< Previous Independent Auditor's Report To the Board of Directors of the Workers Compensation Board of Manitoba Opinion We have audited the accompanying consolidated financial statements of the Workers Compensation Board of Manitoba (WCB), which comprise the consolidated statement of financial position as at December 31, 2021, and the consolidated statement of operations and comprehensive income, consolidated statement of changes in funded position and consolidated statement of cash flows for the year then ended, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the WCB as at December 31, 2021, and the results of operations and cash flows for the year then ended in accordance with International Financial Reporting Standards. Basis for 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 consolidated financial statements section of our report. We are independent of the WCB in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our 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. Information other than the consolidated financial statements and auditor's report thereon Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the consolidated financial statements and our auditor's report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of management and those charged with governance for the consolidated financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the WCB's ability to continue as a going concern, disclosing, as applicable, matters related to a going concern and using the going concern Grant Thornton LLP 94 Commerce Drive Winnipeg, Manitoba R3P 0Z3 T +1 204 944 0100 F +1 204 957 5442 50 2021 WCB ANNUAL REPORT5 basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative to do so. Those charged with governance are responsible for overseeing the WCB's financial reporting process. Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated 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 consolidated 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 risks 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 the override of internal control. • Obtain an understanding of internal control relative 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 WCB'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 WCB'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 consolidated 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 WCB to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the WCB to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion. 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. Grant Thornton LLP, Chartered Professional Accountants Winnipeg, Canada April 20, 2022 2021 WCB ANNUAL REPORT 51Consolidated Statement of Financial PositionDecember 31 (in thousands of dollars)Note20212020AssetsCash3$ 18,672 $31,241 Receivables and other4 10,999 20,742 Investment portfolio5 1,878,274 1,833,949 Deferred assessments7 171,019 166,413 Property and equipment8 32,396 36,412 Intangible assets9 7,389 9,025 $2,118,749$2,097,782Liabilities and funded positionPayables and accruals10$ 24,992 $36,984 Workers' retirement annuity fund11 44,301 40,979 Employee benefits12 163,662 213,482 Mortgages payable on investment properties5 - 15,126 Benefit liabilities13 1,175,938 1,153,409 Total liabilities 1,408,893 1,459,980Accident fund reserve 783,435 776,757 Accumulated other comprehensive loss (73,579)(138,955) Funded position709,856637,802$ 2,118,749$2,097,782Authorized for issue on April 20, 2022, on behalf of the Board of Directors,Michael D. Werier Chair, Board of DirectorsPeter Dyck Chair, Audit Committee of the Board of DirectorsThe accompanying notes are an integral part of the consolidated financial statements.52 2021 WCB ANNUAL REPORTConsolidated Statement of Operations and Comprehensive Income (Loss) Year Ended December 31 (in thousands of dollars)Note20212020RevenuePremium revenue15$ 221,179 $217,399Investment and real estate income5165,374 145,722 Total revenue 386,553363,121ExpensesClaim costs incurred13 201,438 185,718 Operating expenses16 107,062 104,035 Total expenses 308,500 289,753 Operating surplus 78,05373,368Surplus distribution19 (71,375)(36,284)Net funding surplus 6,67837,084Other comprehensive income (loss)Defined benefit plan remeasurements12 65,376 (46,103) Total comprehensive income (loss) $ 72,054$(9,019)The accompanying notes are an integral part of the consolidated financial statements.2021 WCB ANNUAL REPORT 53Consolidated Statement of Changes in Funded Position Year Ended December 31 (in thousands of dollars)Note20212020Funded positionAccident fund reserveBalance at beginning of year$ 776,757 $ 739,673 Operating surplus 78,053 73,368Surplus distribution (71,375)(36,284) 783,435776,757Accumulated other comprehensive lossBalance at beginning of year$ (138,955) $ (92,852)Other comprehensive income (loss) 65,376(46,103) (73,579)(138,955)Funded position, end of year$ 709,856$637,802The accompanying notes are an