Non-Profit Audits and Auditor (Societies Act FAQs)

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This information applies to British Columbia, Canada. Last reviewed for legal accuracy by Pacific Legal Education and Outreach Society (PLEO) in May 2021.

Do we need to hire an auditor?[edit]

Unless required by the bylaws, most non-profits will not need to have their accounting records (aka the “Books”) audited. In fact, an audit may not even be worthwhile, especially if the cost of the audit would cost a significant portion of the non-profit’s overall budget. Generally, the greater the amount of funds managed by the non-profit, the greater the need and pressure will be to have an auditor. In fact, it is often funders who may require that the non-profit’s books be audited as a condition for grant approval. If an auditor is required, then the non-profit must follow the requirements of the Societies Act.

How does a non-profit society appoint an auditor?[edit]

The first auditor of the non-profit must be appointed by a resolution of the directors, to hold office until the close of the following AGM. Every auditor thereafter must be appointed by the members at the AGM. However, if there is a vacancy in auditor due to death or resignation, the directors may appoint an auditor until the close of the next AGM.

Who can be an auditor?[edit]

Only individuals who are chartered professional accountants (CPAs) or firms whose members are CPAs may be appointed as auditors of a non-profit. In addition, the auditor must be independent from the non-profit. Among other things, independent means the auditor cannot be a director, senior manager, or employee of the non-profit. The auditor also cannot be a partner of, be related to, employ, or be employed by a director, senior manager, or employee of the non-profit.

What is a review engagement?[edit]

A review engagement is a less thorough and thus less costly type of financial audit. Since it is less thorough than a full financial audit, it can only provide limited assurance about the accuracy of the non-profit’s financial statements. During a review engagement, an auditor reviews the non-profit’s financials and makes inquiries. The auditor then reports if they have any reason to believe the financial statements are not being presented accurately. In other words, a review engagement might help a non-profit catch any red flags while avoiding the higher cost of a full financial audit.


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