CCI Review - 2020/2021 - #3

The Importance of an Audit - by Trish Kaplan, CCI (Hons), Administrator

The financial and legal health and stability of a condominium corporation are important to all owners, as well as to potential buyers in the corporation. The board has a responsibility to manage the affairs of the corporation. Section 66 (1) of the Act states: A corporation shall have its financial statements prepared in the prescribed manner and in accordance with Canadian accounting standards for not-for- profit organizations as are prescribed. 2015, c. 28, Sched 1, s.59 (1) While the Act, allows any Corporation consisting of fewer than 25 units to dispens e with a formal external audit of the financial records provided that 100% of the Owners consent in writing prior to the Annual General Meeting. Audit or not, the tax return must be prepared by the accountant. The reasons to have an audit can be important to the owners. The auditor is a qualified professional who is appointed by owners to examine and report with a full and detailed examination of the corporation’s financial statements and records on their behalf. Simply put, auditors are required to conduct their audits in accordance with Canadian Auditing Standards (CAS) and to report to the owners whether, in their opinion, the financial statements are presented fairly and to report whether the requirements of the Act have been met ( CAS 700 Forming an Opinion and Reporting on Financial Statements and other CASs as appropriate). Amendments to the Act have increased the tasks to be performed by small board-managed corporations. If a board is unable to complete the new work required, directors must seek advice from professionals to assist them,

especially to ensure compliance with the Act . The one area best served by the professionals is the financial area. The board and owners can be well- served by an audit. It will provide owners with an understanding and transparency of how the corporation took care of their investment. The auditor can highlight any issues, no matter how small, that may have been missed by the corporation’s system and can be brought to the board’s attention for correction. The audit can help to improve a corporation’s internal controls and systems which in turn provides confidence to the owners. It could also be said that dealings with banks to secure more affordable loans if there is proof there are resources to repay the loan, can be improved. Future owners are more inclined to buy where they are secure in the knowledge that the corporation is well managed, especially financially. The document Accounting, Auditing and Tax Guidelines for Ontario Condominium Corporations (October 2013) provides guidance, but readers are cautioned that subsequent amendments to, or interpretations of accounting and auditing standards may affect the

Trish Kaplan , CCI (Hon’s) is the current part-time Adminis- trator for the CCI-London and Area Chapter, also having served in the position from April 2003-September 2010 and was awarded the Distinguished Service Award from CCI Na- tional in November 2006. She served on the Board of Direc- tors from 2010 to 2015 when she returned as Administrator. Trish is also a former condo- minium manager.

validity or applicability of the comments in these guidelines.

You can access this document here :

References to the CPA Canada Handbook , to the CPA Ontario’s Member’s Handbook , and to the Condominium Act, 1998 and related regulations are not all- inclusive. Readers should refer to the complete texts to obtain an

understanding of all applicable standards and ethical and other requirements.

- TK

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