CCRA Charity Audits Robert B. Hayhoe [email protected] 416.595.8174 Canadian Council of...

21
CCRA Charity Audits Robert B. Hayhoe [email protected] 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26, 2001

TAGS:

Transcript of CCRA Charity Audits Robert B. Hayhoe [email protected] 416.595.8174 Canadian Council of...

Page 1: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

CCRA Charity Audits

Robert B. Hayhoe

[email protected]

416.595.8174

Canadian Council of Christian Charities

2001 Annual Conference

September 26, 2001

Page 2: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

CCRA Audits

• CCRA Charities Directorate– Charities Directorate staff– Consulting and Audit Canada staff

• Other audits:– GST/HST – payroll

Page 3: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

CCRA Audit Authority

• ITA 231.1 – power to inspect records to ensure

compliance• ITA 231.2– requirement to provide information

• ITA 231.3– search warrants

Page 4: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

CCRA Audit Philosophy

• Designed to ensure ITA compliance– financial compliance– activity compliance

• Designed to educate• Confidential

Page 5: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

CCRA Audit Selection

• 400-500 audits / year• Random• Problem areas• Complaints– public record:

• constating documents• T2050 application for registration• T3010 information returns

Page 6: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

Your Audit Philosophy

• The auditor is not your friend (or enemy)• Disclose only required information• Pre-audit compliance

Page 7: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

ITA Recordkeeping Requirements

• ITA 230(2)– records necessary to confirm grounds

for revocation of registration• essentially records to show that all

activities have a charitable purpose

– duplicate receipts– information to verify donations

• ITA 230(4.1) electronic data acceptable

Page 8: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

ITA Record Retention Requirements

• IT Reg. 5800 minimum retention:– 2 years after deregistration (if ever):

• directors’ and members’ meeting minutes• all governing documents• records of 10 year trust gifts

– 2 years from end of year:• duplicate receipts and supporting

documents

• ITA 230(4) minimum retention:– 6 years from end of year:

• records to show charitable status

Page 9: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

Privilege

• Legal advice privilege– communications related to obtaining

legal advice– documents prepared by client’s agent

for legal advice– Canada-wide

• No accountant privilege• No consultant privilege

Page 10: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

Claiming Privilege

• ITA 232– procedure for lawyer to claim privilege

for client documents– no ITA procedure for charity to claim

privilege• probably covered by ITA 232• safest to deliver privileged files to lawyer

Page 11: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

CCRA Audit Concerns

• Political activity• Foreign activity / grantmaking• Art donations • Receipted fundraising events• Deputised fundraising• Student aid

Page 12: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

Audit Response Planning

• Initial CCRA letter or call• Charity contacts professional advisors /

CCCC– advice - not representation

• Charity contacts auditor

Page 13: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

Audit Parameters

• Specific or general audit?• Designed to help collect the desired

information• Confirm parameters in writing • Draft CCRA Audit Protocol– no provision for limitations– three year moratorium on re-audit

Page 14: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

Pre-Audit Review

• Legal issues

• Accounting issues (to assist lawyer)– consider privilege issues

Page 15: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

Audit Day

• ITA 231.1 requires “all reasonable assistance”

• Civility• Limited staff access • Privileged documents• Written questions

Page 16: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

Post-Audit

• Auditor returns file to Charities Directorate– slow CCRA turnaround

• Audit meeting to deal with draft audit report

• CCRA audit report letter:– Confirmation of Compliance, or– Education Letter

• minor issues

Page 17: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

Post-Audit (Issues Raised)

• Revocation is always threatened - rarely carried out– First offense / clean operation

• Undertakings Letter– correct for future

– Subsequent offense / serious violation• Administrative Fairness Letter

– revocation of registration

• Legal representation and submissions

Page 18: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

Revocation of Registration

• Only penalty available for most offences – no intermediate sanctions

• ITA 168 revocation for:– ceasing to comply with requirements

for registration– improper receipting– interfering with audit

Page 19: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

Result of Revocation

• Penalty tax equal to assets– unless transfer assets to another

registered charity• pre-register transferee in cases of risky

activities

– appeal to FCA • expensive and cumbersome

Page 20: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

Toronto

Vancouver

Calgary

Edmonton

Markham

Whitehorse

Washington, D.C. M I L L E R T H O M S O N LLP

Resources

• Professional advisors• CCCC• CCRA documents (www.ccra-adrc.gc.ca)– CCRA Information Circular IC78-10R3

“Books and Records Retention / Destruction”

– CCRA Guide T4118 “Auditing Charities”

– Draft “CCRA Audit Protocol”

Page 21: CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2001 Annual Conference September 26,

CCRA Charity Audits

Robert B. Hayhoe

[email protected]

416.595.8174

Canadian Council of Christian Charities

2001 Annual Conference

September 26, 2001


M I L L E R T H O M S O N LLP INCOME TAX ASSESSMENTS OBJECTIONS AND APPEALS Robert B. Hayhoe (416.595.8174) CGA Ontario Public Practitioners’ Convention.

M I L L E R T H O M S O N LLP INCOME TAX ASSESSMENTS OBJECTIONS AND APPEALS Robert B. Hayhoe (416.595.8174) CGA Ontario Public Practitioners’ Convention.

Canadian & U.S. Ministry Relationships Robert B. Hayhoe MILLER THOMSON LLP, Toronto rhayhoe@millerthomson.ca 416.595.8174 Stuart J. Lark HOLME ROBERTS.

Canadian & U.S. Ministry Relationships Robert B. Hayhoe MILLER THOMSON LLP, Toronto [email protected] 416.595.8174 Stuart J. Lark HOLME ROBERTS.

1 Cross-Border Legal and Tax Issues for Ministries Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities September.

1 Cross-Border Legal and Tax Issues for Ministries Robert B. Hayhoe [email protected] 416.595.8174 Canadian Council of Christian Charities September.

M I L L E R T H O M S O N LLP CCRA Charity Audits Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities 2000 Annual.

M I L L E R T H O M S O N LLP CCRA Charity Audits Robert B. Hayhoe [email protected] 416.595.8174 Canadian Council of Christian Charities 2000 Annual.