Independent auditor’s report

Chartered Professional Accountants

To the Director of Research of: Agricultural Research Institute of Ontario

Opinion

We have audited the accompanying financial statements of Agricultural Research Institute of Ontario, which comprise the statement of financial position as at March 31, 2023 and the statements of revenues and expenditures and changes in fund balances, remeasurement losses and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, these financial statements present fairly, in all material respects, the financial position of Agricultural Research Institute of Ontario as at March 31, 2023 and the results of its operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Basis of opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Agricultural Research Institute of Ontario in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of management and those charged with governance for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Canadian public sector accounting standards 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.

In preparing the financial statements, management is responsible for assessing the organization's ability to continue as a going concern, disclosing, as applicable, matters related to a going concern and using the going concern basis of accounting unless management either intends to liquidate the organization or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the organization's financial reporting process.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

  • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or override of internal control.
  • Obtain an understanding of internal control relevant to the audit 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 organization’s internal control.
  • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
  • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the organization’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the organization to cease to continue as a going concern.
  • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Chartered Professional Accountants signature

Guelph, Ontario
July 13, 2023
Chartered Professional Accountants
Licensed Public Accountants

Statement of financial position as at March 31, 2023

Assets
Asset2023 (schedule 1)
$
2022
$
Cash9,147,8787,501,337
Investments23,153,07989,928,497
Accounts receivable1,448,7981,215,620
Total current assets33,749,75598,645,454
TCAs under construction13,642,91435,721,913
TCAs (notes 5 and 13)107,305,59678,134,301
Total assets154,698,265212,501,668
Liabilities
Liability2023 (schedule 1)
$
2022
$
Accounts payable and accruals8,290,84515,154,235
Payable to Minister of Finance (note 10)052,346,420
Holdbacks payable69,85052,000
Unclaimed expenditures1,215,6172,211,018
Deferred revenue128,532198,000
Total current liabilities9,704,84469,961,673
Asset retirement obligations (notes 13 and 15)3,207,0510
Deferred capital funded contributions (notes 6, 9, and 13)105,276,715103,003,399
Deferred capital contributions (note 7)7,867,6698,917,477
Total liabilities126,056,279181,882,549
Net assets
Net assets2023 (schedule 1)
$
2022
$
Fund balances (note 13)22,277,87924,595,324
Accumulated remeasurement losses(67,339)(407,651)
Contributed assets (note 4)6,431,4466,431,446
Total net assets28,641,98630,619,119
Total liabilities and net assets
Liabilities and net assets2023 (schedule 1)
$
2022
$
Total liabilities and net assets154,698,265212,501,668

Statement of revenues and expenditures and changes in fund balances for year ended March 31, 2023

