Youth MLB Jerseys Red Bottom Shoes New Nike NFL Jerseys All 32 Teams Cheap NFL Jerseys China Cheap Jerseys Online Custom Team Hockey Jerseys Wholesale NFL Jerseys UGG Boots Cheap UGG Boots NFL Jerseys Cheap Big And Tall Personalized Baseball Jerseys Studded Michael Kors Crossbody Gucci Handbags Outlet Coach Outlet Dallas Cheap Oakley Sunglasses Chanel Handbags Louis Vuitton Outlet Online Wholesale Jerseys MLB Baseball Jerseys Coach Rings Outlet Chanel Outlet Gucci Outlet Stores Bene Benwikere Kids Jersey Michael Kors Outlet Come Riconoscere Una Borsa Falsa Gucci Cheap NFL Jerseys Sewn Numbers Oakley Sunglasses Kate Spade Purses Outlet Cheap Jerseys

Information for Charities and Not for Profit Organizations

 

New Canadian Auditing Standards – What should Directors Know?

New Canadian Auditing Standards have been implemented for audits of financial statements for the years ending on or after December 14, 2010.  These standards apply to the audits of all entities.  While much of the audit processes are substantially unchanged, directors will notice some changes.  For example the actual wording of the audit report is significantly different.  Also the procedures to establish the date of the audit report has changed.  The following is a link to a Director Alert published by the Canadian Institute of Chartered Accountants summarizing the changes from a director’s point of view and suggesting some points that directors should consider.

 http://www.rogb.ca/director-series/director-alert/item45137.pdf

 

Roles, Responsibilities and Expectations of a Board of Directors

Have you been asked to join a board of directors for a Not for Profit Organization?  Are you already a member of a board?  Do you understand the legal and fiduciary responsibilities of being a director of a not for profit organization?  The following is a link to a publication by the Canadian Institute of Chartered Accountants summarizing the responsibilities of becoming a director in the not for profit section.    The booklet summarizes the role, responsibilities and expectations of a board of directors in a not for profit organization.

 http://www.rogb.ca/npo/item44314.pdf

 

Bill 65 Ontario Not For Profit Corporations Act

The following is an outline of Bill 65 which received Royal Assent on October 25, 2010.  This Act will govern Not for Profit Corporations incorporated at the Ontario level rather than Bill C-4 which governs Not for Profit Corporations with Federal Charters.

Defines Public Benefit Corporation as

a)      A charitable corporation or

b)      A not for profit corporation that receives more than $10,000 in donations or government grants in a year.

Directors must not be bankrupt and must be over 18 years old.

All directors are jointly and severally liable to the employees of the corporation for all debts not exceeding

a)      Six month’s wages

b)      Vacation pay for not more than 12 months under the Employment Standards Act or under any collective agreement.

Any conflict of interests must be disclosed in the minutes of the directors’ meetings.  Otherwise the director may have to refund any profit realized on the transaction.

Members of the corporation shall appoint the auditors or person to conduct a review engagement. 

Members of a public benefit corporation may pass a resolution to have a review engagement if the annual revenue is between $100,000 and $500,000.  If the revenue is under $100,000, the members may pass a resolution not to have an audit or a review engagement.

If the corporation is not a public benefit corporation, the members may pass a resolution to have a review engagement is the annual revenue is over $500,000.  If the revenue is under $500,000 the members may pass a resolution not to have an audit or a review engagement.

A corporation may have an audit committee of not less than three directors, the majority of whom are not officers or employees of the corporation or any of its affiliates.

The directors must approve the annual financial statements that ended not more than six months before the annual meeting.

The corporation must have a copy of the annual financial statements available to members not less than 21 days before the annual meeting.

Unless otherwise provided in the by-laws, the directors my borrow money on the credit of the corporation without the authorization of the members.

Members of the corporation are not liable for any liability of the corporation.

The ability to amalgamate and dissolve not for profit corporations is outlined in the Act.

If a corporation commits an offense under the Act, the directors may be found guilty of the offense and may be liable of a fine up to $5,000 and/or imprisonment of up to six months.

 

Bill C-4, Canada Not-for-profit Corporations Act

On June 24, 2009, Bill C-4, Canada Not-for-profit Corporations Act (NPCA) was passed into law.

The following is a summary of the highlights of the Act.

The Act appoints the governance of not-for-profit corporations (NPOs) to Industry Canada.  In the past, NPOs were enacted by the Ministry of Consumer and Business Affairs in the form of letters patent.   NPOs may now be established through electronic filing.  NPOs now have the ability to amalgamate, liquidate and dissolve.  As part of the governance, Industry Canada may examine certain records of the NPOs.

NPOs formerly incorporated under the Canada Corporations Act must apply for a certificate of continuance under the NPCA within three years or else the NPO may face dissolution.

NPOs are now classified as those who solicit revenue and those who do not.  The receipt of donations , grants or similar financial assistance received from any level of government or an agency of government defines a NPO as soliciting.

Non-soliciting corporations may have only one director.  Soliciting corporations must have a minimum of three directors.  The NPCA prohibits bankrupts, individuals under 18 years old and those found to be incapable of managing their own financial affairs from becoming directors.  Unless the by-laws state otherwise, directors are not required to be members.