integral part of the consolidated financial statements.54 2021 WCB ANNUAL REPORTConsolidated Statement of Cash Flows Year Ended December 31 (in thousands of dollars)Note20212020Operating cash flowsPremiums from employers$ 225,633 $186,886Investment income 77,972 57,213 Claim payments13 (178,909)(168,376)Purchases of goods and services (101,847)(75,342)Net operating cash flows 22,849 381 Investing cash flowsPurchases of investments (742,862) (830,777)Proceeds on disposal of investments 780,427 877,175 Asset acquisitions (583) (1,805)Net investing cash flows 36,982 44,593 Financing cash flowsPayment of leases(1,025)(1,003)Surplus distributions(71,375)(36,284)Net financing cash flows(72,400) (37,287)Net (decrease) increase in cash (12,569)7,687Cash at beginning of year 31,241 23,554 Cash at end of year$ 18,672$ 31,241 The accompanying notes are an integral part of the consolidated financial statements.2021 WCB ANNUAL REPORT 55Notes to Consolidated Financial Statements Year Ended December 31, 2021 ($ amounts in thousands of dollars unless otherwise noted)1. NATURE OF OPERATIONSReporting EntityThe Workers Compensation Board of Manitoba (the WCB) is a statutory corporation created by the Manitoba Legislature. The WCB has its corporate head office in Winnipeg, Manitoba. The WCB was created in 1916 under the authority of The Workers Compensation Act (the Act) of Manitoba. In accordance with the provisions of the Act, the WCB is responsible for: • prevention of workplace injuries and illnesses• administering payments to injured workers and suppliers of services to injured workers• levying and collecting premiums from established classes of employers in amounts sufficient to cover the current and future costs of existing claims• investing funds set aside for the future costs of claims as well as surplus funds. SAFE Work Manitoba, a division of the WCB, is responsible for the delivery of prevention-related services mandated under the Act.An independent Workers Compensation Appeal Commission operates under the Act to make final rulings on any appeals pertaining to the WCB’s assessment or benefits decisions.The Act establishes the Accident Fund for the payment of compensation, outlays and expenses of the workers compensation system. The Accident Fund is funded through premiums collected from employers. The WCB does not receive government funding or assistance. The management of the Accident Fund is guided by the funding policy (Note 19). 2. SIGNIFICANT ACCOUNTING POLICIESBasis of PreparationThe consolidated financial statements of the WCB are prepared in accordance with International Financial Reporting Standards (IFRS) in effect as at December 31, 2021, which have been adopted by the Accounting Standards Board of Canada (AcSB) as Canadian generally accepted accounting principles for public interest entities. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.56 2021 WCB ANNUAL REPORTBasis of MeasurementThe consolidated financial statements of the WCB have been prepared on a historic cost basis except for investment properties and those financial assets and financial liabilities that have been measured at fair value. The WCB’s functional currency is the Canadian dollar, which is the currency of the primary economic environment in which the WCB operates, which is also the presentation currency of the consolidated financial statements. All financial information presented in Canadian dollars has been rounded to the nearest thousand, unless otherwise stated.Basis of ConsolidationThese consolidated financial statements include the accounts of the WCB and its wholly owned real estate investment subsidiary WCB Realty Limited. Intercompany balances and transactions have been eliminated on consolidation. Use of Estimates, Measurement Uncertainty and Critical JudgementsThese consolidated financial statements have been prepared in accordance with IFRS, which requires the WCB to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. As a result, some of the reported amounts are subject to measurement uncertainty. Measurement uncertainty exists when there is a variance between the recognized amount and another reasonable amount. Assumptions and estimates are reviewed on an ongoing basis, and any related revisions are recorded in the period in which they are adjusted. Consequently, actual results could differ from these estimates by significant amounts. Level 3 portfolio investments (Note 5), employee benefits (Note 12) and benefit liabilities (Note 13) are the most significant items based on accounting estimates.Certain investment properties have been determined as joint operations as the WCB has joint control over the assets with other parties through contractual arrangements and the WCB has rights to the specific assets and obligations for the liabilities. The WCB has closely monitored the effects of the COVID-19 pandemic, which has impacted the operations and certain balances and