Research revenues
Revenue2023 (schedule 2)
$
2022
$
Grants — OEGF (Kawartha and IGPC) (note 11)98,000382,122
Intellectual property (note 8)695,900758,666
Total research revenues793,9001,140,788
Property revenues
Revenue2023 (schedule 2)
$
2022
$
Grants — provincial — minor capital (note 9)4,500,0004,500,000
Grants — provincial — CAP (note 9)100,0000
Rental income — provincial310,471380,381
Rental income — private industry134,026239,875
Recovery of holding costs — SOLGEN (note 14)064,351
Grants — provincial — payments in lieu of taxes (note 9)1,250,0001,250,000
Payments in lieu of taxes84,665185,281
Amortization of deferred capital contributions3,226,1442,459,459
Total property revenues9,605,3069,079,347
Other revenues
Revenue2023 (schedule 2)
$
2022
$
Net gain on sale of TCAs (note 10)0667,037
Deferred capital contributions recognized on sale of TCAs (notes 7 and 10)03,719,169
Other income30,15013,071
Realized loss on sale of investment(1,094,176)(465,747)
Investment income964,531755,610
Total other revenues(99,495)4,689,140
Total revenues
Revenue2023 (schedule 2)
$
2022
$
Total research revenues793,9001,140,788
Total property revenues9,605,3069,079,347
Total other revenues(99,495)4,689,140
Total revenues10,299,71114,909,275
Research expenditures
Expenditure2023 (schedule 2)
$
2022
$
Research projects920,985154,026
Intellectual property (note 8)19,44546,742
Total research expenditures940,430200,768
Property expenditures
Expenditure2023 (schedule 2)
$
2022
$
Payments in lieu of taxes1,216,2371,385,660
Minor capital4,784,8256,960,764
Management consulting expense150,0640
Operations and maintenance280,794499,108
Accretion expense108,5540
Amortization of TCAs3,322,8702,459,459
Total property expenditures9,863,34411,304,991
Total expenditures
Expenditure2023 (schedule 2)
$
2022
$
Total research expenditures940,430200,768
Total property expenditures9,863,34411,304,991
Total expenditures10,803,77411,505,759
Excess of revenues over expenditures (expenditures over revenues) for the year
Item2023 (schedule 2)
$
2022
$
Excess of revenues over expenditures (expenditures over revenues) for the year(504,063)3,403,516
Net amount transferred from unclaimed expenditures995,401173,935
Net excess of revenues over expenditures for the year491,3383,577,451
Net assets
Net assets2023 (schedule 2)
$
2022
$
Net assets, beginning of year30,619,11932,691,138
Net remeasurement (losses) gains for the year340,312(399,225)
Change in contributed land (note 4)0(5,250,245)
Opening balance adjustment (note 13)(2,808,783)0
Net assets, end of year28,641,98630,619,119

Statement of remeasurement losses for year ended March 31, 2023

Remeasurement losses2023
$
2022
$
Accumulated remeasurement losses, beginning of year(407,651)(8,426)
Unrealized gains attributable to investments1,434,48866,522
Amounts reclassified to the statement of revenues and expenditures and changes in fund balances: realized loss on sale of investments(1,094,176)(465,747)
Net remeasurement (losses) gains for the year340,312(399,225)
Accumulated remeasurement losses, end of year(67,339)(407,651)

Statement of cash flows for year ended March 31, 2023

Cash provided by (used in) operating activities
Operating activity2023
$
2022
$
Excess of (expenditures over revenues) revenues over expenditures for the year(504,063)3,403,416
Items not requiring an outlay of cash
Operating activity2023
$
2022
$
Amortization of TCAs3,322,8702,459,459
Accretion expense108,5540
Deferred capital funded contributions adjustment010,052,480
Deferred capital funded contributions recognized(2,176,336)0
Deferred capital funded contributions expensed as minor capital(757,305)0
Completed project surplus transferred (to) from unclaimed expenditures0(323,439)
Deferred capital contributions(1,049,808)(4,131,062)
Direct non-cash increase to deferred capital funded contributions(1,199,652)0
Gain on sale of TCAs0(67,242,834)
Net remeasurement (losses) gains340,311(399,225)
Total items not requiring an outlay of cash(1,915,429)(56,181,105)
Changes in non-cash working capital
Operating activity2023
$
2022
$
Accounts receivable(233,178)158,977
Accounts payable and accruals(6,863,390)12,739,115
Holdbacks payable17,850(190,908)
Payable to Minister of Finance(52,346,420)52,346,420
Deferred revenue(69,468)(182,000)
Total cash provided by (used in) operating activities(61,410,035)8,690,499
Cash provided by (used in) investing activities
Capital activity2023
$
2022
$
Investments66,775,418(72,595,587)
Total cash provided by (used in) investing activities66,775,418(72,595,587)
Cash provided by (used in) capital activities
Capital activity2023
$
2022
$
Proceeds on sale of TCAs071,458,886
TCAs under construction(8,925,799)(14,635,912)
Deferred capital funded contributions5,206,9576,629,330
Total cash provided by (used in) capital activities(3,718,842)63,452,304
Net change in cash for the year
Cash2023
$
2022
$
Net (decrease) increase in cash for the year1,646,541(452,784)
Cash, beginning of the year7,501,3377,954,121
Cash end of the year9,147,8787,501,337

Notes to the financial statements

Note 1 — Nature of organization

Under the province of Ontario Agencies and Appointments Directive, the Agricultural Research Institute of Ontario (ARIO) is classified as a Board Governed Operational Service Agency reporting to the Minister of Agriculture, Food and Rural Affairs. In addition, ARIO is a non‑profit organization within the meaning of the Income Tax Act (Canada) and is exempt from income taxes. It was created by the ARIO Act with specific responsibilities for the co‑ordination and direction of agri‑food research programs and research infrastructure in Ontario. These activities relate to a broad range of commodities and disciplines, covering all aspects of the agri‑food system.

