Non-Profit Finances and Borrowing (Societies Act FAQs) - Revision history

PLEO at 00:02, 30 January 2024

2024-01-30T00:02:48Z

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	{{Societies Act FAQs TOC}}		{{Societies Act FAQs TOC}}
	{{REVIEWED \| reviewer = [[Pacific Legal Education and Outreach Society]] (PLEO) in ~~May 2021~~}}		{{REVIEWED \| reviewer = [[Pacific Legal Education and Outreach Society]] (PLEO) in January 2024}}
	==Non-Profit Finances==		==Non-Profit Finances==
	===Can a non-profit society operate a business or own a for-profit corporation?===		===Can a non-profit society operate a business or own a for-profit corporation?===

PLEO: /* What are accounting records? */

2024-01-30T00:02:37Z

What are accounting records?

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	==Non-Profit Accounting Records==		==Non-Profit Accounting Records==
	===What are accounting records?===		===What are accounting records?===
	Accounting records are the general ledger of the non-profit and all related documentation such as bank statements and donation receipts. They include a great deal of ~~sensitive and~~ personal information. For this reason, it is a best practice to restrict access to accounting records in your bylaws.		Accounting records are the general ledger of the non-profit and all related documentation such as bank statements and donation receipts. They may include a great deal of personal information. For this reason, it is a best practice to restrict access to accounting records in your bylaws.

	{{Societies Act FAQs NavBox}}		{{Societies Act FAQs NavBox}}

PLEO: /* What are accounting records? */

2024-01-30T00:02:23Z

What are accounting records?

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	==Non-Profit Accounting Records==		==Non-Profit Accounting Records==
	===What are accounting records?===		===What are accounting records?===
	Accounting records are the general ledger of the non-profit and all related documentation such as bank statements and donation receipts. They include a great deal of personal information. For this reason, it is a best practice to restrict access to accounting records in your bylaws.		Accounting records are the general ledger of the non-profit and all related documentation such as bank statements and donation receipts. They include a great deal of sensitive and personal information. For this reason, it is a best practice to restrict access to accounting records in your bylaws.

	{{Societies Act FAQs NavBox}}		{{Societies Act FAQs NavBox}}

PLEO: /* What are accounting records? */

2024-01-30T00:02:13Z

What are accounting records?

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	==Non-Profit Accounting Records==		==Non-Profit Accounting Records==
	===What are accounting records?===		===What are accounting records?===
	Accounting records are the general ledger of the non-profit and all related documentation such as bank statements and donation receipts. They include a great deal of personal information. ~~Due to the sensitive nature of~~ this ~~information~~, it is a best practice to restrict access to accounting records in your bylaws.		Accounting records are the general ledger of the non-profit and all related documentation such as bank statements and donation receipts. They include a great deal of personal information. For this reason, it is a best practice to restrict access to accounting records in your bylaws.

	{{Societies Act FAQs NavBox}}		{{Societies Act FAQs NavBox}}

PLEO: /* What are accounting records? */

2024-01-30T00:01:48Z

What are accounting records?

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	==Non-Profit Accounting Records==		==Non-Profit Accounting Records==
	===What are accounting records?===		===What are accounting records?===
	Accounting records are the general ledger of the non-profit and all related documentation such as bank statements and donation receipts. They include a great deal of personal information. ~~Access~~ to accounting records ~~should be excluded~~ in your bylaws.		Accounting records are the general ledger of the non-profit and all related documentation such as bank statements and donation receipts. They include a great deal of personal information. Due to the sensitive nature of this information, it is a best practice to restrict access to accounting records in your bylaws.

	{{Societies Act FAQs NavBox}}		{{Societies Act FAQs NavBox}}

PLEO: /* Do the non-profit society’s financial statements need to be prepared by an accountant or bookkeeper? */

2024-01-30T00:00:52Z

Do the non-profit society’s financial statements need to be prepared by an accountant or bookkeeper?

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	The ''Societies Act'' requires that a non-profit keep sufficient accounting records and are able to produce a set of financial statements for its members. The ''Societies Act'' does not require that the non-profit get professional help, nor does the CRA. Thus, a non-profit’s treasurer could provide financial statements.		The ''Societies Act'' requires that a non-profit keep sufficient accounting records and are able to produce a set of financial statements for its members. The ''Societies Act'' does not require that the non-profit get professional help, nor does the CRA. Thus, a non-profit’s treasurer could provide financial statements.

	Note that if a non-profit becomes complicated enough financially, it may be a good idea to get a bookkeeper then an accountant to prepare and approve annual financial statements. Some funders require audited financial statements. The ''Societies Act'' sets out the qualifications of an auditor but does not require an audit. For more information, see the [~~http~~://www.~~cra-arc.gc~~.ca/E/~~pub~~/tg/t4117/~~t4117~~-~~14e~~.~~pdf~~ CRA’s guide to filing the Annual Information return].		Note that if a non-profit becomes complicated enough financially, it may be a good idea to get a bookkeeper then an accountant to prepare and approve annual financial statements. Some funders require audited financial statements. The ''Societies Act'' sets out the qualifications of an auditor but does not require an audit. For more information, see the [https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4117/income-tax-guide-non-profit-organization-information-return.html CRA’s guide to filing the Annual Information return].