transactions recorded in the financial statements. There is additional uncertainty in estimates and assumptions in the following areas and discussed as noted in the consolidated financial statements: level 3 portfolio investments (Note 5); employee benefits (Note 12); benefit liabilities (Note 13); and premium revenue (Note 15).Insurance RiskThe WCB holds the insurance risk, according to the definition in IFRS 4 Insurance Contracts, for all classes of employers insured under the Act and consequently the consolidated financial statements include amounts related to all classes of employers. Fair Value of Other Financial Assets and LiabilitiesOther financial assets and liabilities consist of cash, receivables and other, and payables and accruals. The carrying value of these items approximates their fair value, consistent with the short-term nature of these items. Foreign Currency TranslationTransactions in foreign currency are converted to Canadian dollars at the exchange rate in effect at the time of the transaction. Assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the exchange rates in effect at the date of the consolidated statement of financial position. 2021 WCB ANNUAL REPORT 57Specific Accounting PoliciesIn order to facilitate an understanding of the WCB’s consolidated financial statements, the following significant accounting policies are disclosed in the related notes:NoteTopicPage3Cash 594Receivables and other595Investment portfolio and mortgages payable on investment properties605Investment and real estate income637Deferred assessments668Property and equipment679Intangible assets6810Payables and accruals6911Workers' retirement annuity fund7012Employee benefits7013Benefit liabilities7515Premium revenue80Changes in Accounting PoliciesThe International Accounting Standards Board (IASB) is working towards continual improvement through the development of new accounting standards and the annual improvements process. The IASB will issue a number of exposure drafts of new or revised standards over the next several years. The WCB monitors the IASB work plans and publications to address any developments that may impact the organization.IFRS adopted in the current yearNo new IFRS were adopted in the current year.IFRS issued but not yet effectiveIFRS 17 Insurance ContractsIn May 2017, the IASB issued IFRS 17 Insurance Contracts to replace IFRS 4 Insurance Contracts. IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts. One of the most significant changes requires the WCB to measure the benefit liability using a market-based discount rate, which is expected to increase the benefit liability and introduce increased volatility to the financial results. However, the complete financial impact of IFRS 17 cannot be reasonably estimated at this time. IFRS 17 will also change the financial statement presentation, separating insurance and investment activities, and require expanded disclosures about amounts recognized in the consolidated financial statements, significant judgements, and the nature and extent of risks arising from insurance contracts.The WCB will adopt IFRS 17 on the effective date of January 1, 2023.58 2021 WCB ANNUAL REPORT3. CASHAccounting policy Cash includes cash on hand and balances with banks, net of any outstanding cheques. Cash and short-term investments held by investment managers and custodians for investment purposes are included in the investment portfolio. Cash reported in the consolidated statement of financial position is comprised of:20212020Cash in transit and in banks$ 22,138 $ 35,334 Cheques issued and outstanding (3,466) (4,093)Net cash $ 18,672 $ 31,241 In addition, the WCB has established an operating line of credit with its principal banker in the amount of $3 million. Advances on the line of credit bear interest at the bank’s prime interest rate. The WCB has also established a revolving credit facility with the Province of Manitoba in the amount of $40 million. Advances on the revolving credit facility bear interest at the Province’s preferred lending rate. Both credit facilities are unsecured. 4. RECEIVABLES AND OTHERAccounting policy Receivables are mainly assessed premiums due from Class E employers, recorded at the estimated premium payable net of a provision for doubtful accounts. Current assessments – Class A through Class D employers is comprised of current claim costs billed but not yet received from the Class A through Class D employers. Sundry receivables consist of claim-related overpayments, payroll-related items and prepaid maintenance contracts. Receivables and other reported in the consolidated statement of financial position is comprised of:20212020Premiums - Class E employers$ 7,285 $15,488Provision for doubtful accounts (1,237) (1,156) 6,048 14,332Current assessments - Class A through Class D employers 2,010 2,275 Sundry 2,941 4,135 Total receivables and other$ 10,999$20,7422021 WCB ANNUAL REPORT 59Next >