Funding for programs supported by ARIO is available from various sources. The Ontario Government, through the Ministry of Agriculture, Food and Rural Affairs (OMAFRA), is the primary source of funding. The Ontario Government also provides funding for open research programs. Under the ARIO Act, ARIO may accept grants and donations for research. Other funds usually come from commercial sources (such as agri‑business, marketing boards and producer associations) and can be either designated for specific projects or non‑designated. In addition, ARIO reinvests royalties earned from Ministry funded research.

All receipts are held in trust by the Director of Research and are allocated in accordance with the terms of the funds. Transactions between OMAFRA and the below programs are recorded at the exchange value.

The current research trust funds managed by the secretariat to ARIO are as follows:

  • ARIO
  • Open Competitive Research (includes New Directions, Food Safety, other)
  • Infrastructure

Note 2 — Summary of significant accounting policies

The financial statements have been prepared in accordance with Canadian public sector accounting standards for government not for profit organizations, including the 4200 series of standards, as issued by the Public Sector Accounting Board ("PSAB for Government NPOs") and include the following significant accounting policies:

Basis of accounting

ARIO follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue of the appropriate research trust fund in the year in which the related expenses are incurred. Unrestricted contributions and all other revenues are recognized as revenue of the appropriate research trust fund when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Investment income is accrued in the period the investment returns are earned.

Financial instruments

Measurement of financial instruments

The organization initially measures its financial assets and liabilities at fair value, except for certain non-arm’s length transactions.

The organization subsequently measures all its financial assets and financial liabilities at amortized cost, except for investments, which are measured at fair value. Changes in fair value are recognized in the statement of remeasurement losses.

Impairment

Financial assets measured at amortized cost are tested for impairment when there are indicators of impairment. If an impairment has occurred, the carrying amount of financial assets measured at amortized cost is reduced to the greater of the discounted future cash flows expected or the proceeds that could be realized from the sale of the financial asset. The amount of the write down is recognized in the statement of revenues and expenditures. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in the statement of revenues and expenditures.

Transaction costs

The organization recognizes its transaction costs in expenditures in the period incurred. However, financial instruments that will not be subsequently measured at fair value are adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption.

Unclaimed expenditures

Unclaimed expenditures are defined as the total approved budget for open research projects less expenses incurred to date.

Tangible capital assets

Tangible capital assets (TCAs) are recorded at cost and are amortized using the following annual rates and method:

  • buildings and components — 25 to 40 years straight line

TCAs under construction (new buildings) are not amortized.

Impairment of long lived assets

Long lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized when the carrying value exceeds the total undiscounted cash flows expected from their use and eventual disposition. The amount of the impairment loss is determined as the excess of the carrying value of the asset over its fair value.

Deferred capital contributions

Deferred capital contributions are recognized in the same period as the related expenditure and amortized at the same rate as the buildings to which they relate.

Restrictions on the expenditure of funds

The purpose, funding, terms and conditions and duration of each research trust fund are stipulated in the relevant Order-in-Council, memorandum of understanding or Ministry correspondence.

Use of estimates

The preparation of financial statements in accordance with PSAB for Government NPOs requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Significant areas requiring the use of management estimates and assumptions relate to the valuation of accounts payable and accruals and the useful life of capital assets. Actual results could differ from those estimates.

