Anatomy of a 12-hour ISA Audit

Published on 11:03 pm by in Publications

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Click here to download the paper Summary This article provides guidance and encouragement to auditors who are considering entering the field of auditing micro-entities and those who want to increase their current engagement efficiency.

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Click here to download the paper Summary If the influence of national cultures on the implementation of global standards is not taken into account, the result will be inconsistent implementation at best and outright failure at worst. This is evidenced by a review of the literature in the fields of medicine, peacekeeping, aviation and environmental […]

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by Ian Werker Barrister & Solicitor 393 University Avenue, Suite 2000, Toronto, Ontario, M5G 1E6 e-mail: ian(at)werkerlaw.com Phone: (416) 593-7552 Fax: (416) 593-0668 January 29, 1996 Introduction Corporate directors are obliged to act in the best interests of the corporation. It is also generally accepted that directors should consider their corporation’s responsibility to others, including […]

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Every organization incorporated without share capital under the Ontario Corporations Act and the Canada Corporations Act must have an audit. There is no statutory exemption from audit for not-for-profit organizations incorporated under the acts. Also, many organizations must have an audit as a condition for receiving funding from government and private sources.

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You may find this article written in 1998 useful for background purposes. For more detail on Revenue Canada’s current position on political activities refer to the Revenue Canada policy paper at http://www.cra-arc.gc.ca/tx/chrts/plcy/cps/cps-022-eng.html or contact the Charities Division of Revenue Canada Taxation at: Revenue Canada Taxation, Charities Division, Ottawa, Ontario, K1A OL8; 1-800-267-2384.

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Most not-for-profit organizations work toward accumulating a sufficient financial cushion to provide some security against unexpected financial difficulties. There is a strong and sometimes warranted perception among members of the charitable community that even a modest surplus can have negative implications for raising funds.

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We are often asked by Boards of community-based childcare centres whether or not they should try to obtain registered charitable status. This article points out some of the benefits and costs of having registered charitable status. As Revenue Canada is currently reviewing the whole field of not-for-profit and registered charity reporting the following benefits and […]

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There have been a number of new developments in statutory filing requirements for not-for-profit organizations. We are taking this opportunity to provide a brief update on the mandatory requirements and some of the non-mandatory filing requirements. Statutory requirements are in a constant state of evolution. You should periodically discuss the requirements with your professional advisors […]

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Many not-for-profit organizations are having to rely more heavily than ever before on donations as a key source of revenue. Organizations are becoming more creative in their efforts to both widen their donor bases and ward off competition from other fundraisers. Innovative fundraising ventures such as art auctions, silent auctions, 100 hole golf marathons and […]

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e are often asked whether providing childcare to employees will result in a taxable benefit to the employees. As with many taxation issues the answer is not straightforward. Employer Provided Childcare Interestingly enough, there is no taxable benefit in the hands of the employee in cases where:

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Not-for-Profit Filing Requirements

Published on 4:40 pm by in Taxation

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All corporations in Canada must file a tax or information return with Revenue Canada. Registered Charities must file a Charity Information Return (T3010) within six months of their year end. Failure to file a return could result in deregistration. Registered charities do not have to file a corporate tax return. Not-for-profit organizations that are not […]

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Recovery of Late Filing Penalties

Published on 4:37 pm by in Taxation

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Even centres with excellent financial controls are sometimes late paying their monthly remittances to the Receiver General and/or filing T4 and T4A Summaries at year end.

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For detailed and clearly written information on requirements for issuing chatitable receipts please go to the CRA Website at http://www.cra-arc.gc.ca/tx/chrts/prtng/rcpts/menu-eng.html We have attached for your information a summary of the information required on donation receipts and a list of some of the infractions that will give rise to financial penalties. A CRA reference has been […]

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Fundraising Auctions

Published on 8:05 pm by in Registered Charities

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You can view the CRA Guidance on Fundraising documents in English at: http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-028-eng.html and in French at: http://www.arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-028-fra.html. While the guidelines are not “law”, they do give very clear indication of the direction CRA is following (May 2010). The following article is still relevant for those organziations holding charitable auctions. In the summer of 1997 Revenue […]

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Good financial management is an essential ingredient for service delivery in the not-for-profit community. An important aspect of effective financial management is creating and maintaining a financial cushion sufficient to weather stormy periods of financial uncertainty and dwindling financial resources.

