1. M I L L E R T H O M S O N LLP CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2000 Annual Conference Friday, September 29, 2000

2. M I L L E R T H O M S O N LLP CCRA Audits l CCRA Charities Directorate u Charities Directorate staff u Consulting and Audit Canada staff l Other audits: u GST/HST u payroll

3. M I L L E R T H O M S O N LLP CCRA Audit Authority l ITA 231.1 u power to inspect records to ensure compliance l ITA 231.2 u requirement to provide information l ITA 231.3 u search warrants

4. M I L L E R T H O M S O N LLP CCRA Audit Philosophy l Designed to ensure ITA compliance u financial compliance u activity compliance l Confidential

5. M I L L E R T H O M S O N LLP CCRA Audit Selection l Random l Problem areas l Complaints u public record: constating documents T2050 application for registration T3010 information returns

6. M I L L E R T H O M S O N LLP Your Audit Philosophy l The auditor is not your friend (or enemy)! l Required information only! l Fix it first!

7. M I L L E R T H O M S O N LLP ITA Recordkeeping Requirements l ITA 230(2) u records necessary to confirm grounds for revocation of registration essentially records to show that all activities have a charitable purpose u duplicate receipts u information to verify donations l ITA 230(4.1) electronic data acceptable

8. M I L L E R T H O M S O N LLP ITA Record Retention Requirements l IT Reg. 5800 minimum retention: u 2 years after deregistration (if ever): directors’ and members’ meeting minutes all governing documents records of 10 year trust gifts u 2 years from end of year: duplicate receipts

9. M I L L E R T H O M S O N LLP Privilege l Legal advice privilege u communications related to obtaining legal advice u documents prepared by client’s agent for legal advice u Canada-wide l No accounting privilege l No consultant privilege

10. M I L L E R T H O M S O N LLP Claiming Privilege l ITA 232 u procedure for lawyer to claim privilege for client documents u no ITA procedure for charity to claim privilege probably covered by ITA 232 safest to deliver privileged files to lawyer

11. M I L L E R T H O M S O N LLP Current Audit Concerns l Political activity l Foreign activity / grantmaking l Art donations l Deputised fundraising l Student aid

12. M I L L E R T H O M S O N LLP Audit Response Planning l Initial CCRA letter l Charity contacts professional advisors / CCCC u advice - not representation l Charity contacts auditor

13. M I L L E R T H O M S O N LLP Audit Parameters l Specific or general audit? l Designed to help collect the desired information l Confirm parameters in writing

14. M I L L E R T H O M S O N LLP Pre-Audit Review l Legal issues l Accounting issues (to assist lawyer)

15. M I L L E R T H O M S O N LLP Audit Day l ITA 231.1 requires “all reasonable assistance” l Civility l Limited staff access l Privileged documents l Written questions

16. M I L L E R T H O M S O N LLP Post-Audit l Slow CCRA turnaround l Audit meeting to deal with draft audit report l CCRA audit report letter: u clean report, or u issues raised

17. M I L L E R T H O M S O N LLP Post-Audit (Issues Raised) l Revocation is always threatened - rarely carried out u First offense / clean operation correct for future undertakings (promises) will be required u Subsequent offense / serious violation revocation of registration l Legal representation and submissions

18. M I L L E R T H O M S O N LLP Revocation of Registration l Only penalty available for most offences u no intermediate sanctions l ITA 168 revocation for: u ceasing to comply with requirements for registration u improper receipting u interfering with audit

19. M I L L E R T H O M S O N LLP Result of Revocation l Penalty tax equal to assets u unless transfer assets to another registered charity pre-register transferee in cases of risky activities u appeal to FCA (expensive)

20. M I L L E R T H O M S O N LLP Resources l Professional advisors l CCCC l CCRA documents (www.ccra-adrc.gc.ca) u CCRA Information Circular IC78-10R3 “Books and Records Retention / Destruction” u CCRA Guide T4118 “Auditing Charities”

21. M I L L E R T H O M S O N LLP CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2000 Annual Conference Friday, September 29, 2000