Asset retirement obligation

ARIO records asset retirement obligations when there is a legal obligation associated with the retirement of the TCA that results from the acquisition, construction, development and/or normal use of a TCA. Such obligation justifies recognition of a liability and can result from existing legislation, regulation, agreement, contract or a promise and an expectation of performance. The estimate of the liability includes costs directly attributable to asset retirement activities, such as post‑retirement operation, maintenance, and monitoring that are an integral part of the retirement of the TCA. Estimated retirement costs are capitalized to the carrying value of the associated assets and amortized on a straight line basis over the asset's estimated useful life. The amortization of the asset retirement costs follows the same method of amortization as the associated TCA.

Note 3 — Financial instruments

Fair value

PS3450, Financial Instruments — Disclosures requires disclosures about the inputs to fair value measurements, including their classification within a hierarchy that prioritizes the inputs to fair value measurement. The 3 levels of the fair value hierarchy are:

  • Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
  • Level 2: Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly.
  • Level 3: Inputs that are not based on observable market data.

ARIO’s financial instruments are classified as Level 2 except for cash which is classified as Level 1 as at March 31, 2023 and 2022.

There were no transfers in or out of Level 1 or Level 2 for the years ended March 31, 2023 and 2022.

Associated risks

Market price risk

Market price risk is the risk that the value of an instrument will fluctuate because of changes in market prices, whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market. As all of ARIO’s financial instruments are carried at fair value with fair value changes recognized in the statement of remeasurement losses, all changes in market conditions will directly affect the increase (decrease) in accumulated remeasurement losses. Market price risk is managed by the investment manager through construction of a diversified portfolio of instruments traded on various markets and across various industries.

A 1% increase (decrease) in the value of the investments would increase (decrease) the asset value and the change in unrealized gains in investments by $231,531 (2022 — $899,285). The price of the investments is affected by changes in market values, foreign exchange rates and interest rates impacting the underlying financial instruments held within the individual investments managed by the investment manager.

Interest rate risk

Interest rate risk refers to the adverse consequences of interest rate changes on the Institute’s cash flows, financial position and income. Interest rate changes have an indirect impact on the investment assets in ARIO. ARIO uses investment diversification to manage this risk.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

All of ARIO’s fixed income securities are considered to be readily realizable as they can be quickly liquidated at amounts close to their fair value in order to meet liquidity requirements.

Foreign currency risk

Foreign currency risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. ARIO is not exposed to significant foreign currency risk.

Credit risk

Credit risk is the risk that a customer or counterpart may be unable or unwilling to meet a commitment that it has entered into with ARIO. ARIO is not exposed to significant credit risk.

Note 4 — Contributed assets

Contributed assets of $6,431,446 (2022 — $6,431,446) are recorded in the Infrastructure Fund and represent the cost of the land transferred to ARIO from the Government of Ontario. During the year, there were no reductions. During the prior year, there were 4 land parcel sales that occurred, reducing the value in contributed surplus by $5,250,245. The sales of Guelph, Kemptville, New Liskeard and Woodstock land reduced the contributed land assets by $5,072,100, $18,287, $12,106 and $147,752, respectively.

Note 5 — TCAs

Land assets
LandCost
$
Accumulated amortization
$
Net 2023 (note 13)
$
Net 2022
$
Regional campuses718,6980718,698718,698
Research stations19,419,546019,419,54619,419,546
Total land assets20,138,244020,138,24420,138,244
Building assets
BuildingCost
$
Accumulated amortization
$
Net 2023 (note 13)
$
Net 2022
$
Regional campuses28,693,64710,916,08117,777,56612,054,674
Research stations87,748,82418,359,03869,389,78645,941,383
Total building assets116,442,47129,275,11987,167,35257,996,057
Total land and building assets
Land and buildingCost
$
Accumulated amortization
$
Net 2023 (note 13)
$
Net 2022
$
Total land assets20,138,244020,138,24420,138,244
Total building assets116,442,47129,275,11987,167,35257,996,057
Total assets136,580,71529,275,119107,305,59678,134,301

As at March 6, 2007, the titles for TCAs (land and buildings) with a carrying value of approximately $60.9 million were transferred to ARIO from the Government of Ontario. Carrying value is being used as the transfer value since the transfer took place between non‑arm's length parties, is non‑monetary in nature and does not have commercial substance. As an agency of the Government of Ontario, ARIO reports these TCAs (and other assets and liabilities) in consolidation with OMAFRA on an annual basis.

