Member petitioners have now sent another official letter to The Filipino Centre Toronto (FCT) Board to follow up on their petition to have FCT conduct an independent third party financial audit of FCT’s books and accounting records for years 2016 – 2018. FCT President Mary Anne San Juan approved this motion for an independent financial audit way back during the last AGM (Annual General Meeting) in October 3, 2018.
The financial audit was to be conducted by an independent third party chosen through an unbiased selection process done jointly by designated Board members and designated members’ representative/s. To date FCT Board remains uncommitted.
An independent financial audit not a financial “review” was requested of the FCT Board.
An independent financial audit is the “highest level of financial statement service a licensed public accountant can provide. The purpose of having an audit is to provide financial statement users with an opinion by the auditor on whether the financial statements are free of material misstatement and in accordance with the proper financial reporting framework. “
A financial “review” differs significantly from an audit. Review engagements provide less assurance to the users of the financial statements because the licensed public accountant only provides limited assurance to ascertain whether or not the financial statements are believable or plausible. Because a review engagement is substantially less intensive in scope than an audit, the licensed public accountant cannot express an opinion on the fairness of the financial statements taken as a whole.
Per Revenue Canada (https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs05010.html), these are the rules on the following:
| On Financial Statements – A corporation must prepare financial statements each year (refer to subsection 172(1) the Canada Not-for-profit Corporations Act (NFP Act)) which comply with the requirements of the NFP Act. The financial statements must be prepared in accordance with the Canadian generally accepted accounting principles (GAAP) as set out in the CPA Canada Handbook – Accounting. On providing financial statements to the members (all corporations):A corporation must send a summary of its annual financial statements or a copy of a document reproducing the required financial information (such as an annual report) to the members not less than 21 days but not more than 60 days before the day on which the annual meeting of members is held, or the day on which a resolution in writing is signed by the members.On level of Financial Review: The level of financial review required will depend on whether the corporation is a soliciting or non-soliciting corporation (see Requirements for soliciting corporations under the Canada Not-for-profit Corporations Act).. The members motion or resolution determines the level of financial “review “: or “ audit” needed. On Qualifications of Public Accountant: If a public accountant is not appointed at a meeting of members, the incumbent public accountant, who was appointed at the first meeting of directors or at the previous meeting of members, continues in office until a successor is appointed. Note that there is no public accountant appointed by any meeting of members. |
In a rather surprising move, when members inquired about the status of the independent financial audit during the Special General Meeting last June 6, 2019, Mary Anne San Juan echoed the position of its financial officer in dismissing it as too expensive. This is despite the previously approved member’s motion and cost wise against the backdrop of FCT having spent close to $1 m in legal and litigation expenses over time. A flip flopping exercise nonetheless at the members’ expense and confusion which has left members petitioners no choice but to file the independent financial audit petition dated August 26, 2019.
With the embarrassing absence of AGM-approved financial statements for the years 2016 and 2017, following the sale of its building for $5.9 M, with the need to come clean and identify both areas of compliance and non compliance with its financial bylaws, with the need to establish areas of improvement for the Board going forward, and lastly with questions still unresolved with $678,000 worth of payables, it certainly is more than compelling for the FCT Board to have the proper independent financial audit done as soon as possible or however late than never.
The back and forth of half answers and partial explanations over the questionable payables as witnessed by its members in the last two years and the Board’s chosen interpretation of the bylaws offered lately to the membership on board compensation issues quite understandably have failed to achieve any rightful and acceptable conclusion.
The next AGM on October 2, 2019 purports to be all about the election of new Board of Directors. FCT may try and devote as much time to the election activity and divert attention from the independent financial audit and payables problem. In some respects, it will indeed be a tough if not unfair to newly elect directors to be saddled with the unwanted baggage of dealing with the independent financial audit petition and the ever pending financial issues.
Some members are questioning the wisdom of FCT dragging its feet on the petitioners’ demand for the independent financial audit. To offer relief by claiming an independent financial audit has been done – one without members’ engagement in the selection of the auditor and in the audit scope definition, would simply be disrespectful.
In the forthcoming AGM would FCT be on to its usual trick and treat well in advance of Halloween?
We will see.