Corporate

Workplace Safety & Prevention Services Notes to Financial Statements December 31, 2013 24. fUNDINg AND NEt ASSEtS The MOL's "Surplus Investment Policy" with an effective date of September 18, 2013 was adopted by the Association. The policy states that the Association's operations are not to result in a deficit position at the end of any government fiscal year. The amount of surplus that is eligible to be retained by the Association will be a maximum of 6% of the previous year's audited total actual revenue including government transfer payments. Any amount in excess of the 6% maximum amount may be recovered by MOL in the following year through reduction of transfer payment funding. Surplus funds must be used to support MOL's commitment to enhance health and safety in Ontario workplaces. No surplus funds can be used without written approval from MOL. MOL will notify the Association in writing in a timely manner regarding decisions related to proposed retention of surpluses. The use of surplus funds approved to be retained by the the Association will be tracked by the Association and reported to MOL. Any amount not approved to be retained will be recovered by MOL. 25. ECoNoMIC DEPENDENCE The Association is dependent on the MOL for funding the cost of operations. 26. fINANCIAL INStrUMENtS Credit Risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Association's financial instruments that are exposed to concentrations of credit risk relate primarily to cash and cash equivalents, short term investments and accounts receivable. The Association manages its exposure to this risk by maintaining its cash and cash equivalents, and investments with a major Schedule I bank and where feasible obtaining prepayment for courses held. Accounts receivable is net of an impairment allowance of $363,367 (2012 – $382,594). Liquidity Risk Liquidity risk is the risk that the Association encounters difficulty in meeting its obligations associated with financial liabilities. Liquidity risk arises from accounts payable and accrued liabilities, vacation payable, attendance credits, exit benefits, deferred WSIB surplus, employee future benefits and commitments. The Association continues to focus on maintaining adequate liquidity to meet operating working capital requirements and capital expenditures. 38 2013 annual report  |  Workplace Safety & Prevention Services

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