¶372.2.4.1 Signing Officers: The society or board should name the signing officers who may sign cheques and other financial instruments on behalf of the church. The treasurer should normally be one of the signing officers. The society or board may wish to name more than one signing officer, and define signing limits where cheques larger than a pre-defined amount require more than one signature. If the treasurer does not keep the books, the board may wish to authorize the bookkeeper to sign cheques up to this limit and require cheques for larger amounts be co-signed by the treasurer.
¶372.2.4.2 Auditor: ¶320.4.2 requires the society, or in its place, the official board, to appoint an auditor. The society may choose to employ an external licensed public accountant or audit firm, or may use the services of a volunteer auditor (unless federal regulations or incorporation legislation requires the use of an external public accountant or audit firm). This volunteer may be a member of the society, who has accounting or auditing qualifications, or a volunteer with such qualifications from outside the society. If the volunteer is not a licensed public accountant it is important to ensure there is an understanding of the role of the volunteer in regards to an independent and diligent scrutiny of the records and ensure that receipts received and disbursements made are accurately recorded and documented.
It is recommended that when a society or official board asks volunteers to perform a review, that the following steps be considered as part of the review process to be performed by the volunteer:
- Review year end bank reconciliations and other months on a sample basis.
- Determine if there is a separation of duties among two or more people who are at arm’s length to each other (ie. the person who receives and approves the invoice does not issue the cheques)
- Review supporting receipts for expense reports to ensure completeness to support the amounts expensed
- Review cash receipts, cash disbursements, payroll and general ledger transactions for supporting documentation
- Ensure proper authorization of transactions (eg. Verifying two signatures on cheques. In some societies where only one person signs cheques, consideration of additional testing of disbursements should be made)
- Ensure all payroll transactions have been recorded properly as per central payroll debit advice
- Review cash receipts against charitable tax receipts issued and ensure this ties to the financial statements and to what is reported on the annual information return filed with Canada Revenue Agency (T3010)
- Ensure that the annual information return was completed and forwarded to the Canada Revenue Agency no later than 6 months after the year end (most societies have a calendar year end, so June 30th is the key date)
- Ensure that insurance coverage is up to date
- Ensure that Harmonized Sales Tax or Goods and Services Tax recoveries are filed
- Review bequests received in the year for appropriate designations
- Review equipment leases (if applicable)
- Compare expenses (and revenues) with budget and prior year and get explanation for unexpected variances
- Consider whether an expenditure is a repair and maintenance item or a capital asset to ensure proper accounting treatment
- Review investments (if applicable), verifying value, treating of income
- Review designated gifts to ensure they comply with the donor’s wishes
- Search for unrecorded liabilities (ie. this covers services performed or materials received prior to the fiscal year end for which the church has not been invoiced or has been invoiced in the next fiscal year that relates to the prior fiscal year)
- Review postmark on envelopes for December 31 cut off of donations (Note: for churches that do not receive donations by mail, this step is not applicable)Findings by the volunteer reviewer should be presented to the annual society meeting.A full audit is not normally required. A financial review statement is sufficient.