Note 6 — Deferred capital funded contributions

Deferred capital funded contributions relating to construction of capital funded projects represents the amount of grants and other restricted funding received by ARIO for construction projects.

Balance2023
$
2022
$
Balance, beginning of the year103,003,39986,321,589
Less amortization for the year(2,176,336)(2,047,567)
Less amounts expensed as minor capital(757,305)0
Add funds retained for future development014,229,377
Add contributions received for capital purposes5,206,9574,500,000
Balance, end of the year105,276,715103,003,399
Funding sources
Funding source2023
$
2022
$
Federal997,5001,032,500
Provincial91,711,22291,063,446
Industry12,567,99310,907,453
Total funding sources105,276,715103,003,399

Note 7 — Deferred capital contributions

Deferred capital contributions represent the unamortized amount of the net book value of the buildings transferred to ARIO from the Government of Ontario in 2007. The amortization of capital contributions is recorded as revenue in the statement of revenues and expenditures. The changes in the deferred capital contributions are as follows:

Balance2023
$
2022
$
Balance, beginning of the year8,917,47713,048,539
Less amounts recognized upon sale of TCAs0(3,180,912)
Less amortization for the year(1,049,808)(950,150)
Balance, end of the year7,867,6698,917,477

Note 8 — ARIO research fund

Revenue
RevenueSeed royalty
$
Technology royalty
$
Other
$
Total 2023
$
Total 2022
$
Intellectual property536,220159,6800695,900758,666
Investment income(12,149)(9,051)0(21,200)232,720
Total revenue524,071150,6290674,700991,386
Expenses
ExpenseSeed royalty
$
Technology royalty
$
Other
$
Total 2023
$
Total 2022
$
Expenses76310,3828,30019,44546,742
Fund balances
Fund balancesSeed royalty
$
Technology royalty
$
Other
$
Total 2023
$
Total 2022
$
Net surplus (deficit) for the year523,308140,247(8,300)655,255944,644
Fund balance, beginning of year4,744,0803,539,774466,6468,750,5008,111,923
Remeasurement gains (losses)39,54929,4273,95972,935(306,067)
Fund balance, end of year5,306,9373,709,448462,3059,478,6908,750,500

During 2019, the University of Guelph began program administration for the above intellectual property fund.

Note 9 — Grants received from the provincial government

The following grants, recorded at the exchange value, have been received from OMAFRA and successor ministries:

Research programs and other grants
Other grants2023
$
2022
$
Minor capital4,500,0004,500,000
Canadian Agricultural Partnership (CAP)850,0001,000,000
Major capital build projects2,500,0002,500,000
Payments in lieu of taxes1,250,0001,250,000
Total other grants9,100,0009,250,000

The following Provincial Government capital transfer payment grants have been partially capitalized as deferred capital funded contributions and partially recognized as revenues as follows:

Minor capital
Minor capital2023
$
2022
$
Funding received4,500,0004,500,000
Capitalized — Deferred capital funding contributions00
Net revenue4,500,0004,500,000
Canadian Agricultural Partnership
Minor capital2023
$
2022
$
Funding received850,0001,000,000
Capitalized — Deferred capital funding contributions(750,000)(1,000,000)
Net revenue100,0000
Major capital build projects
Major capital build projects2023
$
2022
$
Funding received2,500,0002,500,000
Capitalized — Deferred capital funding contributions(2,500,000)(2,500,000)
Net revenue00

Note 10 — Gain on disposal of TCA

There were no sales of property in the current fiscal year.

During the prior year, the organization sold property in 4 locations, (Guelph, Kemptville, New Liskeard and Woodstock). All parcels of land, including property, were originally transferred to the organization and capitalized to TCAs and contributed assets.

