The Audit of 2006

Submitted by Patty Baxter
President, CPC Halifax-Cornwallis
  

In December 2005, Halifax-Cornwallis received an early Christmas present from the Canadian Revenue Agency … notice that we were being audited for the period April 2003-May 2004.

They supplied a list of the types of information that they would be looking for. Financial information from that time period specified (balance sheets, income statement and the general ledger), copies of receipts issued from all of our events, bank statements and cheques written to our charities. In addition to that, we also had to provide correspondence from the National office (AGM and regional reports) copies of the club bylaws as well as national bylaws, any type of awards, plaques, banners, etc. that our club has received, correspondence received from our chosen charities as well as background information on the charities that we support. We then had to provide copies of all types of publicity that we use to promote our events: newspaper and magazine ads that promote both ticket sales and nomination requests for our annual dinner, posters, flyers, brochures, event programs, copies of billboard ads and proof of radio bookings. The auditor then checked that we had signed contracts for the venues that host our events and the cancelled cheques to prove that we paid these invoices.

He asked to see all general and executive minutes from that time period, a list of all club members and those on the executive. We also had to supply him with a copy of our club mission statement and any membership recruitment information that we send out. Myself, as current club president, Maura Holmes our treasurer at that time and Pat Bowes who was president that year were present for the audit and were all asked specific questions. Luckily for us, Maura, who is a CA, also used to be an auditor so she was very familiar with the auditing process which helped greatly in the preparation leading up to audit day. Overall it was a fairly routine audit and lasted about 4 hours in total, although many, many hours were spent preparing for it. The result for our club was a clean audit with a letter put on our file outlining one area where we are weak … receipting … the letter received for our file outlined the requirements for charities to follow when issuing receipts. The penalty for non-compliance of government regulations range from a change to your charitable status or a possible fine to a clean audit. All of this information and more can be found on the Government of Canada website www.ccra-adrc.gc.ca/charities.

There is a separate audit division within CRA designed specifically for auditing charities, which was established after September 2001, with their first priority being to ensure the legitimacy of the charity. We were able to do this quite easily with all of our national correspondence, all of the information about the charities that we support and also all of our club publicity for the events and the club record keeping (minutes etc).

The main lesson we walked away with from all of this is the importance of accurate record keeping and being organized. For our club, a lot of the club information is stored in boxes in members’ basements and offices and with some members who are no longer in the club … we knew we had the information somewhere but it was a bit of an issue finding it all and organizing it for the auditor. It brought to light the importance of accurate, detailed record keeping and also the importance of a central storage location.