Standards for Canadian organizations

2020 Edition

For-Profit Administration and Financial Management (CA-AFM) 10: Financial Accountability

The organization is accountable for the management and performance of its finances to stakeholders and applicable regulatory bodies.
2020 Edition

Currently viewing: FOR-PROFIT ADMINISTRATION AND FINANCIAL MANAGEMENT (CA-AFM)

VIEW THE STANDARDS

Purpose

The for-profit organization ensures accountability through effective administration and management, and sound financial management practices.
1
The organization's practices fully meet the standard, as indicated by full implementation of the practices outlined in the CA-AFM 10 Practice standards.
2
Practices are basically sound but there is room for improvement, as noted in the ratings for the CA-AFM 10 Practice standards.
3
Practice requires significant improvement, as noted in the ratings for the CA-AFM 10 Practice standards.
4
Implementation of the standard is minimal or there is no evidence of implementation at all, as noted in the ratings for the CA-AFM 10 Practice standards.
Self-Study EvidenceOn-Site EvidenceOn-Site Activities
  • Most recent audit or review and the accompanying management letter
  • Written certification by owner and financial officers
No On-Site Evidence
  • Interviews may include:
    1. Owner
    2. CEO
    3. CFO

CA-AFM 10.01

The organization receives an audit or review of its financial statements that is conducted within 180 days of the end of each fiscal year by an independent, certified public accountant.
Examples: There are three levels of financial statement services offered by CPAs: audits, reviews, and compilations, each of which should be conducted by an independent CPA.
 
An audit provides the highest level of assurance on an organization’s financial statements. An audit provides assurance that an organization’s financial statements are free of material misstatement and are fairly presented based upon the application of generally accepted accounting principles. An audit includes:
  1. confirmation with outside parties;
  2. testing selected transactions by examining supporting documents;
  3. completing physical inspections and observations; and
  4. considering and evaluating the internal control system of the organization.
A review of financial statements provides limited assurance on an organization’s financial statements. During a review, inquiries and analytical procedures present a reasonable basis for expressing limited assurance that no material modifications to the financial statements are necessary and that they are in conformity with generally accepted accounting principles. Following a review engagement, the CPA will issue a formal report that includes a conclusion as to whether, based on the review, the CPA is aware of any material modifications that should be made to the financial statements to bring them in accordance with the applicable financial reporting framework.
 
A compilation provides no assurance on an organization’s financial statements and does not meet the requirements of the standard.
1
The organization's practices reflect full implementation of the standard.

Organizations seeking reaccreditation have completed audits or reviews of financial statements for each intervening year since their last accreditation.
2
Practices are basically sound but there is room for improvement; e.g.,
  • The organization undergoing accreditation completed an audit or review of financial statements for the most recent auditable fiscal year; however, it did not conduct an audit for any or all of the intervening years since their last accreditation; or 
  • The organization undergoing accreditation for the first time completed an audit or review of financial statements in the most recent auditable year; or
  • The organization completed the audit or review; however, it was not conducted within eight months of the end of the fiscal year, but the organization implemented procedures to ensure timely completion for future audits.
3
Practice requires significant improvement; e.g.,
  • The audit or review for the most recent auditable year is scheduled but has not been completed; or
  • The most recent audit or review was completed more than eight months after the end of the fiscal year, and no plan is in place to ensure timely completion of future audits.
4
Implementation of the standard is minimal or there is no evidence of implementation at all; e.g.,
  • An audit or review for the most recent auditable year has not been completed nor has one been scheduled.

CA-AFM 10.02

The owner and financial officers confirm in writing that, to the best of their knowledge, financial statements are accurate and fairly represent the financial condition and operations of the organization.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement.
3
Practice requires significant improvement.
4
Implementation of the standard is minimal or there is no evidence of implementation at all.