Proceeds from sale
Proceeds from saleGuelph
$
Kemptville
$
New Liskeard
$
Woodstock
$
Total 2022
$
Proceeds from sale63,619,8432,705,7931,580,0503,553,20071,458,886
Proceeds from sale63,619,8432,705,7931,580,0503,553,20071,458,886
Net book value
Net book valueGuelph
$
Kemptville
$
New Liskeard
$
Woodstock
$
Total 2022
$
Cost of property5,873,3504,521,9432,611,718147,75213,154,763
Accumulated amortization(410,784)(1,886,088)(1,391,594)0(3,688,466)
Net book value5,462,5662,635,8551,220,124147,7529,466,297
Net book value of buildings
Net book value of buildingsGuelph
$
Kemptville
$
New Liskeard
$
Woodstock
$
Total 2022
$
Net book value5,462,5662,635,8551,220,124147,7529,466,297
Contributed asset(5,072,100)(18,287)(12,106)(147,752)(5,250,245)
Net book value of buildings390,4662,617,5681,208,01804,216,052
Gain on sale before undernoted
Net gain on sale before undernotedGuelph
$
Kemptville
$
New Liskeard
$
Woodstock
$
Total 2022
$
Gain on sale before undernoted63,229,37788,225372,0323,553,20067,242,834
Funds retained for future development14,229,37700014,229,377
Payable to the Minister of Finance49,000,000003,346,42052,346,420
Net gain on sale088,225372,032206,780667,037

Payable to the Minister of Finance is non‑interest bearing with no set repayment terms. The Minister of Finance authorized ARIO to retain the residual proceeds from the sale of the Guelph research station and use it to construct a new research facility, consistent with the ARIO Act, 1990. Accordingly, this has been included in deferred capital funded contributions at the end of fiscal 2022.

Additionally, due to the sale of these TCA, the associated deferred capital contributions have been recognized. At the prior year end, the recognized deferred capital contributions include:

Total recognizedGuelph
$
Kemptville
$
New Liskeard
$
Woodstock
$
Total 2022
$
Deferred capital contributions390,4661,032,5621,757,88403,180,912
Deferred capital funded contributions0538,25700538,257
Total recognized390,4661,570,8191,757,88403,719,169

Note 11 — Funding agreements with third parties

ARIO, Her Majesty the Queen in right of Ontario as represented by OMAFRA and the Integrated Grain Processors Co-operative (IGPC) have jointly signed an agreement whereby, pursuant to a Capital Grant Agreement effective June 2006 between OMAFRA and IGPC, IGPC agreed to contribute to a research and development fund in exchange for the capital grant support provided by OMAFRA through the Ontario Ethanol Growth Fund (OEGF). IGPC has agreed to contribute $280,000 annually for 10 years (for a total of $2,800,000) starting in April 2012 and ending with the final payment in April 2021. These funds are being paid directly to ARIO to be used to support research priorities in the agri-food sector in Ontario. Funds recognized to date are $2,800,000.

Her Majesty the Queen in right of Ontario as represented by OMAFRA and Kawartha Ethanol have signed a Capital Grant Agreement effective August 1, 2008 between OMAFRA and Kawartha Ethanol whereby Kawartha Ethanol agreed to contribute to a research and development fund in exchange for the capital grant support provided by OMAFRA through the OEGF. Kawartha Ethanol has agreed to contribute $98,000 annually for 10 years (for a total of $980,000) starting April 2013 and ending with the final payment in April 2022. These funds are to be paid directly to ARIO to be used to support research priorities in the agri‑food sector in Ontario. Funds recognized and received to date are $980,000. Refer to schedule 2.

Note 12 — Canadian Agricultural Partnership (CAP) Funding

During the year, ARIO received funding for research infrastructure projects from the CAP program:

  • Electronic Sow Feeders Project: $250,000
    Funding supported the purchase of electronic sow feeders for the new swine research centre currently under construction at the Elora Research Station. The Project will enhance and automate sow feed distribution and monitoring at the new swine research centre while also enabling a number of precision feeding research platforms.
  • Electronic Feeders for Finishing Hogs Project: $500,000
    Funding supported the purchase of electronic feeders for finishing hogs within the finishing barn section of the new swine research centre currently under construction at the Elora Research Station. The Project will enhance and automate finishing hog feed distribution and monitoring at the new swine research centre while also enabling a number of precision feeding research platforms.