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Risk management is a hot topic in the commercial sector, especially in light of the recent losses of some multi-national corporations. Some significant lessons can be learned from these incidents and can be applied towards improving risk management in not-for-profit organizations. This article defines risk as it relates to the not-for-profit community and discusses how […]

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Stopping Theft of Cash

Published on 6:46 pm by in Financial management

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Every now and then an event jars us into remembering how susceptible to theft many not-for-profit organizations are. Recently we were involved with a small not-for-profit organization that was shocked to discover its bank account had been cleaned out. Ten blank cheques were stolen, signatures poorly forged and the cheques cashed through ATMs over a […]

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Regulations regarding recognition of revenue by not-for-profit organizations, effective since April 1, 1997, are complex and often misunderstood. Confusion can arise at the time annual financial statements are prepared, especially where revenue recognized in the audited statements is significantly different from that expected by management. This article will attempt to shed some light on revenue […]

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To the uninitiated, annual financial statements can be confusing and intimidating. This article is intended to help financial statement readers understand the content and limitations of financial statements. It should also help with the interpretation of the information contained in the statements. While the article is not a comprehensive guide to reading and interpreting financial […]

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Mergers of not-for-profit organizations are becoming popular in the wake of funding cutbacks. Organizations often site the ability both to offer better and more comprehensive services and to reduce overhead and administration costs as reasons for merging. While the motivations may be valid, improvements in service and savings may not always be realized.

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An organization’s books and records are often costly and cumbersome to store. We frequently receive questions as to what must be kept and what can be discarded. This article summarizes the rules and regulations of the more common Acts governing not-for-profit organizations in Ontario regarding the retention of books and records.

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Many not-for-profit organizations operating in multiple locations have branch networks. We are often asked what the “correct” accounting systems and controls are for an organization with several branch locations. In this article we will briefly look at some of the fundamental underlying issues and address a number of specific concerns.

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All levels of government are taking more care to ensure that grant money is spent as intended. If your organization finds itself with unspent money at the end of a grant program there is a good chance you will have to return it. In this article we will look at strategies you can use to […]

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Clear financial reporting to the Board of Directors is essential for good financial management in any organization. Budgets and accurate day-to-day financial records are of limited use if the information they contain is not communicated clearly to the Board and those people responsible for managing the organization.

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All organizations must deal with financial uncertainty. The key, as always, is to maximize the level of services provided given your financial resources. The fundamental restructuring of delivery and funding of social services in Ontario has resulted in a state of chaos for many government funded not-for-profit organizations. The degree of uncertainty makes financial management […]

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Most of the incorporated not-for-profit organizations in Ontario are governed by either the Ontario Corporations Act or the Canada Corporations Act. Both pieces of governing legislation require that all organizations have an annual audit. Under these pieces of legislation there are no exemptions from audit.

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It is critical that you use all the resources of your organization as intended. In a childcare setting you want to ensure that all cash, food, supplies and other items are only used for childcare. Your Board of Directors is ultimately responsible for ensuring that resources are used appropriately. The major issue is the control […]

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The Art of Budgeting

Published on 2:20 pm by in Financial management

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The budgeting process is often intimidating because it is seen as being technical and time consuming. A budget for a not-for-profit organization need not be complex to be effective and can be prepared by the Finance Committee or any person on the Board of Directors. This article presents a framework for preparation of your budget, […]

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This article is the first in a series describing how your Board of Directors can use internal controls to improve the financial efficiency of your childcare centre. Over the next few months we will be looking at a variety of ways to make the most of your financial resources.

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Employee Benefits

Published on 3:12 am by in Employment, Taxation

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Employers, especially those in the not-for-profit sector, often look for creative ways to remunerate staff. Non-cash benefits can fit the bill. It is important to understand the tax consequences of employee benefits being offered or your organization and staff could be in for a surprise at tax time.

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Living with Pay Equity

Published on 2:48 am by in Employment

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In this article we will address a number of issues that we deal with on a regular basis. Raise Pay Equity Target Rates Annually for Across the Board Wage Increases Pay equity target rates must be increased annually for across-the-board wage increases given to staff each year.

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This article attempts to provide some clarity as to the rights and obligations of employers under the Pay Equity Act and the Pay Equity Amendment Act of 1993 (collectively referred to as “the Act”) and the mechanics and rules of implementing pay equity increases. We will review the pay equity obligations of your organization and […]

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WSIB Departure Fee

Published on 11:28 pm by in Employment

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Not-for-profit organizations with optional Workplace Safety and Insurance Board (“WSIB”) coverage must pay a sizable fee in order to withdraw from the plan. This departure fee came into effect in December, 1997 and is calculated regardless of an organization’s previous WSIB claims experience. Even organizations with no prior claims under the plan will be levied […]

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*Written in 2000 Overview of the Changes and Some Practical Considerations for directors of charities [1] By: Brian Iler and Ted Hyland, Lawyers Iler, Campbell, Klippenstein On July 1, 1999, the Ontario Government substantially revised the powers and duties of some individuals and organizations holding and investing money, or other assets, for others, or for […]

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We frequently receive questions regarding employer/employee relations. Many of the questions relate to the regulations governing not-for-profit employers. In this issue we will provide an overview of many of the statutory obligations of employers in the not-for-profit sector.

