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UNIVERSITY OF PRINCE EDWARD ISLAND


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STUDENT UNION INC.


FINANCIAL STATEMENTS
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APRIL 30, 2017


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INDEPENDENT AUDITORS' REPORT
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To the Directors of
University of Prince Edward Island Student Union Inc.
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Report on the Financial Statements

We have audited the accompanying financial statements of University of Prince Edward Island Student
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Union Inc., which comprise the statement of financial position as at April 30, 2017, and the statements of
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income and operating surplus and cash flows for the year then ended, and a summary of significant
accounting policies and other explanatory information.
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Managements Responsibility for the Financial Statements


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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
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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.
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Auditors' Responsibility
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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
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we plan and perform the audit to obtain reasonable assurance whether the financial statements are free
from material misstatement. We are also required to comply with applicable ethical requirements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's 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, the auditor considers 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.

. . . /Continued
INDEPENDENT AUDITORS' REPORT (Continued)

Accordingly, the auditor expresses no such opinion. 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
qualified audit opinion.

Basis for Qualified Opinion

The Student Union derives revenue from student activities and events, the completeness of which is not
susceptible to satisfactory audit verification. Accordingly, our verification of those revenues was limited to
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the amounts recorded in the records of the Student Union and we were not able to determine whether any
adjustments might be necessary to revenues, net income, assets or surplus.
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Qualified Opinion
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In our opinion, except for the effect of adjustments, if any, which we might have determined to be necessary
had we been able to satisfy ourselves concerning the completeness of revenue referred to in the Basis For
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Qualified Opinion paragraph, these financial statements present fairly, in all material respects, the financial
position of the University of Prince Edward Island Student Union Inc. as at April 30, 2017 and April 30, 2016,
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and the results of its operations and cash flows for the years then ended, in accordance with Canadian
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accounting standards for not-for-profit organizations.


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APPROVAL DATE Chartered Professional Accountants


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UNIVERSITY OF PRINCE EDWARD ISLAND STUDENT UNION INC.


STATEMENT OF INCOME AND OPERATING SURPLUS
YEAR ENDED APRIL 30, 2017

2017 2016

Revenue
Student Health Plan $ 1,304,175 $ 1,224,366
Other revenue 21,412 24,516
Student Centre Fund 153,171 149,880
Student fees 620,298 607,958
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Transit fees 221,825 209,359


CASA fees 15,616 14,988
CFS fees 34,532 -
WUSC fees 53,626 22,476
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2,424,655 2,253,543
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Operating expenses
Student Health Plan 1,304,175 1,224,366
Lounge operations (Schedule 1) 26,379 44,658
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Mickey's Place (Schedule 2) 8,901 4,796


Student activities (Schedule 3)
Social committee and special events 12,564 (19,876)
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Student Union newspaper 10,543 10,773


Yearbook 18,557 7,676
Student Council activities 16,570 16,839
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Transit fees 222,029 209,415


CASA fees 12,986 13,210
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CFS fees 34,186 -


WUSC fees 53,626 28,482

1,720,516 1,540,339
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Income before general and administrative expenses and other items 704,139 713,204
General and administrative expenses (Schedule 4) 551,050 542,528
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Income before other items 153,089 170,676


Other items
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Settlement obligations (Note 12) - (268,000)


Gain on disposal of equipment 600 -

Net income (loss) 153,689 (97,324)


Operating surplus, beginning of year 456,737 652,438
Appropriation to capital surplus (25,097) (98,377)

Operating surplus, end of year $ 585,329 $ 456,737


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UNIVERSITY OF PRINCE EDWARD ISLAND STUDENT UNION INC.


STATEMENT OF FINANCIAL POSITION
AS AT APRIL 30, 2017

2017 2016
ASSETS
Current
Cash and short-term deposits $ 213,165 $ 208,349
Accounts receivable 9,382 22,700
Prepaid expenses 64,448 45,327
Inventory 12,551 10,570
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299,546 286,946
Student medical plan in trust (Note 3) 653,439 535,014
Investments (Note 4) 101,027 152,135
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Property and equipment (Note 5) 194,651 193,774


Building interest (Note 6) 2,048,881 2,048,881
Contingency reserve (Note 7) 136,744 163,879
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$ 3,434,288 $ 3,380,629
LIABILITIES
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Current
Accounts payable and accrued liabilities (Note 9) $ 26,506 $ 26,765
Accrued pension obligation (Note 10) 9,489 13,222
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Deferred revenue (Note 11) 660,083 627,024


Current portion of settlement obligations (Note 12) 104,000 104,000
Current portion of long-term debt (Note 13) - 25,097
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800,078 796,108
Settlement obligations (Note 12) - 104,000
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800,078 900,108
SURPLUS
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Operating surplus 585,329 456,737


Capital surplus (Note 14) 2,048,881 2,023,784
2,634,210 2,480,521
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$ 3,434,288 $ 3,380,629
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On behalf of the Executive

..................................................... President

..................................................... Vice President - Finance


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UNIVERSITY OF PRINCE EDWARD ISLAND STUDENT UNION INC.


