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Assurance
A licensed public accounting firm in Cobourg, with eleven years in public practice behind it. If a lender, a funder, a statute or your own bylaws require an audit or a review, this is the page that works out which one, and whether they are right about needing it.
| Engagement | Standard | What you get |
|---|---|---|
| Compilation | CSRS 4200 | Financial information assembled with a note on the basis of accounting. No assurance |
| Review | CSRE 2400 | Enquiry and analysis, concluding that nothing has come to my attention suggesting material misstatement. Limited assurance |
| Audit | Canadian Auditing Standards | Testing of evidence, confirmations and substantive procedures, expressed as an opinion. Reasonable assurance |
Only a firm licensed by CPA Ontario to practise public accounting may issue audit and review reports. Compilations are covered on the financial statements page.
Boards usually arrive asking what the law requires. That is the third question rather than the first, because two other things can require more.
A transfer payment agreement, a grant condition or a United Way style funding arrangement can require audited financial statements regardless of your size. This overrides everything below it, and it is the most common reason a small organization is audited.
Read the agreement before reading the statute. Many boards discover they have been passing resolutions to waive an audit they are contractually obliged to obtain.
Bylaws can require an audit even where the statute would permit less. Plenty do, having been drafted decades ago when audits were the default. If your bylaws say audit, you need an audit until the members change the bylaws.
Which statute depends on where you are incorporated. Ontario corporations fall under the ONCA, federal ones under the Canada Not-for-profit Corporations Act, and the thresholds are different.
The Ontario Not-for-Profit Corporations Act came into force in October 2021 and introduced the ability for some corporations to have a review instead of an audit, or to dispense with both. The three year transition period for updating governing documents ended on 18 October 2024.
Which band you are in turns first on whether you are a public benefit corporation. That means a charitable corporation, or a non-charitable one receiving more than $10,000 in a financial year in donations or gifts from people who are not members, directors, officers or employees, or in grants or similar assistance from a federal, provincial or municipal government or agency.
The default is an audit. That is the part most summaries bury. Anything less than an audit requires the members to positively decide on it, so a board that has not passed a resolution is in the audit column whatever its revenue.
| Type of corporation | Revenue in the financial year | Default | Available instead, by extraordinary resolution |
|---|---|---|---|
| Public benefit | $100,000 or less | Audit | Review engagement, or waive both |
| Public benefit | More than $100,000 but less than $500,000 | Audit | Review engagement |
| Public benefit | $500,000 or more | Audit | Nothing. Audit required |
| Not a public benefit corporation | $500,000 or less | Audit | Review engagement, or waive both |
| Not a public benefit corporation | More than $500,000 | Audit | Review engagement |
The boundaries are worth reading closely, because they are not symmetrical. A public benefit corporation at exactly $500,000 is in the audit band with no way out. A corporation that is not a public benefit corporation at exactly $500,000 can waive both.
Waiving the audit and the review does not mean no financial statements. The corporation still has to report its finances to its members, and in practice that usually means a compilation. See financial statements.
Waiving requires an extraordinary resolution. That means at least 80% of the votes cast at a special members' meeting where there are enough members to vote, or the written consent of all voting members. It is not something the board can decide.
It also has to be passed again each year, since the resolution runs only until the next annual meeting. A resolution passed two years ago does nothing for the current year, and this is the single most common gap I would expect to find on a file.
Statements go to members before the meeting, not at it. Members must receive the financial statements, or a summary of them, at least five days before the annual meeting. That works backwards into when the year end has to be finished, and it is the constraint boards most often discover late. Set the meeting date accordingly.
Failing to appoint has a consequence. Where an audit is required for a year and no auditor is appointed, a member can apply to the court to have one appointed. In practice this is rare, but it is the answer to "what happens if we just do not".
Federal corporations are divided into soliciting and non-soliciting. A corporation is soliciting where it received more than $10,000 in income from public sources in a single financial year, meaning donations or gifts from people who are not members, directors, officers or employees, government grants, or money from another organization that itself received more than $10,000 in public funds. A corporation is non-soliciting where it received no public funds, or less than $10,000, in each of its three previous financial years.
