When does an NPO required audited financial statements?
It’s a question most board members find asking themselves when gearing up for their first year-end. Do we need an audit? Do we require an external auditor?
The following table and definitions will help you determine the financial reporting requirements of your Not-for-profit entity:
Definitions
Soliciting Corporation – one that receives more than 10k in revenue from a public source (ie donations from the public and gov’t grants.
SOLICITING CORPORATIONS
| Gross Revenue | Does a Public Accountant need to be appointed? | Type of report required |
| <50k | Yes, unless waived by unanimous resolution. | Review unless audit is otherwise required or members pass ordinary resolution opting for audit. If no Public Accountant appointed by members, then compilation may be engaged. |
| 50-250k | Yes, must be appointed at AGM. | Audit unless members pass a special resolution opting for a review. |
| >250k | Yes, must be appointed at AGM. | Audit |
NON-SOLICITING CORPORATIONS
| Gross Revenue | Does a Public Accountant need to be appointed? | Type of report required |
| < $1 million | Yes, unless waived by unanimous resolution. | Review unless audit is otherwise required or members pass ordinary resolution opting for audit. If no Public Accountant appointed by members, then compilation may be engaged. |
| > $1 million | Yes, must be appointed at AGM. | Audit |
A note on external vs internal auditors:
The Provincial Companies and Societies Acts acts have differing requirements for financial reporting. Some require external audits, with a provision for a unanimous resolution waiving the audit, similar to the CNPCA. Some of the legislations allow for an “internal” audit, in which two or more members who are independent of the BOD examine the accounting records and approve the financial statements.
