MSF Canada Financial Report 2010

Financial Statements of

DOCTORS WITHOUT BORDERS CANADA/MÉDECINS SANS FRONTIÈRES CANADA

Year ended December 31, 2010

KPMG LLP Telephone (416) 228-7000 Chartered Accountants Fax (416) 228-7123 Yonge Corporate Centre Internet www.kpmg.ca 4100 Yonge Street Suite 200 Toronto ON M2P 2H3 Canada

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Canada provides services to KPMG LLP.

INDEPENDENT AUDITORS' REPORT

To the Members of Doctors Without Borders Canada/ Médecins Sans Frontières Canada

Report on the Financial Statements

We have audited the accompanying financial statements of Doctors Without Borders Canada/Médecins Sans Frontières Canada, which comprise the statement of financial position as at December 31, 2010, 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 generally accepted accounting principles, 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.

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Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of Doctors Without Borders Canada/Médecins Sans Frontières Canada as at December 31, 2010, and its results of operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

Report on Other Legal and Regulatory Requirements

As required by the Corporations Act (Ontario), we report that, in our opinion, these principles have been applied on a basis consistent with that of the preceding year.

Chartered Accountants, Licensed Public Accountants

April 21, 2011 Toronto, Canada

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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA (Incorporated under the laws of Canada) Statement of Financial Position December 31, 2010, with comparative figures for 2009 2010 2009

Assets Current assets:

Cash and cash equivalents (note 2) $ 13,525,675 $ 7,768,414 Investments (note 3) 47,915 22,448 Accounts receivable (note 4) 2,392,273 1,572,864 Prepaid expenses 203,164 324,429 16,169,027 9,688,155

Capital assets (note 5) 58,770 95,972 $ 16,227,797 $ 9,784,127

Liabilities and Net Assets Current liabilities:

Accounts payable and accrued liabilities (note 6) $ 6,981,929 $ 6,316,625 Net assets:

Invested in capital assets 58,770 95,972 Unrestricted 9,187,098 3,371,530 9,245,868 3,467,502

Commitments (note 12) Contingencies (note 13) $ 16,227,797 $ 9,784,127

See accompanying notes to financial statements.

On behalf of the Board:

Director

Director

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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Statement of Operations Year ended December 31, 2010, with comparative figures for 2009 2010 2009 Revenue:

Donations $ 43,034,162 $ 22,968,026 Support from Canadian International

Development Agency (note 9) 4,500,000 5,175,000 Grants from other MSF sections 3,499,238 2,433,869 Interest 109,285 33,715 Other 53,190 115,309 51,195,875 30,725,919

Expenses (note 11):

Program services: Emergency, medical, nutrition and health

projects (notes 9 and 10) 30,441,329 18,940,597 Program support and development 5,489,476 4,477,576 Public education 1,176,072 943,554 37,106,877 24,361,727

Supporting services:

Fundraising 6,947,510 5,140,408 Management and general 1,363,122 1,252,850 8,310,632 6,393,258

45,417,509 30,754,985 Excess of revenue over expenses

(expenses over revenue) $ 5,778,366 $ (29,066)


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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Statement of Changes in Net Assets Year ended December 31, 2010, with comparative figures for 2009 2010 2009 Invested in capital Unrestricted assets Total Total Net assets, beginning of year $ 3,371,530 $ 95,972 $ 3,467,502 $ 3,496,568 Excess of revenue over expenses

(expenses over revenue) 5,841,935 (63,569) 5,778,366 (29,066) Purchase of capital assets (26,367) 26,367 – – Net assets, end of year $ 9,187,098 $ 58,770 $ 9,245,868 $ 3,467,502


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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Statement of Cash Flows Year ended December 31, 2010, with comparative figures for 2009 2010 2009 Cash provided by (used in): Operating activities:

Excess of revenue over expenses (expenses over revenue) $ 5,778,366 $ (29,066)

Amortization of capital assets which does not involve cash 63,569 140,928

Change in non-cash operating working capital: Accounts receivable (819,409) 594,752 Prepaid expenses 121,265 (165,451) Accounts payable and accrued liabilities 665,304 140,632

5,809,095 681,795 Investing activities:

Purchase of investments, net (25,467) (2,220) Purchase of capital assets (26,367) (51,136) (51,834) (53,356)

Increase in cash and cash equivalents 5,757,261 628,439 Cash and cash equivalents, beginning of year 7,768,414 7,139,975 Cash and cash equivalents, end of year $ 13,525,675 $ 7,768,414


DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements Year ended December 31, 2010

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Doctors Without Borders Canada/Médecins Sans Frontières Canada ("MSF Canada") actively

commenced operations on January 1, 1992. MSF Canada offers assistance to populations in

distress, victims of natural or man-made disasters and victims of armed conflict, without

discrimination and irrespective of race, religion, creed or political affiliation.

