m i l l e r t h o m s o n llp ccra charity audits robert b. hayhoe [email protected]...
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M I L L E R T H O M S O N LLP
CCRA Charity Audits
Robert B. [email protected]
416.595.8174
Canadian Council of Christian Charities
2000 Annual Conference
Friday, September 29, 2000
M I L L E R T H O M S O N LLP
CCRA Audits
CCRA Charities Directorate Charities Directorate staff Consulting and Audit Canada staff
Other audits: GST/HST payroll
M I L L E R T H O M S O N LLP
CCRA Audit Authority
ITA 231.1 power to inspect records to ensure compliance
ITA 231.2 requirement to provide information
ITA 231.3 search warrants
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CCRA Audit Philosophy
Designed to ensure ITA compliance financial compliance activity compliance
Confidential
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CCRA Audit Selection
Random Problem areas Complaints
public record:• constating documents
• T2050 application for registration
• T3010 information returns
M I L L E R T H O M S O N LLP
Your Audit Philosophy
The auditor is not your friend (or enemy)! Required information only! Fix it first!
M I L L E R T H O M S O N LLP
ITA Recordkeeping Requirements
ITA 230(2) records necessary to confirm grounds for
revocation of registration• essentially records to show that all activities have a
charitable purpose duplicate receipts information to verify donations
ITA 230(4.1) electronic data acceptable
M I L L E R T H O M S O N LLP
ITA Record Retention Requirements
IT Reg. 5800 minimum retention: 2 years after deregistration (if ever):
• directors’ and members’ meeting minutes
• all governing documents
• records of 10 year trust gifts 2 years from end of year:
• duplicate receipts
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Privilege
Legal advice privilege communications related to obtaining legal
advice documents prepared by client’s agent for
legal advice Canada-wide
No accounting privilege No consultant privilege
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Claiming Privilege
ITA 232 procedure for lawyer to claim privilege for
client documents no ITA procedure for charity to claim privilege
• probably covered by ITA 232
• safest to deliver privileged files to lawyer
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Current Audit Concerns
Political activity Foreign activity / grantmaking Art donations Deputised fundraising Student aid
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Audit Response Planning
Initial CCRA letter Charity contacts professional advisors /
CCCC advice - not representation
Charity contacts auditor
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Audit Parameters
Specific or general audit? Designed to help collect the desired
information Confirm parameters in writing
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Pre-Audit Review
Legal issues Accounting issues (to assist lawyer)
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Audit Day
ITA 231.1 requires “all reasonable assistance”
Civility Limited staff access Privileged documents Written questions
M I L L E R T H O M S O N LLP
Post-Audit
Slow CCRA turnaround Audit meeting to deal with draft audit report CCRA audit report letter:
clean report, or issues raised
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Post-Audit (Issues Raised)
Revocation is always threatened - rarely carried out First offense / clean operation
• correct for future • undertakings (promises) will be required
Subsequent offense / serious violation• revocation of registration
Legal representation and submissions
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Revocation of Registration
Only penalty available for most offences no intermediate sanctions
ITA 168 revocation for: ceasing to comply with requirements for
registration improper receipting interfering with audit
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Result of Revocation
Penalty tax equal to assets unless transfer assets to another registered
charity• pre-register transferee in cases of risky activities
appeal to FCA (expensive)
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Resources
Professional advisors CCCC CCRA documents (www.ccra-adrc.gc.ca)
CCRA Information Circular IC78-10R3 “Books and Records Retention / Destruction”
CCRA Guide T4118 “Auditing Charities”
M I L L E R T H O M S O N LLP
CCRA Charity Audits
Robert B. [email protected]
416.595.8174
Canadian Council of Christian Charities
2000 Annual Conference
Friday, September 29, 2000