Does your Not-for-Profit Corporation need to have an independent audit?
The short answer –
NPCs (Not-for-profit Corporations) with gross annual revenues of less than the amount prescribed by regulation ($50,000 or less for a soliciting corporation, $1,000,000 for a non-soliciting corporation) are not required to undergo an annual audit.
The Law –
The NPCA (Not-for-profit Corporations Act) imposes different financial reporting requirements on NPCs (Not-for-profit Corporations), depending on their status as either a soliciting or non-soliciting corporation and on the amount of revenue they earn.
- High-revenue, soliciting corporations, and non-soliciting corporations with gross annual revenues higher than $1 miilion, must be audited.
- NPCs with gross annual revenues of less than the amount prescribed by regulation ($50,000 or less for a soliciting corporation, $1,000,000 for a non-soliciting corporation) are not required to undergo an annual audit. An NPC that is exempt from audits nonetheless have the right to appoint a public accountant and require, in its articles or by-laws, an audit annually or otherwise.
- Medium-revenue, soliciting corporations may resolve not to be audited, if two thirds of their members approve, and to undertake a review engagement instead (which has a less comprehensive scope of review).
- Low-revenue, soliciting corporations also will require at least a review engagement unless all members resolve not to undertake this process.
- A soliciting corporation with revenues that are equal to or less than the prescribed amount ($250,000 as per draft regulation 85), or that is deemed to have such revenues by Industry Canada, may decide not to undergo an audit, but instead opt for a less onerous review engagement, if the NPC’s members pass a special resolution to that effect.
All not-for-profit corporations must make their financial statements available to their members,directors and officers, as well as to Industry Canada. Soliciting corporations must make all financial statements publicly available.
Please contact us to to help you with your compliance and assurance (Audit / Review) requirements.
NPCA Compliance Requirements –
The new Canada Not-for-Profit Corporations Act (the “Act”) replaces the existing Canada Corporations Act (CCA), which has substantially remained the same since 1917. The new legislation introduces rules and provisions for higher level of corporate governance.
Act requires that every existing federally incorporated not-for-profit corporation will have to take action to make the transition to the new Act. This ‘continuance’ must be completed by October 17, 2014 in order to remain in good standing with CRA.
You should act well in advance of the deadline, to ensure that the continuance is completed in time. Failure to continue the corporation by October 17, 2014 may result in the dissolution of the corporation.