	==Non-Profit Accounting Records==		==Non-Profit Accounting Records==

PLEO: /* What is the difference between accounting records and financial statements? */

2024-01-29T23:59:09Z

What is the difference between accounting records and financial statements?

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	Financial statements and accounting records are not the same thing.		Financial statements and accounting records are not the same thing.

	Financial statements are a broad overview of the non-profit’s financial position, presented ~~for member approval~~ at each AGM. Financial statements generally include four documents: Income Statement, Balance Sheet (Statement of Financial Position), Statement of Cash Flows, and Equity Statement (Statement of Retained Earnings).		Financial statements are a broad overview of the non-profit’s financial position, presented to members at each AGM. Financial statements generally include four documents: Income Statement, Balance Sheet (Statement of Financial Position), Statement of Cash Flows, and Equity Statement (Statement of Retained Earnings).

	Accounting records is a broad category which includes details on individual financial transactions such as the date and amount of deposits or withdrawals, cheque numbers, bank account numbers, daily balances, etc. Normally it is called the ''general ledger''. Since there is much more detailed and sensitive information in accounting records, it may be in the non-profit’s best interest to restrict access to such records.		Accounting records is a broad category which includes details on individual financial transactions such as the date and amount of deposits or withdrawals, cheque numbers, bank account numbers, daily balances, etc. Normally it is called the ''general ledger''. Since there is much more detailed and sensitive information in accounting records, it may be in the non-profit’s best interest to restrict access to such records.

	Non-profits may restrict access to records listed under s. 20(2) of the ''Societies Act'', which includes accounting records. Non-profits may not restrict access to records listed under s. 20(1), which includes financial statements. For more on recordkeeping, see [[Non-Profit_Recordkeeping_and_Privacy_(Societies_Act_FAQs)\|Non-Profit Recordkeeping and Privacy]].		Non-profits may restrict access to records listed under s. 20(2) of the ''Societies Act'', which includes accounting records, in the non-profit's bylaws. Non-profits may not restrict access to records listed under s. 20(1), which includes financial statements. For more on recordkeeping, see [[Non-Profit_Recordkeeping_and_Privacy_(Societies_Act_FAQs)\|Non-Profit Recordkeeping and Privacy]].

	===Do we need to submit financial statements to the Registrar?===		===Do we need to submit financial statements to the Registrar?===

PLEO: /* What are debentures? */

2024-01-29T23:57:28Z

What are debentures?

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	===What are debentures?===		===What are debentures?===
	A debenture is a ~~debt instrument~~ used to raise ~~capital~~. Debentures are typically used to raise short term capital for specific purposes (for instance an upcoming expansion). Debentures are unsecured by collateral or assets, and are generally backed up by the creditworthiness of the borrower. The term is found in many non-profit bylaws because the old ''Society Act'' did not permit the issuing of debentures without a special resolution. Under the ''Societies Act'', non-profits can borrow funds and issue debentures whenever the directors determine, unless it is prohibited by the bylaws. A non-profit that wishes to can limit the borrowing powers of the board in its bylaws.		A debenture is a legal agreement used to raise money by borrowing from others. Debentures are typically used to raise short term capital for specific purposes (for instance an upcoming expansion). Debentures are unsecured by collateral or assets, and are generally backed up by the creditworthiness of the borrower. The term is found in many non-profit bylaws because the old ''Society Act'' did not permit the issuing of debentures without a special resolution. Under the ''Societies Act'', non-profits can borrow funds and issue debentures whenever the directors determine, unless it is prohibited by the bylaws. A non-profit that wishes to can limit the borrowing powers of the board in its bylaws.

	==Non-Profit Financial Statements==		==Non-Profit Financial Statements==

PLEO: /* Can a non-profit society operate a business or own a for-profit corporation? */

2024-01-29T23:55:25Z

Can a non-profit society operate a business or own a for-profit corporation?

← Older revision		Revision as of 23:55, 29 January 2024
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	==Non-Profit Finances==		==Non-Profit Finances==
	===Can a non-profit society operate a business or own a for-profit corporation?===		===Can a non-profit society operate a business or own a for-profit corporation?===
	A non-profit can own a for-profit business if operating the business supports the non-profit’s purposes. This may be a situation, however where the non-profit wants to make sure that it has legal and accounting advice.		A non-profit can own a for-profit business if operating the business supports the non-profit’s purposes. This may be a situation, however, where the non-profit wants to make sure that it has legal and accounting advice.

	===What are debentures?===		===What are debentures?===

Desy Wahyuni at 00:29, 29 May 2021

2021-05-29T00:29:32Z

← Older revision		Revision as of 00:29, 29 May 2021
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	{{Societies Act FAQs TOC}}		{{Societies Act FAQs TOC}}
			{{REVIEWED \| reviewer = [[Pacific Legal Education and Outreach Society]] (PLEO) in May 2021}}
	==Non-Profit Finances==		==Non-Profit Finances==
	===Can a non-profit society operate a business or own a for-profit corporation?===		===Can a non-profit society operate a business or own a for-profit corporation?===