Financial statements and review

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Financial statements

A corporation must prepare financial statements each year (refer to subsection 172(1) the Canada Not-for-profit Corporations Act (NFP Act)) which comply with the requirements of the NFP Act. The financial statements must be prepared in accordance with the Canadian generally accepted accounting principles (GAAP) as set out in the CPA Canada Handbook – Accounting.

Providing financial statements to the members (all corporations)

A corporation must send a summary of its annual financial statements or a copy of a document reproducing the required financial information (such as an annual report) to the members not less than 21 days but not more than 60 days before the day on which the annual meeting of members is held, or the day on which a resolution in writing is signed by the members.

The only exception to this rule is if the by-laws of the corporation allow the corporation to give notice to the members that the annual financial statements are available for viewing at the registered office and that members may request a copy free of charge (see The members; you can also refer to section 175 of the NFP Act).

Providing financial statements to Corporations Canada (Soliciting corporations only)

A soliciting corporation must provide its annual financial statements to Corporations Canada not less than 21 days before the annual general meeting of members or without delay in the event that the corporation's members have signed a resolution approving the statements, instead of holding a meeting (see Requirements for soliciting corporations under the Canada Not-for-profit Corporations Act). In any event, a corporation must send financial statements to Corporations Canada within 15 months from the preceding annual meeting (by which time an annual meeting is required to be held under the NFP Act or a resolution in writing signed in place of a meeting), but not later than six months after the end of the corporation's preceding financial year (refer to section 176 of the NFP Act).

Level of financial review

The level of financial review required will depend on whether the corporation is a soliciting or non-soliciting corporation (see Requirements for soliciting corporations under the Canada Not-for-profit Corporations Act).

Level of financial review for soliciting corporations
Gross annual revenues Appointment of public accountant Review engagement or audit
$50,000 or less Members must appoint a public accountant (PA) by ordinary resolution at each annual meeting.

Exception – Members may waive appointment by annual unanimous resolution.

PA must conduct a review engagement, but members may pass an ordinary resolution to require an audit instead.

(If no PA is appointed, then only a compilation is necessary.)

More than $50,000 and up to $250,000 Members must appoint a PA by ordinary resolution at each annual meeting. PA must conduct an audit, but members can pass a special resolution to require a review engagement instead.
More than $250,000 Members must appoint a PA by ordinary resolution at each annual meeting. PA must conduct an audit.
Level of financial review for non-soliciting corporations
Gross annual revenues Appointment of public accountant Review engagement or audit
$1 million or less Members must appoint a PA by ordinary resolution at each annual meeting.

Exception – Members may waive appointment by annual unanimous resolution.

PA must conduct a review engagement, but members may pass an ordinary resolution to require an audit instead.

(If no PA is appointed, then only a compilation is necessary.)

More than $1 million Members must appoint a PA by ordinary resolution at each annual meeting. PA must conduct an audit.

Qualifications of public accountant

A public accountant must:

  • be a member in good standing of an institute or association of accountants incorporated by or under an act of the legislature of a province (for ex., chartered accountant, certified general accountant or certified management accountant)
  • meet any qualifications under an enactment of a province for performing any duty that the person is required to perform under the NFP Act (for ex., a provincial licence to conduct audits and/or review engagements; refer to sections 188 to 191 of the NFP Act)
  • subject to an order of the court (refer to subsection 180(6) of the NFP Act), be independent of the corporation, its affiliates or the directors or officers of the corporation or its affiliates (refer to the paragraph below).

Under section 180(6), an interested person may make an application to the court for an order relieving a public accountant from meeting the qualifications described in subsection 180(1). If the court considers that such an order would not unfairly prejudice the members of the corporation, the court may make such an order on such terms as it considers fit.

If a public accountant is not appointed at a meeting of members, the incumbent public accountant, who was appointed at the first meeting of directors or at the previous meeting of members, continues in office until a successor is appointed.

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