Non-Profit and Charity Compliance
With recent changes in ONCA, Non-Profit and Charitable organizations are being put under more of a microscope than they were previously. One major point is that there is going to be more accountability for the organizations to meet the actual financial statement requirements that have been in place. For any Non-Profit and Charitable organization currently incorporated under the Province of Ontario the following chart applies in order to determine what engagement they are required to obtain in order to meet the requires to maintain their statuses as Non-Profits and Charitable organizations. Organization incorporated under Canada rather than Ontario have a different set of rules, but that is very rare to see.
The paragraph below the image noting waiving an audit or review only applies to the items in the chart with the * indication beside it. Whatever is noted in that column is the minimum requirement, for example for a public benefit corporation of greater than $100,000 but less than $500,000 they are able to waive the audit down to a Review Engagement.
A Public Benefit Corporation is defined as a charitable corporation or a non-charitable corporation that receives more than $10,000 per financial year in either:
- donations or gifts from people who are not members, directors, officers or employees of the corporation
- grants or similar financial assistance from federal, provincial or municipal governments or a government agency
Almost every Non-Profit or Charity meets this definition as the bar is so low at $10,000
It is our responsibilities as accountants when issuing a compilation, review or audit engagement to make sure that the engagement we are issuing is appropriate for the client’s needs. It is a part of the client acceptance and continuance form we have to fill out at the start of any engagement, which makes the firm liable if we are not issuing the correct report. If you have any Non-Profit or Charity clients that are not currently meeting their requirements, this needs to be communicated to them what the requirements are. If they choose not to meet the requirements, we should be getting a signed letter annually from the Board of Directors stating that they are aware of what engagement they should be getting, and knowing the potential consequences are choosing not to comply. It is important that this is done each year as board of directors changes, the overall opinion may change. This is the only way to protect ourselves from potential litigation in the future if a client were to lose their Non-Profit or Charity status over not having performed the correct engagement.
For questions regarding EQCR, please contact Pat Wojcik.