Behind the scenes, the annual audit of the General Fund (club: where your dues go) and the Community Service Fund (charity; where directed donations and CRCF revenue goes) is about to begin. In reality, we prepare for the audit year-round by following the policies and procedures set forth by these two entities and by complying with the CRA rules and generally accepted accounting practices. Here's what happens behind the scenes.
This year, the planning phase of the audit begins on August 8. During this phase, we are required to upload backups of our accounting software, bank statements, meeting minutes, budgets, agreements, contracts, and any other information, as requested. We are also required to complete questionnaires and meet with the audit team. From this phase, the auditors establish a strategy for engagement and develop an audit plan. The goal is to look for reasonable assurance that our financial statements are free from material misstatement.
The execution phase takes place between August 28 – September 12 and can extend beyond this date based on the amount of work involved. During this phase, upwards of 200 samples are chosen for review and from those samples several more may be required to confirm the validity of the initial samples. This phase is long and arduous involving several auditors with expertise in their areas meticulously reviewing the files and samples, asking questions and sometimes the same questions, from year to year. The review looks at controls in place and the reasonableness of significant accounting estimates, the appropriateness of accounting policies used and the overall structure of our organization. The audit is not complete until every sample is reviewed to the satisfaction of the audit team. It is our responsibility to respond to all questions and provide information requested, in a timely manner.
Once we have provided the required backup information and answered every question asked of us, the auditors prepare the draft financial statements with notes and issue an audit report with opinion based on the audit evidence. It is the responsibility of the audit finance committee to review the results and the draft statements. From there, the statements are presented to the Board for final approval. Occasionally, several drafts are issued before a final statement is approved.
The last and very important piece in this long process is the completion of the Charity Information Return for the CRA. The return must be filed no later than six months after the end of the fiscal year (December 31) and must include the audited financial statements. Being late or missing information puts our charitable status at risk of being revoked. Therefore, it is imperative that the audit runs smoothly and on time and that we meet all requirements for filing the return. And, in six months, we will do it all over again!
Tracy Nelson
Club Accountant