Charity Accounting and Bookkeeping

Setting up a Charity is not an easy process, and to lose your charity status due to incomplete reporting would be very upsetting.

The CRA is getting quite aggressive with charities in respect of proper reporting. We are seeing more and more inquiries from the CRA each month as they try to verify incomplete or missing information

We understand, as does the CRA, that many charities are operated by volunteers, and volunteers certainly cannot be expected to know the rules and reporting requirements for the T3010, T1235, T1236 and other related charity forms, however, they are taking a position that regardless of your knowledge, they expect full and complete reporting.

Whether you are a small charity or a large one, alters the reporting requirements, however, they are some common items that must be reported such as:

· Fundraising methods

· Compensation of Fundraisers

· Gifts and Gifts in Kind

· Compensation of staff and directors

· Activities outside of Canada

In addition, the CRA expects and demands full financial disclosure; if your annual receipts are less than $100,000 you do not have to report in as much detail, but if your annual receipts are more than $100,000 you need to report in greater detail including:

· Full Assets, Prepaid Amounts

· Capital Assets such as Land, Buildings & Equipment

· Full Liabilities

· Full Revenue Disclosure including:

       o Donations for which you will issue receipts

       o Other donations

       o Gifts, Gifts in Kind

       o Amounts received from various levels of Government

       o Interest & Other income

       o Income from sales of goods / services

· Full Expenditure Disclosure Including:

      o Travel & Vehicle Expenses

      o Professional Fees

      o Occupancy Costs

      o Other Operational Expenses

     o Other Operational Expenses

When it comes to the individuals responsible for the operations of the Charity, the CRA demands full disclosure and compliance including the following for each director:

· Name and Address

· SIN, Date of Birth

· Phone Number

· Start Date and Position within the Charity

If your charity makes donations to other charities, then you need to report that in detail as well, including:

· Name and Business Number of the other charities

· City, Province and Postal Code

· Amount of Cash and Non-Cash gifts

This list of requirements may seem cumbersome, but if you have your books setup properly and follow some simple procedures it is not as hard to comply as it may seem.

One final note: the CRA expects you to file your returns within 6 months of your fiscal year end, and failure to do so could result in the loss of your charitable status. We’ve seen it happen!

Need help getting your financial information in order? We’re here to help.