the investment objectives and guidelines of the organization under the Statement of Investment Policy and Procedures (SIPP) and evaluates the results of the investment activities. 

Following the limitations and restrictions defined within the SIPP, CIRA may invest in a mixed asset portfolio of pooled funds including Canadian Fixed Income and Mortgages, Canadian and Global Equities under a discretionary investment management mandate. Under a non-discretionary mandate, CIRA may also invest in government-backed securities, Canada Deposit Insurance Corporation (CDIC) secured investments and what management believes are high quality corporate bonds.  Fair value is determined primarily by quoted market prices.  Cost is determined based on the amortized cost using the effective interest rate method.

The guaranteed investment certificates have an interest rate of 2.37% to 2.55% (2017 - 2.10% to 2.55%) and have maturity dates in 2020.

5. Property and equipment:
Table 23: A table reporting Property and equipment
  Cost Accumulated amortization 2018 Net book value 2017 Net book value
Total $ 16,235,496 $ 12,205,167 $ 4,030,329 $ 4,338,551
Computer hardware $ 12,789,315 $ 10,819,245 $ 1,970,070 $ 2,084,920
Furniture and fixtures $ 1,477,761 $ 699,435 $ 778,326 $ 855,666
Office equipment $ 237,319 $ 215,245 $ 22,074 $ 51,740
Leasehold improvements $ 1,731,101 $ 471,242 $ 1,259,859 $ 1,346,225

 

Cost and accumulated amortization at March 31, 2017, amounted to $14,878,730 and $10,540,179, respectively.

6. Intangible assets:
Table 24: A table reporting Intangible assets
  Cost Accumulated amortization 2018 Net book value 2017 Net book value
Total $ 5,009,505 $ 4,650,620 $ 358,885 $ 271,925
Computer software $ 3,671,148 $ 3,312,263 $ 358,885 $ 271,925
Finite life .CA registry $ 1,338,357 $ 1,338,357 $ - $ -

 

Cost and accumulated amortization at March 31, 2017, amounted to $4,699,358 and $4,427,433, respectively.

7. Accounts payable and accrued liabilities:

Included in accounts payable and accrued liabilities are government remittances payable of $169,637 (2017 - $110,101), which includes amounts payable for harmonized sales tax and payroll-related remittances.

8. Lease inducement:

Under its current office lease agreement CIRA was paid $661,500 as a lease inducement; this will be amortized over the term of the lease.  Lease inducements recorded as a reduction of rent expense during the year totalled $33,075 (2017 - $33,075).

9. Net assets:
10. Investment income, net:

Investment income, net earned and recorded in the statement of operations is calculated as follows:

Table 25: A table reporting Investment income, net
  2018 2017
Total Investment income, net $ 783,473 $ 956,846
Income earned on restricted investments $ 739,086 $ 733,427
Income earned on cash $ 37,426 $ 17,721
Change in fair value of restricted investments $ 6,961 $ 205,698

 

11. Related party transactions:

The financial statements include Directors’ fees paid to CIRA's 12 Directors of $255,957 (2017 - $252,505).  These services were provided in the normal course of business and have been recorded at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

In the normal course of operations, CIRA interacts with Registrars whose principal shareholders, directors or executive members may also be Directors of CIRA.  In 2018, CIRA provided services to such Registrars at the normal exchange amount for such registration fees of $1,869,213 (2017 - $1,904,602).  Included in accounts receivable are balances from these Registrars for $107,890 (2017 - $105,612).

Included in accounts payable are amounts owed to executive members and Directors of CIRA for re-imbursement of expenses that total $1,530 (2017 - $8,309).

12. Commitments:
13. Contingencies:

In the normal course of business it is common for CIRA to be involved in claims regarding domain name registrations.  Though the outcome of these claims is uncertain, management believes they will not materially affect the financial position of the organization. As the financial impact cannot currently be estimated, no provision has been made in the accounts for the claims.

14. Financial instruments and related risks:
15. Guarantees:

In the normal course of business, CIRA entered into an insurance agreement that meets the definition of a guarantee.

An indemnity has been provided to all directors and/or officers of CIRA for various items including, but not limited, all costs to settle suits or actions due to their involvement with CIRA, subject to certain restrictions.  CIRA has purchased directors' and officers' liability insurance to mitigate the cost of any potential future suits or actions.  The term of the indemnification is not explicitly defined, but is limited to the period over which the indemnified party served as a trustee, director or officer of CIRA.  The maximum amount of any potential future payment cannot be reasonably estimated.

16. Capital management:

CIRA defines capital as net assets. 

CIRA’s objective with respect to internally restricted net assets is to safeguard CIRA’s financial position and ensure the capability of operations in the event of unexpected circumstances.

CIRA manages its net assets in a way to meet its objectives to maintain funds for operating purposes and to finance the acquisition of property and equipment and intangible assets as operationally required.  The objectives are set by the Board of Directors during its annual corporate plan and budget review.

CIRA is not subject to any externally imposed requirements on capital and there has been no change in capital management practices from the previous year.

 

Download CIRA’s fiscal year 2018 financial statements.