The development of this asset is ongoing over year end.

Note 13 — Opening balance adjustment

An adjustment was made to opening net assets to account for the asset retirement obligation (ARO) activity from the previous years, back to inception of the TCA. Accordingly, opening net assets were adjusted April 1, 2022 in the following amounts:

Opening balance adjustmentOpening balance 2023
$
Adjustment
$
Adjusted balance 2023
$
Tangible capital assets: building82,432,3141,805,70684,238,020
Tangible capital assets: building — accumulated amort(24,436,257)(1,515,992)(25,952,259)
Total tangible capital assets57,996,057289,71458,285,771
Asset retirement obligation0(3,098,497)(3,098,497)
Net assets24,595,324(2,808,783)21,786,541

Note 14 — Recovery of holding costs — SOLGEN

The Ministry of the Solicitor General (SOLGEN) acquired a parcel of land in Kemptville that ARIO had marked for disposition. Up until the time that ARIO and SOLGEN were able to complete the approved transfer of land, ARIO was responsible for incurring all holding costs for any necessary upgrades and costs to maintain the property at its current state. ARIO is now recovering these costs incurred from SOLGEN.

Note 15 — Asset retirement obligation

ARIO records an asset retirement obligation related to the legal obligations where the organization is obligated to incur costs to retire a TCA. A total liability of $3,207,051 has been recorded for activities to fulfill the obligation based on estimations for the extent and cost of activities to fulfill the requirements of the obligation, plus an estimated amount for inflationary costs up to the retirement date.

The change in the year, resulting from a passage of time, was $108,554 and no revision to cash flows were recorded. There were no obligations settled in the fiscal year.

ARIO discounts significant obligations where there is a high degree of confidence on the amount and timing of cash flows. As of March 31, 2023, the obligations have been recorded at their net present value, based on remaining useful lives and discount rates provided by the Province.

Schedule 1 — Research trust funds: financial position as at March 31, 2023

Assets
AssetsARIO
$
Infrastructure
$
New directions
$
Food safety
$
Eliminations
$
2023
$
Cash9,147,87800009,147,878
Investments23,153,079000023,153,079
Due from ARIO017,501,7683,810,666889,209(22,201,643)0
Accounts receivable10,0001,438,7980001,448,798
Total current assets32,310,95718,940,5663,810,666889,209(22,201,643)33,749,755
Tangible capital assets under construction013,642,91400013,642,914
Tangible capital assets (notes 5 and 13)0107,305,596000107,305,596
Total tangible capital assets0120,948,510000120,948,510
Total assets32,310,957139,889,0763,810,666889,209(22,201,643)154,698,265
Liabilities
LiabilitiesARIO
$
Infrastructure
$
New directions
$
Food safety
$
Eliminations
$
2023
$
Due to other research trust funds22,201,643000(22,201,643)0
Accounts payable and accruals07,712,549528,55149,74508,290,845
Holdbacks payable0039,85030,000069,850
Unclaimed expenditures630,6240382,606202,38701,215,617
Deferred revenue0128,532000128,532
Total current liabilities22,832,2677,841,081951,007282,132(22,201,643)9,704,844
Asset retirement obligation (notes 13 and 15)03,207,0510003,207,051
Deferred capital funded contributions (note 6, 9 and 12)0105,276,715000105,276,715
Deferred capital contributions (note 7)07,867,6690007,867,669
Total asset retirement obligation and deferred capital0116,351,436000116,351,436
Total liabilities22,832,267124,192,516951,007282,132(22,201,643)126,056,279
Fund balances
Fund balancesARIO
$
Infrastructure
$
New directions
$
Food safety
$
Eliminations
$
2023
$
Fund balances (note 13)9,692,9419,108,4362,867,705608,797022,277,879
Accumulated remeasurement (losses) gains(214,251)156,678(8,046)(1,720)0(67,339)
Contributed assets (note 4)06,431,4460006,431,446
Total fund balances9,478,69015,696,5602,859,659607,077028,641,986
Total liabilities and net assets32,310,957139,889,0763,810,666889,209(22,201,643)154,698,265