Financial Reporting Requirements

The NPCA imposes different financial reporting requirements on NPOs depending on whether they are soliciting and their revenue level.

  • Soliciting corporations with gross annual revenues higher than $50,000 and non-soliciting corporations  with gross annual revenues higher than $1 million must be audited.  Other NPOs may include the requirement of an audit in its articles or by-laws.
  • Soliciting corporations with gross revenue less than $250,000 may pass a special resolution to have a review engagement.  The special resolution must be approved by two thirds of the members.
  • All other NPO’s require at least a review unless all members resolve that a review is not required.

An audit committee may be established and must be composed of at least three directors.

Financial Disclosure

Directors must approve the annual financial statements.  Subject to the by-laws of the corporation, the financial statements must be available for the members within the prescribed period prior to the annual meeting to allow members to review the content.  The financial statements must be presented at the annual meeting.  Soliciting corporations are required to make their financial statements publicly available.

The NPO must provide copies of the financial statement to Industry Canada.

Records

Corporations are required to maintain the following records:

  • Articles
  • By-laws
  • Minutes of member’s meetings and members’ committee meetings
  • Members’ resolutions and members’ committee resolutions
  • A debt obligations register (if any debt obligations exist)
  • A register of directors
  • A register of officers and
  • A register of members

Conflict of Interest

Directors are required to disclose the nature and extent of any interest in any material contract with the NPO.   Once a conflict of interest is declared, the director involved must not vote on the transaction unless it relates to the director’s compensation, indemnification or insurance or is with an affiliate.

If a director fails to comply with the conflict of interest rules, the NPO or any of its members may apply to have the transaction annulled and for an order that the director account for any profits earned as a result of the transaction.

Directors’ Liabilities

Directors are liable for payroll debts not exceeding six months’ wages if:

  • The NPO issued within six months of the debt becoming due
  • The NPO has started the process of liquidating or dissolving or has been dissolved or
  • The NPO has made an assignment or gone into receivership and a claim for debt has been proven within six months after the date of assignment.

The director is liable for the wages only while he is a director or within two years after ceasing to be a director.

Membership Meetings

The directors are required to call an annual meeting of members no later than 18 months after the inception of the NPO.  Thereafter, the directors must hold annual meetings within 15 months of subsequent annual meetings but not later than six months after the year end.  The directors may call a special meeting at any time.  The directors may fix a record date determining members who are eligible to participate in the meeting.

Notice of the time and place of the annual meeting must be sent to each member entitled to vote at the meeting as well as to each director and the auditor.  Individual members are allowed to waive their right to receive notice of meetings.

Auditors must attend the annual meeting if asked to by the directors and the auditor must be available to answer questions from the members.

If the directors fail to call a meeting under the above regulations, any member may call a meeting and the NPO must reasonable reimburse him for expenses incurred.

Any member entitled to vote at a meeting is allowed to submit notice to the NPO of a matter that they propose to raise at a meeting.  The corporation must include the proposal and supporting statement in its notice of the meeting.  The proposal can only be denied if it is

  • Not within the prescribed period of time
  • Intended to enforce a personal claim or grievance
  • Promotes a cause that does not relate in a significant way to the activities of the corporation
  • Only for the purpose of securing publicity.

If a proposal is refused, the member must be notified in writing including the reason for the refusal.

Dissolution

Part 14 of the Act allows for the dissolution of the NPO.  Industry Canada will issue a Certificate of Dissolution once the required procedures are completed.

If a corporation has no members, a resolution of all of the directors is required to dissolve the NPO.  If there are members but no property or liabilities, the NPO can be dissolved by a special resolution of the members.

For more information on the NPCA, please see the following website: 

http://www2.parl.gc.ca/Sites/LOP/LegislativeSummaries/Bills_ls.asp?lang=E&ls=c4&source=library_prb&Parl=40&Ses=2

 

Other Resources

The Canadian Institute of Chartered Accountants has a series of publications called the 20 Questions Series.  These publications address the responsibility of directors in a NPO.   More information can be obtained at the website: http://www.rmgb.ca/

The Canada Revenue Agency presents free information webinars on topics that are important to Charities.  Past webinars are recorded and are available on topics such as the application of GST to charities, financial statements and books and records, fundraising guidance, gifting and receipting, and payroll.  Click here to view these webinars.

  • Publications

  • Sign Up For Our Mailing List!
    Subscribe now and receive all the latest accounting news and updates!
    100% Privacy. We don't spam.

Youth MLB Jerseys Red Bottom Shoes New Nike NFL Jerseys All 32 Teams Cheap NFL Jerseys China Cheap Jerseys Online Custom Team Hockey Jerseys Wholesale NFL Jerseys UGG Boots Cheap UGG Boots NFL Jerseys Cheap Big And Tall Personalized Baseball Jerseys Studded Michael Kors Crossbody Gucci Handbags Outlet Coach Outlet Dallas Cheap Oakley Sunglasses Chanel Handbags Louis Vuitton Outlet Online Wholesale Jerseys MLB Baseball Jerseys Coach Rings Outlet Chanel Outlet Gucci Outlet Stores Bene Benwikere Kids Jersey Michael Kors Outlet Come Riconoscere Una Borsa Falsa Gucci Cheap NFL Jerseys Sewn Numbers Oakley Sunglasses Kate Spade Purses Outlet Cheap Jerseys