As an organization incorporated under the Federal Not-for-Profit Corporations Act, it is important for you to understand what your financial statement reporting requirements are, depending on whether you are a soliciting or non-soliciting corporation.
Soliciting versus Non-Soliciting Corporations – A Few Definitions
A corporation is a soliciting corporation if its receipts from public sources in a single financial year are more than $10,000.
Public sources include:
- Donations or gifts from people who are not members, directors, officers or employees of the corporation at the time of the request or from persons who are not related by blood, marriage or cohabitation arrangements.
- Grants or similar financial assistance received from the federal government, provincial or municipal government.
- Donations or gifts from a corporation or other entity that has received income in excess of $10,000 during the most recent financial year, in the form of donations, gifts, or grants or similar financial assistance as referred in (1) and (2).
A corporation is non-soliciting if it has received no public funds or less than $10,000 in public funds in each of its three previous financial years.
Financial Reporting Requirements – Audit, Review or Compilation?
A soliciting corporation must have an audit if its gross annual revenues are over $250,000 in its previous financial year. If gross annual revenues are more than $50,000 and up to $250,000 in its previous financial year, the default financial statement reporting requirement would be an audit. However, members may by special resolution opt for a review engagement instead. If gross annual revenues are $50,000 or less in its previous financial year, the default financial statement reporting requirement would be a review. However, members may by ordinary resolution opt for an audit (or a compilation).
A non-soliciting corporation is only required to have an audit if its gross annual revenues in the previous financial year are more than $1 million. If gross annual revenues are $1 million or less, the default financial statement reporting requirement would be a review engagement. However, members may by ordinary resolution opt for an audit or a compilation.
| Gross Annual Revenues | Rules |
| $50,000 or less | A chartered public accountant must conduct a review engagement, but members may pass an ordinary resolution to require an audit instead. (If no chartered public accountant is appointed, then only a compilation is necessary.) |
| More than $50,000 and up to $250,000 | A chartered public accountant must conduct an audit, but members can pass a special resolution to require a review engagement instead. |
| More than $250,000 | A chartered public accountant must conduct an audit. |
| Gross Annual Revenues | Rules |
| $1 million or less | A chartered public accountant must conduct a review engagement, but members may pass an ordinary resolution to require an audit instead. (If no chartered public accountant is appointed, then only a compilation is necessary.) |
| More than $1 million | A chartered public accountant must conduct an audit. |
Questions?
Do not hesitate to contact one of our advisors if you have any questions about the financial statement reporting requirements for your organization.
