Corporate

29 | WSPS.CA/AnnualReport Workplace Safety & Prevention Services Notes to Financial Statements March 31, 2021 (8) 12 Related party transactions The Corporation subleases its premises from CHSI and pays its proportionate share of the operating costs based on rented space. During the year, CHSI charged rental and operating costs of $402,366 (2020 – $2,159,187). Advances to CHSI as of year-end are $1,843,225 (2020 – $nil). Minimum annual rental lease payments are $nil for fiscal 2022. During the year, the Corporation charged CHSI human resources service fees of $12,000 (2020 – $12,000). These transactions are in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties, and approximates the arm's length equivalent value. 13 Funding and net assets Surplus funds retained by the Corporation must be used to support MLTSD's commitment to enhance health and safety in Ontario workplaces. No surplus funds can be used without written approval from MLTSD. MLTSD will notify the Corporation 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 Corporation will be tracked by the Corporation and reported to MLTSD. Any amount not approved to be retained will be recovered by MLTSD. In the current year, MLTSD approved funding in the amount of $31,783,201 (2020 – $25,224,108). Included in current year's funding is $nil (2020 – $nil) for capital expenditures. MLTSD approved a deficit up to $1,300,668 (2020 – $5,407,488). 14 Economic dependence The Corporation is dependent on MLTSD for funding a significant portion of the cost of operations. 15 Financial risk management The Corporation is exposed to certain financial instrument risks, such as credit risk, liquidity risk and interest rate risk. Credit risk Credit risk is the risk one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Corporation'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 Corporation manages its exposure to this risk by maintaining its cash and cash equivalents and investments with major Schedule I banks and, where feasible, obtaining prepayment for courses held. Accounts receivable are net of an impairment allowance of $25,755 (2020 – $36,810).

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