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Pay Equity Funding History

Published on 10:15 pm by in Employment

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First, some background on pay equity funding is necessary. Funding received in 1994 by organizations adopting the proxy method was calculated at 3% of 1993 salaries. This was initially meant to represent the 1% pay equity adjustment for 1994 with an additional 2% allowance to help organizations catch up to their pay equity base.

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Most not-for-profit organizations in Ontario currently provide disability benefits for staff through either participation in the Ontario Workers’ Compensation Board (“WCB”) plan and/or through private short and long-term disability benefit plans. The WCB plan will undergo significant changes effective January 1, 1998. Now is a good time to review your long-term disability coverage to ensure […]

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Deducting Childcare Expenses

Published on 10:00 pm by in Childcare, Taxation

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Most parents are aware that there is some relief from the high cost of childcare through the deduction of childcare expenses from personal taxable income. Given that centre staff are often asked questions on this topic, we thought it would be useful to review what expenses are deductible, when may they be deducted, how much […]

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We have recently commented at length on guidelines for calculation and distribution of pay equity grants. Childcare centres must continue to distribute their direct operating grant and wage enhancement grant subsidies (collectively referred to as wage subsidies) in addition to pay equity grants. Rules for calculation and distribution of wage subsidies were set by the […]

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Collecting Parent Fees

Published on 9:46 pm by in Childcare

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Collecting parent fees is becoming increasingly difficult. Every increase in the Toronto Children’s Services user fee component of subsidy means centres with purchase of service agreements are responsible for collecting larger portions of their fees. Collection efforts are hampered by a slower than expected domestic economy; many families are finding it difficult to make ends […]

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Centres almost never get into financial difficulty overnight. Financial difficulty generally builds over many months. If financial difficulties come as a surprise then there has probably been a lack of attention to finances on the part of the Board of Directors and staff. Following are a few early warning signs that, in our experience, generally […]

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What does the future hold in store? 1. Do you prepare an annual budget? 2. Is it prepared before the year starts? 3. Is it approved by the board? 4. Is it updated periodically? 5. Do you have a monthly cash flow forecast? 6. Is it used by the board in settling fee/expense policy? 7. […]

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Finance Committees

Published on 10:40 pm by in Governance

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Monitoring your organization’s systems for budgeting, record keeping, financial reporting and safeguarding assets is generally more than a volunteer Treasurer or full-time Executive Director can do or should do by him or herself. Setting up a Finance Committee of the Board of Directors is a team approach that can make it easier to manage your […]

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JANUARY Assemble payroll information for T4/T4-A preparation FEBRUARY Final date for T4/T4A submission is month end Review monthly cash flow assumptions and adjust monthly cash flow forecast if necessary (*)

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Improving Computer Security

Published on 4:44 am by in Technology

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Computers are now the most common medium used to store key and often highly confidential information about operations, programs and personnel. The computer has also replaced most manual accounting ledgers. Securing your computer and the data stored within is essential. You should take a few minutes to review the controls of your electronically stored information […]

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Refund of HST Paid

Published on 4:35 am by in Taxation

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By now almost all not-for-profit childcare centres are aware of whether or not they are eligible for a partial refund of HST paid. All centres with registered charitable status are automatically entitled to a 70% refund of HST paid. Not-for-profit organizations without registered charitable status are eligible provided they have at least 40% of their […]

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Effective Fundraising

Published on 4:23 am by in Registered Charities

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Many not-for-profit organizations raise funds from individual and corporate sponsors to augment grant and fee revenue. Before undertaking a fundraising venture the Board of Directors should identify the objectives of the organization and how they relate to fundraising. Once the objectives have been clearly identified then the volunteers and staff can develop and implement a […]

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Recently, there has been a lot of material published on running efficient and effective boards in the not-for-profit environment. We have a few suggestions geared specifically to childcare centres: Focus on the primary objective of your organization Providing quality childcare at an affordable price is the primary objective of most licensed childcare centres.

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We are often asked whether providing childcare to employees will result in a taxable benefit to the employees. As with many taxation issues the answer is not straightforward. Employer Provided Childcare Interestingly enough, there is no taxable benefit in the hands of the employee in cases where:

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Summer presents a financial challenge to many centres as enrolments often decline when families make alternative care arrangements in July and August. Centres with school-age programs are most susceptible to enrolment drops in the summer. In addition, many staff naturally prefer to take their holidays during the summer. This increases the need for casual staff […]

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