Schedule 2 — Research trust funds: revenues and expenditures and changes in fund balances for the year ended March 31, 2023

Research revenue
RevenueARIO
(note 8)
$
Infrastructure
$
New directions
$
Food safety
$
2023
$
Grants — OEGF (Kawartha and IGPC) (note 11)0098,000098,000
Intellectual property (note 8)695,900000695,900
Total research revenues695,900098,0000793,900
Property revenue
RevenueARIO
(note 8)
$
Infrastructure
$
New directions
$
Food safety
$
2023
$
Grants — provincial — minor capital (note 9)04,500,000004,500,000
Grants — provincial — CAP (note 9)0100,00000100,000
Rental income — provincial0310,47100310,471
Rental income — private industry0134,02600134,026
Grants — provincial — payments in lieu of taxes (note 9)01,250,000001,250,000
Payments in lieu of taxes084,6650084,665
Amortization of deferred capital contributions03,226,144003,226,144
Total property revenues09,605,306009,605,306
Other revenue
RevenueARIO
(note 8)
$
Infrastructure
$
New directions
$
Food safety
$
2023
$
Other income030,1500030,150
Realized loss on sale of investment(178,915)(859,805)(44,885)(10,571)(1,094,176)
Investment income157,715757,93039,5679,319964,531
Total other revenue(21,200)(71,725)(5,318)(1,252)(99,495)
Total revenue
RevenueARIO
(note 8)
$
Infrastructure
$
New directions
$
Food safety
$
2023
$
Total research revenue695,900098,0000793,900
Total property revenue09,605,306009,605,306
Other revenue(21,200)(71,725)(5,318)(1,252)(99,495)
Total revenues674,7009,533,58192,682(1,252)10,299,711
Research expenditures
Research ExpendituresARIO
(note 8)
$
Infrastructure
$
New directions
$
Food safety
$
2023
$
Research projects00815,714105,271920,985
Intellectual property (note 8)19,44500019,445
Total research expenditures19,4450815,714105,271940,430
Property expenditures
Property expendituresARIO
(note 8)
$
Infrastructure
$
New directions
$
Food safety
$
2023
$
Payments in lieu of taxes01,216,237001,216,237
Minor capital04,784,825004,784,825
Management consulting expense0150,06400150,064
Operations and maintenance0280,79400280,794
Accretion expense0108,55400108,554
Amortization of tangible capital assets03,322,870003,322,870
Total property expenditures09,863,344009,863,344
Total expenditures
ExpendituresARIO
(note 8)
$
Infrastructure
$
New directions
$
Food safety
$
2023
$
Total research expenditures19,4450815,714105,271940,430
Total property expenditures09,863,344009,863,344
Total expenditures19,4459,863,344815,714105,27110,803,774
Excess of revenue over expenditures for the year
Net surplus for the yearARIO
(note 8)
$
Infrastructure
$
New directions
$
Food safety
$
2023
$
Excess of revenues over expenditures (expenditures over revenues) for the year655,255(329,763)(723,032)(106,523)(504,063)
Net amount transferred from unclaimed expenditures00892,499102,902995,401
Total net surplus for the year655,255(329,763)169,467(3,621)491,338
Net assets
Net assetsARIO
(note 8)
$
Infrastructure
$
New directions
$
Food safety
$
2023
$
Total net surplus for the year655,255(329,763)169,467(3,621)491,338
Net assets, beginning of year8,750,50018,584,5562,676,646607,41730,619,119
Net remeasurement losses for the year72,935250,55013,5463,281340,312
Opening balance adjustment (note 13)0(2,808,783)00(2,808,783)
Net assets, end of year9,478,69015,696,5602,859,659607,07728,641,986