MSF Canada is a registered charity under the Income Tax Act (Canada) and, while registered, is

exempt from income taxes.

1. Significant accounting policies:

These financial statements have been prepared in accordance with Canadian generally

accepted accounting principles. The significant accounting policies are summarized as follows:

(a) Financial instruments:

All financial instruments are classified as either held-for-trading, held-to-maturity

investments, loans and receivables, available-for-sale or other financial liabilities. Financial

instruments classified as held-for-trading are measured at fair value with unrealized gains

and losses recognized in the statement of operations. Financial instruments classified as

held-to-maturity investments, loans and receivables and other liabilities are measured at

amortized cost. Financial instruments classified as available-for-sale are measured at fair

value with the unrealized gains and losses recognized in the statement of changes in net

assets.

MSF Canada designated its cash and cash equivalents and investments as held-for-

trading, which are measured at fair value, accounts receivable as loans and receivables,

which are measured at amortized cost, and accounts payable and accrued liabilities as

other financial liabilities, which are measured at amortized cost.

Transaction costs that are directly attributable to the acquisition of investments are not

considered significant and are expensed when paid. Investment purchase and sale

transactions are accounted for on the trade date.

DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2010

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1. Significant accounting policies (continued):

(b) Cash and cash equivalents:

Cash and cash equivalents consist of cash on hand and short-term investments with

original maturities of less than 90 days.

(c) Capital assets:

Capital assets consist of office equipment, furnishings and leasehold improvements. These

costs are capitalized and amortized on a straight-line basis using an estimated useful life of

three years.

(d) Revenue recognition:

MSF Canada follows the deferral method of accounting for contributions. Unrestricted

contributions are recognized when received or receivable if the amount to be received can

be reasonably estimated and collection is reasonably assured. Donations are recognized

on a cash basis since pledges are not legally enforceable claims. Externally restricted

contributions are recognized as revenue in the year in which the related expenses are

incurred.

Interest income is recognized as revenue on an accrual basis.

Grants from other MSF Canada sections are recognized as revenue when related

expenses are incurred or services are provided.

(e) Contributed materials and services:

Doctors and other volunteers contribute a significant amount of time in support of MSF

Canada. As this time cannot be easily valued, contributed services are not recognized in

the financial statements. Contributed materials are also not recognized.


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1. Significant accounting policies (continued):

(f) Use of estimates:

The preparation of financial statements requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities and disclosure of

contingent assets and liabilities at the date of the financial statements and the reported

amounts of revenue and expenses during the year. Actual results could differ from those

estimates.

2. Cash and cash equivalents:

2010 2009 Cash $ 10,025,669 $ 4,268,408 Money market fund 3,500,006 3,500,006 $ 13,525,675 $ 7,768,414

At December 31, 2010, the money market fund yielded an effective interest rate of 0.41%

(2009 - 0.90%).

3. Investments:

2010 2009 Market Market value Cost value Cost Equities $ 29,837 $ 29,568 $ 21,942 $ 21,996 Mutual funds 18,078 17,792 506 499 $ 47,915 $ 47,360 $ 22,448 $ 22,495

Equities represent gifts-in-kind donated at year end and sold subsequent to year end.


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4. Accounts receivable:

2010 2009 Donations receivable $ 1,198,479 $ 840,427 MSF Holland 242,386 281,275 Other MSF organizations 817,418 369,141 Other 133,990 82,021 $ 2,392,273 $ 1,572,864

5. Capital assets:

2010 2009 Accumulated Net book Net book Cost amortization value value Office equipment $ 422,321 $ 393,501 $ 28,820 $ 40,958 Furnishings 78,044 64,960 13,084 17,963 Leasehold improvements 262,746 245,880 16,866 37,051 $ 763,111 $ 704,341 $ 58,770 $ 95,972

6. Accounts payable and accrued liabilities:

Included in accounts payable and accrued liabilities is $6,222,018 (2009 - $5,503,472) in

amounts owing to other MSF organizations, relating to shared grants and program

expenditures.


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7. Financial instruments:

(a) Investment risk management:

Investments are primarily exposed to interest rate and market risk. MSF Canada has

formal policies and procedures that address risk mitigation.

(b) Fair values:

The fair values of cash and cash equivalents, accounts receivable and accounts payable

and accrued liabilities approximate their carrying values due to the short-term nature of

these financial instruments.

The fair values of investments are based on quoted market values, as disclosed in note 3.

(c) Interest rate risk:

Interest rate risk arises from the possibility that changes in interest rates will affect the

value of fixed income securities held by MSF Canada. MSF Canada manages this risk by

holding guaranteed investment certificates and by staggering the terms of the securities

held.

