Definition: Annual Report1
An annual report is a comprehensive report on the organization’s activities throughout the preceding year. The annual report should give stakeholders information about the organization’s activities and financial performance. The annual report usually includes the financial statements of the preceding year, comments on the activities of the past year and outlook for the future.
Why is it important to make your organization’s annual report publicly available? Annual reports can be an important component of a charity or nonprofit’s communication to its stakeholders and can help develop an organization’s reputation for accountability and transparency both financially and in its operations.2
The Canadian Institute of Chartered Accountants suggests that effective annual reports should answer the following questions:2
- What are the organization’s mission and vision?
- What strategies do the organization employ to achieve the mission and vision?
- What were the organization’s annual goals and how did actual performance compare to these goals?
- What risks and opportunities face the organization?
- What were the organization’s financial and nonfinancial highlights for the year?
- What fundraising methods did the organization use and what were the outcomes?
- What does the organization seek to accomplish in the coming year?
- What is the governance structure of the organization?
Why is it important to make your organization’s financial statements publicly available? Increasingly, community members, donors, funders, and other stakeholders are taking an active interest in the financial practices of charitable and nonprofit organizations.2 Making financial statements publicly available demonstrates financial accountability and transparency to stakeholders. Level two and three organizations that are required to have an independent audit or review engagement (see Standard B2.) must make any notes by a licensed public accountant available along with their financial statements.
Why is it important for organizations to make a list of their board members publicly available? Members of a nonprofit or charity’s board of directors are responsible for overseeing all activities of the corporation. Stakeholders and members of the community therefore have a right to know the names and contact information of all board members.3 Nonprofits and charities are obliged to report any changes to the board of directors, including the election or appointment of a new director, the resignation or removal of a director, or a change in the residential address of a board member within 15 days of the change by submitting Form 4006 – Changes Regarding Directors to Corporations Canada.3 Standard B10 ensures that nonprofits and charities also make this information publicly available so that stakeholders are able to contact board members.
Why is it important for charities to make their registration number (BN) assigned by the Canada Revenue Agency (CRA) available on their website? Every registered charity in Canada is assigned a unique registration number which includes a business number, program identifier, and reference number. This number is an important component of a charity’s legal identification.
Why is it important for charities to make the public portion of their most recent Registered Charity Information Return (form T3010) as submitted to CRA available on their website? The public portions of the T3010 provide essential information about a charity’s financial activities including revenues, expenses, and compensation levels of its 10 highest paid employees. Providing easy access to this information by including it on your organization’s website demonstrates financial transparency and accountability to stakeholders and the broader community. The Canada Revenue Agency publicizes portions of the T3010s submitted by all Canadian charities online in their Charities Listing. Organizations can provide a link to this information on their websites in order to comply with this standard.
From "Accreditation Preparation Workbook Section B: Financial Accountability & Transparency," Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.
- “Standards Program Definitions,” Imagine Canada, May 2011.
- “Improved Annual Reporting by Not-For-Profit Organizations,” The Canadian Institute of Chartered Accountants, 2011.
- “Report Changes Regarding Directors,” Your Reporting Obligations Under the Canada Not-for-profit Corporations Act, Industry Canada.
Standards Reference Guide