Standards Section B : Financial Accountability and Transparency

Standard B1: Completion of financial statements

Overseeing the financial affairs of a nonprofit or charitable organization is one of the most important roles of the board of directors, and financial statements are the main avenue of communication about the organization’s financial status.

Standard B1 Explained

Standard B2: Audit/review engagement

An audit provides an opportunity to demonstrate financial accountability and transparency by allowing an external auditor to review the organization’s books and records to ensure that the information reported in the financial statements is accurate.

Standard B2 Explained

Standard B3: Release of financial statements

Nonprofit and charitable boards of directors are responsible for overseeing their organization’s financial affairs. While directors do not need to have a lot of expertise related to finance, they do need to know how to read and understand the financial information presented to them by staff.

Standard B3 Explained

Standard B4: Tax filing

Filing the T3010 is required by law for all Canadian charities. The board of directors must make certain that their organization complies with all relevant legislation, and are responsible for ensuring that the T3010 is filed accurately and on time.

Standard B4 Explained

Standard B5: Budget approval & oversight

A budget is a financial plan that reflects an organization’s broader strategic and operational plans.

Standard B5 Explained

Standard B6: Statutory remittances

Failure to submit statutory remittances is one of the most frequent reasons for lawsuits against charities and nonprofits in Canada. Directors of nonprofit and charitable organizations who fail to submit all legally required payments to government can be held personally liable for these amounts plus the interest accrued.

Standard B6 Explained

Standard B7: Board oversight of fundraising & administrative costs

Standard B7 Explained

Standard B8: Investment policy

Directors of nonprofit and charitable organizations can face serious liability risks resulting from improper investment of an organization’s funds.

Standard B8 Explained

Standard B10: Disclosure - general

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.

Standard B10 Explained

Standard B11: Disclosure - compensation

Individual donors, corporations, foundations and governments increasingly want to understand the operating costs and expenses of charitable and nonprofit organizations.

Standard B11 Explained

Standard B12: Disclosure - payments to board members

Paying a board member or an organization in which a board member is an important stakeholder, for instance an owner, partner, or senior manager, can appear to be a significant conflict of interest. 

Standard B12 Explained

Standard B13: Disclosure - fundraising costs

The Canada Revenue Agency states that charities must be transparent regarding their fundraising costs, revenues, and practices, warning that failure to accurately disclose this information may indicate that fundraising activities have been illegal or deceptive.

Standard B13 Explained