(d) Market risk:

Market risk arises as a result of receiving donated securities. Fluctuations in the market

expose MSF Canada to a risk of loss. MSF Canada mitigates its own market risk through

investing in guaranteed investment certificates.


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8. Capital management:

In managing capital, MSF Canada focuses on liquid resources available for operations. MSF

Canada's objective is to have sufficient liquid resources to continue operating and to provide it

with the flexibility to have funds available to respond to international humanitarian medical

emergencies. The need for sufficient liquid resources is considered in the preparation of an

annual budget and in the monitoring of cash flows and actual operating results compared to

budget.

9. Canadian International Development Agency:

MSF Canada solicits funds for projects being undertaken by MSF worldwide from Canadian

International Development Agency ("CIDA"). CIDA funds a number of these projects and

grants the funding to MSF Canada. MSF Canada retains 5% (2009 - 5%) of the CIDA funds to

cover its project coordination, administration and overhead costs. MSF Canada enters into an

agency agreement with the operational MSF section that will carry out the project and passes

on the CIDA funds to that section. At the conclusion of the project, the operational section

accounts for the funds to MSF Canada. MSF Canada reviews these accounts and presents

them to CIDA. To the extent that the funds are not fully spent, they are returned by the

operational section to MSF Canada and by MSF Canada to CIDA.

2010 2009 New grants recognized as revenue $ 4,500,000 $ 5,175,000 Grants disbursed by country:

Democratic Republic of Congo $ 855,000 $ – Ethiopia - Somali region 855,000 – Chad 760,000 1,140,000 Central African Republic 665,000 950,000 Zimbabwe 475,000 475,000 Niger 427,500 – Myanmar (Burma) 237,500 – Sri Lanka – 1,116,250 Sudan – 1,235,000

$ 4,275,000 $ 4,916,250


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9. Canadian International Development Agency (continued):

The grants disbursed are included in program services expenses - emergency and medical

projects.

For the year ended December 31, 2010, the difference between new grants recognized as

revenue and grants disbursed represents project coordination, administration and overhead

expenses totalling $225,000 (2009 - $258,750).

10. Emergency, medical, nutrition and health projects by country:

2010 2009 Projects funded by CIDA (note 9) $ 4,275,000 $ 4,916,250 Haiti (2010 earthquake) 13,730,898 500,000 Democratic Republic of Congo 2,799,000 2,500,000 Somali 2,400,000 2,150,000 South Sudan 1,600,000 500,000 Colombia 1,000,000 1,000,000 Nigeria 1,000,000 – Zimbabwe 1,000,000 500,000 Niger 900,000 1,016,000 Pakistan 820,000 712,760 Guinea 410,000 1,370,000 Myanmar – 500,000 Papua New Guinea – 500,000 Caucasus - Russia – 1,000,000 Sudan (Darfur) – 1,000,000 Kenya – 143,335 Other:

Access to essential medicines campaign and Drugs for Neglected Diseases Initiative and Innovation Fund 366,719 243,094

Other direct field costs 139,712 389,158

$ 30,441,329 $ 18,940,597


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11. Expenses:

MSF Canada classifies expenses on the statement of operations by function ("Program"). The

entity allocates certain costs by identifying the appropriate basis of allocation and applying that

basis consistently each year. These costs are prescribed by the MSF International Accounting

Standards ("MSF IAS"), developed and accepted by all MSF Sections for the purpose of

producing recombined financial statements that are separately audited and certified. Allocated

expenses and the basis of allocation are as follows:

Common costs:

Administration costs, as prescribed by MSF IAS, that are not clearly assignable to a specific

program are grouped as common costs and reallocated to each Program on a consistent basis.

The basis of allocation is an estimate of the percentage of usage of each Program according to

space and staff numbers.

Common costs of $1,015,389 (2009 - $871,205) were allocated as follows:

Allocation key 2010 2009 Program services:

Program support and development: Operating cell 10% $ 101,539 $ 87,121 Human resources department 25% 253,847 217,801 Program unit 5% 50,770 43,560

Public development: Communications department 15% 152,308 130,681

Fundraising department 25% 253,847 217,801 Management, general and administration 20% 203,078 174,241

$ 1,015,389 $ 871,205


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12. Commitments:

MSF Canada has commitments for its leased premises and equipment. The future minimum

annual lease payments under operating leases are as follows:

2011 $ 122,160 2012 124,106 2013 124,233 2014 122,154 2015 126,820 Thereafter 74,415 $ 693,888

13. Contingencies:

MSF Canada is involved in various legal actions that are normal to its business. In the opinion

of management, any resulting liabilities are not expected to have a material adverse effect on

the financial position or net operations.

Documents

MSF Canada Financial Report 2010