The federal rules work differently from Ontario's. Rather than a permission to step down, each band has a default, which the members can move up or down from.
| Gross annual revenue | Default | Alternatives | |
|---|---|---|---|
| Soliciting | Under $50,000 | Review engagement | Audit, or no review at all |
| $50,000 to $250,000 | Audit | Review engagement | |
| Over $250,000 | Audit | None. Audit required | |
| Non-soliciting | Under $1 million | Review engagement | Audit, or no review at all |
| Over $1 million | Audit | None. Audit required |
The band that surprises people is $50,000 to $250,000 for a soliciting corporation, where the default is an audit. A board that has quietly been doing nothing is not sitting on an exemption, it is sitting on an unmet default.
Two federal obligations with no Ontario equivalent. A soliciting corporation must send its financial statements and the public accountant's report to Corporations Canada, which is a filing rather than just a members' meeting item. And a soliciting corporation needs at least three directors, at least two of whom are not officers or employees.
Soliciting status is tested at each financial year end and applies from the annual meeting that follows. Once you are soliciting, you stay soliciting until you fail the definition for three consecutive years, so a single large grant has effects that run on. Corporations Canada has an assistance tool for working out which you are.
A federal organization operating in Ontario is still federal. Where you carry on activities does not change which statute governs your corporation. It is worth being certain which one you were incorporated under before working out which table applies, and boards are sometimes wrong about this.
An audit means planning, understanding your controls, testing transactions and balances, confirming things with third parties such as banks and funders, and forming an opinion. For a not-for-profit it usually also means looking closely at revenue recognition, since restricted contributions, deferred revenue and grants received in advance are where the judgment sits.
A review means enquiry, analytical procedures and discussion, sufficient to conclude that nothing has come to my attention suggesting material misstatement. Substantially less work, and less cost, but it is not an audit and a funder who asked for one will notice.
For either, planning starts before your year end rather than after it. Independence procedures, opening balances and the request list can all be dealt with in advance, which is what keeps the spring from being a scramble.
If you keep the books for an organization that needs an audit or review, you cannot issue the report yourself without a public accounting licence. I am available to take that scope and hand the client back, and I have no interest in the rest of the relationship.
Same applies to accountants who would rather not carry assurance work. Get in touch and we can sort out how it would run.
Check three things in order: what your funding agreements require, what your bylaws say, and what your incorporating statute requires. The first two can require more than the statute, and a funder's condition is the most common reason a small organization is audited.
Under the ONCA, a public benefit corporation with revenue of $500,000 or more must be audited. Above $100,000 but below $500,000 a review engagement is available, and at $100,000 or less both can be waived. A corporation that is not a public benefit corporation can waive both at $500,000 or less, and can have a review instead of an audit above that. Waiving requires an extraordinary resolution each year.
Under the ONCA the default is an audit. Anything less requires the members to pass an extraordinary resolution, so a board that has not turned its mind to it is in the audit column regardless of revenue. Federally the defaults vary by band: a review engagement below the lower threshold, an audit above it.
Until the next annual meeting. The extraordinary resolution has to be passed again each year, and it needs at least 80% of votes cast at a meeting called for that purpose, or the consent of every voting member. A resolution from a previous year does not carry forward.
They can prepare the underlying records and the draft statements, but the audit or review report has to be issued by a firm licensed by CPA Ontario to practise public accounting. The two roles are separate for a reason.
Before your year end rather than after. Planning, independence procedures and opening balance work can happen in advance, and a year end audit that begins in April was always going to be tighter than one that began in October.
This page describes the position in general terms as at August 2026 and is not advice for your organization. The Ontario thresholds follow the province's published summary of the ONCA, and the federal ones follow Corporations Canada's published summary of the NFP Act. Both have technical conditions beyond what is set out here, and regulations can alter the detail. Check your incorporating statute, your bylaws and your funding agreements, and take legal advice where the corporate requirements are in doubt.
Sources: Ontario, rules for not-for-profit and charitable corporations and Corporations Canada, requirements for soliciting corporations.
Whether it is a funding agreement, a bylaw or a section of the statute, working out what it actually requires is a short conversation and there is no charge for it.
Call (905) 207-9639