Not-For-Profit Services

Not-for-Profit (NPOs) Audit Support – Overview and Requirements

An image of a local Oakville CPA who is helping a NPO with their CRA Audit

Not-for-Profit Audit Services in Oakville, Halton Region and Across Ontario

Not-for-profit organizations (NPOs) and registered charities face unique challenges compared to profit companies. While meeting community needs, they must also adhere to strict transparency requirements and comply with municipal, provincial, and federal legislation. That is why working with an expert accounting firm with years of industry experience helps ensure your organization meets regulatory requirements.

At Glenn Graydon Wright LLP, we bring decades of trusted experience and a deep understanding of your organization’s specific needs and goals. Our accounting professionals deliver audit services you can trust.  

Audits and Review Engagements

An audit provides independent assurance regarding whether an organization’s financial statements are presented fairly, in accordance with the applicable financial reporting framework.

For Ontario not-for-profit corporations, the requirement for an audit or review engagement depends on factors including whether the organization is a public benefit corporation, its annual revenue, and whether members have properly exercised available waiver provisions. Under ONCA, certain public benefit corporations with annual revenue of $500,000 or more must have an audit. At the same time, other organizations may qualify for a review engagement or a waiver depending on the circumstances.

An audit may also be required or requested by:

  • The organization’s governing documents or members
  • Funding agencies or grant providers
  • Lenders or other stakeholders
  • Head or parent organizations
  • Other applicable legislation or regulatory requirements

For registered charities, the CRA does not generally require financial statements to be audited simply because the organization files a T3010. However, the CRA recommends professional auditing for charities with income over $250,000, and other organizations or funding bodies may impose their own requirements.

Our audit and assurance professionals can work with your organization to determine the appropriate level of assurance and complete the engagement efficiently and professionally.

Understanding ONCA

Ontario’s Not-for-Profit Corporations Act, 2010 (ONCA) provides the legal framework for Ontario not-for-profit corporations, including charitable corporations. ONCA came into force on October 19, 2021, replacing many of the rules previously applicable under Ontario’s Corporations Act.

ONCA sets out rules on incorporation, corporate governance, members, directors, officers, financial reporting, and dissolution. Among other changes, it distinguishes between public benefit corporations and other not-for-profit corporations and sets out when an audit or review engagement may be required or waived.

Ontario not-for-profit organizations should ensure that their articles, by-laws and governance practices remain consistent with ONCA and other legislation applicable to their activities. The transition period for existing corporations ended October 18, 2024, but organizations that have not completed their review should seek appropriate professional advice on their governing documents and ongoing compliance.

Financial reporting requirements under ONCA can vary depending on the corporation’s status and annual revenue.

When Is an Audit Required?

Not every not-for-profit organization is automatically required to have an audit. The requirement depends on several factors, including the organization’s incorporating legislation, by-laws, funding agreements, contractual obligations, and the requirements of lenders or other stakeholders. Some organizations may also choose to obtain an audit to provide greater transparency and assurance to their members, board of directors, donors, funders, or other stakeholders.

What Does an NPO Audit Cover?

The scope of an audit depends on the organization’s circumstances and applicable reporting requirements. An audit may address financial statement areas such as:

  • Donations and other contributions
  • Government grants and funding
  • Membership fees and other operating revenue
  • Restricted and unrestricted funds
  • Investment income and investments
  • Accounts payable and accrued liabilities
  • Capital assets
  • Payroll and related expenses
  • Program and administrative expenditures
  • Related-party transactions
  • Commitments and contingencies

Auditors also consider whether the financial statements include appropriate presentation and disclosures. For NPOs, particular attention may be required for restricted contributions, designated funds, fundraising activities, and other transactions with specific accounting considerations.

Financial Reporting for Not-for-Profit Organizations

Many Canadian NPOs prepare their financial statements using Accounting Standards for Not-for-Profit Organizations (ASNPO), as applicable. ASNPO includes accounting guidance on matters particularly relevant to not-for-profit organizations, including contributions and restricted resources.

Applying the appropriate reporting framework is an important part of the financial reporting process. The organization’s accounting policies should appropriately reflect its activities and circumstances, while the financial statements and accompanying notes should provide users with relevant information about the organization’s financial position and operations.

Preparing for an NPO Audit

Good financial record-keeping throughout the year can make the audit process more efficient. Before an audit begins, an organization may need to provide its accounting records, bank statements, investment statements, contribution and grant documentation, board minutes, supporting schedules, contracts, and other relevant information.

Management and staff may also be asked to answer questions or provide supporting documentation for selected transactions and account balances. Keeping records organized and maintaining appropriate financial controls can help facilitate the process and reduce delays.

At Glenn Graydon Wright LLP, we work with not-for-profit organizations to provide professional audit and assurance services tailored to their unique circumstances. We take the time to understand each organization’s operations, funding arrangements, reporting requirements, and financial reporting framework. Our approach provides boards and management with reliable financial information and a clear understanding of the organization’s reporting responsibilities.

Contact Glenn Graydon Wright LLP CPAs in Oakville for Trusted Audit Services for Charities and Not-for-Profits

If your not-for-profit organization must undergo an audit, or you are considering one to strengthen financial accountability and reporting, Glenn Graydon Wright LLP can help you understand the applicable requirements and prepare for the engagement.

Our accounting professionals have been delivering comprehensive audit services for not-for-profit and charitable organizations for more than 60 years. Call us today at 905-845-6633 or connect with us online to set up an initial consultation.