We are able to provide services for tax exempt, not-for profit entities.

Audited financial statements are the accepted means by which not-for-profit organizations report to their members, to bankers, to creditors and to government. Federal and provincial legislation in Canada generally requires an incorporated society to prepare annual financial statements for audit by a qualified independent auditor. Some societies may be exempted from the audit requirement.

TBJ will recommend either an audit, review, or compilation to you only after discussing with you the purpose of your financial statements, and your financial goals.

Confused about Audits, Reviews and Compilations? The following might help you to understand the relative difference in meaning and intent of the auditing or accounting engagements. Much of the information here has come from a brochure prepared and distributed by the Certified General Accountants Association of British Columbia.

Each of the engagements described below relies on accounting records provided by you. If you also require assistance with the completion of those records, we would be happy to offer our bookkeeping services to you.

Audit Engagements

The audit consists of an examination of the accounting records and other evidence supporting the financial statements. The auditor will gather the evidence necessary to determine whether the financial statements present a fair picture of the organization's financial position and its activities during the period being audited. The auditor's report will include a professional opinion on the financial statements.

Smaller organizations will generally only have an audit if there is a requirement from a third party, such as a funding agency, or the membership. More often, such organizations can rely on the lower level of assurance provided by a review, rather than an audit.

We may recommend an audit if:
  • Your bank or other lender requires an audit
  • Your insurance company requires an audit
  • Your membership require or desire an audit
  • A funding agency requires an audit
  • A regulatory body requires an audit

Review Engagements

When an audit is not required, or when the membership does not require or desire an audit, financial statements may be prepared on a review basis. While in an audit the accountant will express an opinion on the fairness of the financial statements, a review leads to a more limited assurance that the financial information conforms to Canadian generally accepted accounting principles.

The review procedures include making inquiries concerning all relevant information, comparisons to financial data for the current and prior periods, and discussion covering the information received. As well, the financial statements are reviewed with responsible client officials.

Compilation Engagements:

A not-for-profit organization will generally engage an accountant to prepare a review of financial information to provide some assurance to creditors, potential lenders, and members that the financial statements are worthy of belief.

We may recommend a review if there are no requirements for an audit and:
  • You rely on banks or other lenders for financing
  • A review would enhance our ability to provide you with advice regarding your accounting system

A compilation engagement provides no assurance from the accountant on the financial information. The objective of a compilation engagement is to compile unaudited financial information into financial statement format based on information provided by the client.

Unlike audited or reviewed financial statements, compiled financial statements may not include all disclosure required by some users, and may not include a statement of cash flows or explanatory notes.

In a compilation engagement, the accountant will report that he has "not audited, reviewed, or otherwise attempted to verify the accuracy or completeness" of the information and will caution users of the information that it may not be appropriate for their purposes.

Generally, a compilation engagement is only appropriate for internal use by management.

Although no assurance is provided by the accountant to the user of the financial information, a CGA will not be associated with financial information he or she knows, or has reason to believe, is misleading or incorrect.

We may recommend a compilation if:
  • You require interim financial statements to supplement your annual review or audit
  • There are no lenders, insurers, or funding agencies who will rely on the financial statements
  • Your needs for accounting system advice are very limited
  • You require the financial statements primarily for management use.
To top

Prince George Office: 180 Victoria Street, Prince George, B.C. V2L 2J2 Tel:  (250) 564-2014 Toll Free: 1-888-564-2014 Fax: (250) 564-5613
Mackenzie Office: Suite 130 - 403 Mackenzie Blvd., Mackenzie, B.C. V0J 2C0 Tel:  (250) 997-6611 Toll Free: 1-888-997-6611 Fax: (250) 997-3499

Last Update January 2017
© Copyright 2015 TBJ Terlesky Braithwaite Janzen LLP, All Rights Reserved