Under ONCA, Can Not-for-Profit Corporations Waive Audit and Review Engagements?

Not-for-profit corporations play a crucial role in our society, serving various purposes, such as advancing education, promoting social welfare, and supporting religious activities. As these corporations operate in the public interest, specific legal requirements are in place to ensure accountability and transparency. One such requirement is the need for audit and review engagements.

The Ontario Not-for-Profit Corporations Act (ONCA) outlines the rules and regulations not-for-profit corporations must follow. Under ONCA, the possibility of waiving audit or review engagement requirements for not-for-profit corporations depends on factors like annual revenue and whether the corporation is a public benefit corporation under section 76 of ONCA.

An audit requirement can be waived for public benefit corporations with annual revenue between $100,000 and $500,000, but a review engagement is still necessary. If the income is $500,000 or more, an audit becomes mandatory.

Conversely, if the annual revenue is $100,000 or less, the audit and review engagement can be waived for public benefit corporations. It is important to note that these thresholds are subject to change in the future through regulation amendments.

To waive audit or review engagement requirements, an extraordinary resolution requiring approval by at least 80% of members is needed. This decision stays in place until the next yearly meeting. It is essential to follow the proper procedures and obtain the necessary approvals before waiving these requirements, as failure to do so can result in legal and financial consequences.

For other not-for-profit corporations not classified as public benefit corporations, those with annual revenue over $500,000 can waive the audit but must conduct a review engagement. The audit and review engagement can be waived if the income is $500,000 or less. Again, an extraordinary resolution is required in either case, valid until the next annual meeting of members.

In summary, not-for-profit corporations must consider their annual revenue and legal classification when deciding whether to waive audit and review engagement requirements. Following the proper procedures and obtaining the necessary approvals before making any decisions is essential.

By doing so, not-for-profit corporations can ensure accountability and transparency, strengthen public trust, and continue to serve their essential missions.

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