STATEMENT OF CASH FLOWS
YEAR ENDED APRIL 30, 2017

2017 2016

Net inflow (outflow) of cash related to


the following activities:
Operating
Net income (loss) $ 153,689 $ (97,324)
Items not affecting cash
Amortization 29,493 31,923
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Gain on disposal of equipment (600) -

182,582 (65,401)
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Changes in non-cash operating working capital items


Accounts receivable 13,318 (3,297)
Prepaid expenses (19,121) (7,634)
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Inventory (1,981) (840)


Accounts payable and accrued liabilities (259) 16,552
Accrued pension obligation (3,732) (3,732)
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Deferred revenue 33,059 42,518


Settlement obligation (104,000) 208,000
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(82,716) 251,567

99,866 186,166
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Financing
Repayment of long-term debt (25,097) (98,377)
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Investing
Increase in student medical plan in trust (118,425) (116,885)
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Decrease in investments 51,108 36,959


Acquisition of property and equipment (30,371) (8,892)
Disposal of equipment 600 -
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Decrease in contingency reserve 27,135 1,531

(69,953) (87,287)
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Net cash inflow 4,816 502


Cash position, beginning of year 208,349 207,847

Cash position, end of year $ 213,165 $ 208,349


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UNIVERSITY OF PRINCE EDWARD ISLAND STUDENT UNION INC.


NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED APRIL 30, 2017

1. DESCRIPTION OF ORGANIZATION

The University of Prince Edward Island Student Union Inc. is a student organization whose purpose is to
act as the official organization of the students of the University of Prince Edward Island and co-ordinate
and promote the group activities of the students. The University of Prince Edward Island Student Union
Inc. is incorporated under the Companies' Act of Prince Edward Island as a not-for-profit organization
and is considered the same under the Income Tax Act.
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The University of Prince Edward Island Student Union Inc. has contributed $2,048,881 to the University
of Prince Edward Island for the construction of the Student Centre in the form of $1,048,881 in cash and
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services and $1,000,000 in mortgage financing. In addition, the Student Union has entered into a co-
management agreement with the University of Prince Edward Island in relation to the management of
the Student Centre and payment of operating costs.
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2. ACCOUNTING POLICIES
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The financial statements have been prepared in accordance with Canadian accounting standards for
not-for-profit organizations and include the following significant accounting policies:
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a) Inventory
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Inventory is valued at the lower of cost and net realizable value.

b) Property and Equipment


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Property and equipment is recorded at cost. Amortization is computed using the declining-balance
method at the following annual rates:
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Capital renovations - building 5%


Equipment 20%
Computer equipment 30%
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Website 30%
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c) Revenue Recognition
The organization recognizes revenue when it is realizable and earned. The organization considers
revenue realized or realizable and earned when the product has been delivered or the services
have been provided to the customer, the sales price is fixed or determinable and collectibility is
reasonably assured.

d) Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions
that affect the reported amount of assets and liabilities and the reported amounts of revenues and
expenses for the periods covered. The main estimates relate to the net realizable value of
inventory, impairment of financial assets and the useful life of property and equipment.
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UNIVERSITY OF PRINCE EDWARD ISLAND STUDENT UNION INC.


NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED APRIL 30, 2017

2. ACCOUNTING POLICIES (Continued)

e) Financial Instruments

Initial and subsequent measurement

The organization initially measures its financial assets and liabilities at fair value.
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The organization subsequently measures all its financial assets and liabilities at cost or amortized
cost.
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Financial assets measured at amortized cost on a straight-line basis include cash and short-term
deposits and accounts receivable.
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Financial liabilities measured at amortized cost on a straight-line basis include accounts payable
and accrued liabilities and accrued pension obligation
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3. STUDENT MEDICAL PLAN IN TRUST


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The University of Prince Edward Island Student Union Inc. is a member of The Campus Trust Medical
coverage insurance program for the administration of UPEI students' health and benefits plan. The
University of Prince Edward Island Student Union Inc. was required to make an initial contribution in the
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amount of $25,500 to join the program. During 2002, the medical plan was underfunded and funds from
the initial contribution were used to fund the deficit. In 2003, the remaining amount from the initial
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investment was transferred to Maritime Life to cover future deficits in the program and as at April 30,
2017 the fund had a surplus of $653,439.
2017 2016
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Investment $ 653,439 $ 535,014


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4. INVESTMENTS
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In 2006, the Student Union elected to start setting aside funds for future investments. These amounts
are earmarked for building expenditures or to pay down long-term debt. The accumulated balance as at
the beginning of the fiscal year was $152,135. During the year, $51,108 was used, resulting in a balance
of $101,027 as at April 30, 2017. This total is invested in GIC's, maturing in May, October, November,
2017, January and April, 2018.
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UNIVERSITY OF PRINCE EDWARD ISLAND STUDENT UNION INC.


NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED APRIL 30, 2017

5. PROPERTY AND EQUIPMENT


Accumulated Net Book Value
Cost Amortization 2017 2016

Capital renovations - building $ 126,009 $ 39,055 $ 86,954 $ 91,532


Equipment 409,994 313,553 96,441 89,187
Computer equipment 136,614 125,568 11,046 12,755
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Website 10,402 10,192 210 300

$ 683,019 $ 488,368 $ 194,651 $ 193,774


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6. BUILDING INTEREST

The University of Prince Edward Island Student Union Inc. has an agreement with the University of
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Prince Edward Island which entitles the Student Union membership the use and enjoyment of the
Student Centre in recognition of the central role of the Student Union in the project concept,
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development, building design, construction and funding of the WA Murphy Student Centre. The building
interest is considered an intangible asset consisting of $1,014,764 cash donation, $1,000,000 in
mortgage financing, and $34,117 in management salary. The building interest was assessed for
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impairment and no write-down is considered necessary.


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7. CONTINGENCY RESERVE
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The University of Prince Edward Island Student Union Inc. has set up a contingency reserve to offset
any future settlement payments.
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8. BANK INDEBTEDNESS

The bank indebtedness consists of a line of credit, bearing interest at prime + 1%, with an authorized
limit of $100,000 of which all was unused at April 30, 2017.
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9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Government remittances payable as at April 30, 2017 were $18,916 (2016 - $16,761) and are included in
accounts payable and accrued liabilities.

10.ACCRUED PENSION OBLIGATION

During 2012, an employee of the Student Union retired. Upon retirement, as per the retirement
agreement, the Student Union is required to make RRSP contributions for the next seven years based
on 8% of the employee's salary at the retirement date. The annual payment is estimated to be $3,732
plus provision of health benefits. No impact for the health benefit obligation has been recorded on the
financial statements.
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UNIVERSITY OF PRINCE EDWARD ISLAND STUDENT UNION INC.


NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED APRIL 30, 2017

11.DEFERRED REVENUE

The deferred revenue represents the excess of revenue over expenditures in the student medical plan.

12.SETTLEMENT OBLIGATIONS
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The Student Union agreed to settlements in the prior year for two legal claims which they were named as
defendants. The balance of the claims at April 30, 2017 is $104,000.
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13.LONG-TERM DEBT
2017 2016
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Term loan, 3.25%, repaid during the year $ - $ 25,097


Current portion - 25,097
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$ - $ -
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14.CAPITAL SURPLUS
2017 2016
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Capital surplus, beginning of year $ 2,023,784 $ 1,925,407


Principal debt repayment 25,097 98,377
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Capital surplus, end of year $ 2,048,881 $ 2,023,784


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15.FINANCIAL INSTRUMENTS

The Student Union is exposed to various risks through its financial instruments, without being exposed
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to concentrations of risk. The main risks are broken down below.


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Liquidity risk

Liquidity risk is the risk that the Student Union will encounter difficulty in meeting obligations associated
with financial liabilities. The Student Union is exposed to this risk mainly in respect of its accounts
payable and accrued liabilities.

Credit risk

Credit risk is the risk that one party to a financial asset will cause a financial loss for the organization by
failing to discharge an obligation. The Student Union's credit risk is mainly related to accounts
receivable.
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UNIVERSITY OF PRINCE EDWARD ISLAND STUDENT UNION INC.


NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED APRIL 30, 2017

15.FINANCIAL INSTRUMENTS (Continued)

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in interest rates. The Student Union is exposed to interest rate risk on its fixed
interest rate financial instruments. Fixed interest rate instruments subject the company to a fair value
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risk, since fair value fluctuates inversely to changes in market interest rates.

16.COMPARATIVE FIGURES
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Certain accounts in the prior year financial statements have been reclassified for comparative purposes
to conform with the presentation in the current year's financial statements.
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SCHEDULE 1

UNIVERSITY OF PRINCE EDWARD ISLAND STUDENT UNION INC.


LOUNGE OPERATIONS
YEAR ENDED APRIL 30, 2017

% %
2017 of Sales 2016 of Sales

Sales $ 142,536 100.0 $ 160,066 100.0

Cost of sales
Inventory, beginning of year 10,570 9,730
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Purchases 68,960 79,051

79,530 88,781
Inventory, end of year (12,551) (10,570)
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66,979 47.0 78,211 48.9


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Gross margin 75,557 53.0 81,855 51.1

Expenses
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Advertising - 1,372
Entertainment 9,838 16,115
Interest and bank charges 2,664 2,652
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Licenses 4,440 3,773


Materials and supplies 8,891 11,906
Miscellaneous 2,227 3,192
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Repairs, maintenance and equipment 3,481 7,951


Salaries 66,910 74,732
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Staff clothing 280 1,488


Staff training 32 273
Telephone 3,173 3,059
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101,936 126,513

Net loss $ (26,379) $ (44,658)


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SCHEDULE 2

UNIVERSITY OF PRINCE EDWARD ISLAND STUDENT UNION INC.


MICKEY'S PLACE
YEAR ENDED APRIL 30, 2017

2017 2016

Sales $ 30,993 $ 41,264

Expenses
Interest and bank charges 1,106 1,272
Office 412 1,255
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Repairs and maintenance - 983


Salaries 15,432 13,459
Supplies 21,535 27,658
Telephone and internet 1,409 1,433
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39,894 46,060
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Net loss $ (8,901) $ (4,796)


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SCHEDULE 3

UNIVERSITY OF PRINCE EDWARD ISLAND STUDENT UNION INC.


STUDENT ACTIVITIES
YEAR ENDED APRIL 30, 2017

Social
Committee Student
and Union
Special Events Newspaper Yearbook

Revenue $ 45,067 $ - $ 4,526


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Expenses
Advertising 114 - -
Dues and licenses 34 129 -
Entertainment 25,288 - -
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Materials and supplies 8,458 - 103


Miscellaneous 9,825 - 70
Printing 2,404 - 18,955
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Salaries and training 11,508 10,104 3,677


Telephone - 310 278
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57,631 10,543 23,083

Deficiency of revenue over expenses $ (12,564) $ (10,543) $ (18,557)


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2016

Revenue $ 45,359 $ - $ 6,885


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Expenses
Advertising 1,093 - -
Dues and licenses 174 127 -
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Entertainment 14,851 - -
Materials and supplies 4,837 - -
Miscellaneous (6,452) - -
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Printing 1,191 - 9,775


Salaries and training 9,789 10,269 4,409
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Telephone - 377 377

25,483 10,773 14,561

Excess (deficiency) of revenue over expenses $ 19,876 $ (10,773) $ (7,676)


SCHEDULE 4

UNIVERSITY OF PRINCE EDWARD ISLAND STUDENT UNION INC.


GENERAL AND ADMINISTRATIVE EXPENSES
YEAR ENDED APRIL 30, 2017

2017 2016

Amortization $ 29,493 $ 31,923


Banquet 3,671 3,874
Donations and sports awards 7,792 7,675
Equipment 734 746
Handbook 9,195 10,302
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Insurance 20,930 21,081


Interest and bank charges 5,243 4,799
Interest on long-term debt 136 2,556
Office and miscellaneous 32,384 28,469
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Operating costs - Student Centre


Heat 31,094 27,240
Insurance 2,057 2,186
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Lights 26,763 28,083


Repairs and maintenance 9,880 15,289
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Wages and benefits 56,187 55,394


Water 1,260 1,260
Professional fees 21,923 24,862
Repairs and maintenance 2,610 1,868
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Salaries and employee benefits 262,614 249,398


Telephone 5,845 5,178
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Travel 19,707 19,729


Workers' compensation insurance 1,532 616
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$ 551,050 $ 542,528
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