48/ RECO 2017 ANNUAL REPORT/FINANCIALS Financials Management Discussion and Analysis This management discussion and analysis provides supplementary information for stakeholders and other readers of the financial statements of the Real Estate Council of Ontario (RECO). The analysis should be read in conjunction with the audited financial statements that follow. RECO has two reporting categories: General Operations and the Insurance Program. General Operations REVENUES General operating receipts are derived primarily from registration fees required under the Real Estate and Business Brokers Act, 2002 (REBBA), which are amortized to income over the two-year period of each registration. Fees charged to review applications are recognized as they are earned. Operating revenue also includes amounts receivable under the Education Services Agreement with the Ontario Real Estate Association (OREA) for the provision of the Pre-registration, Articling and Broker Educational Program. In August 2013, RECO launched the RECO Mandatory Continuing Education (MCE) Program for delivering MCE requirements directly to registrants. Fees for RECO’s MCE program are recognized as they are earned. Other sources of revenue include transfer fees, fines assessed by disciplinary panels, miscellaneous revenues and interest, all of which are recognized as they are earned. Recognized operating revenues increased by $3,345,439 or 17.7 per cent. Registration fees were higher by $721,112 due to an increase in registrants along with a fee increase that became effective on January 1, 2017. RECO also implemented an application review fee to recuperate costs associated with processing new applications and reinstatements, totaling $1,864,020 for 2017. Proceeds from the Education Services Agreement increased by $588,913 due largely to a significant increase in enrollments at OREA. MCE program revenues were higher by $125,972 due to the increase in the number of members advancing from provisional to permanent status. Other revenues, which include transfer fees, disciplinary penalties and miscellaneous items, were higher by $45,422. CATEGORY 2017 2016 Higher/ (Lower) Per cent Registration fees 14,578,586 13,857,474 721,112 5.2% Application review fees 1,864,020 – 1,864,020 N/A Pre-registration education 3,027,828 2,438,915 588,913 24.1% MCE program 1,311,332 1,185,360 125,972 10.6% Other revenues 1,456,706 1,411,284 45,422 3.22% Total Revenues 22,238,472 18,893,033 3,345,439 17.7%