Standards for Canadian organizations

2020 Edition

For-Profit Administration and Financial Management (CA-AFM) 11: Financial Management

Positive financial outcomes are achieved through a financial management system that receives, disburses, and accounts for funds consistent with sound financial practices.
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 11 Practice standards.
2
Practices are basically sound but there is room for improvement, as noted in the ratings for the CA-AFM 11 Practice standards.
3
Practice requires significant improvement, as noted in the ratings for the CA-AFM 11 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 11 Practice standards.
Self-Study EvidenceOn-Site EvidenceOn-Site Activities
  • Financial management and accounting procedures
  • Job description of the person responsible for managing financial accounts
  • Resume of the person responsible for managing financial accounts
  • Procedures regarding protection of client funds and assets
  • Documentation tracking staff completion of training on the accounting system
  • Interviews may include:
    1. Owner
    2. CEO
    3. CFO
    4. Relevant personnel
  • Observe reporting and accounting system

Fundamental Practice

CA-AFM 11.01

Accounting records are kept up-to-date and balanced on a monthly basis, as demonstrated by:
  1. timely reconciliation of bank statements and subsidiary records to the general ledger;
  2. up-to-date posting of cash receipts and disbursements;
  3. monthly updating of the general ledger; and
  4. review of the bank reconciliation by a person other than the person who performs the reconciliation and who is not authorized to sign checks.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • The organization has an occasional, minor problem in compliance such as short delays in posting receipts and disbursements or slightly overdue updates to the general ledger.
3
Practice requires significant improvement; e.g.,
  • Bank reconciliation is not regularly reviewed by two people as required.
4
Implementation of the standard is minimal or there is no evidence of implementation at all.

CA-AFM 11.02

The organization uses the accrual method of accounting, at least at the end of the year.
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.

CA-AFM 11.03

Oversight and management of the organization’s accounting system require:
  1. a financial officer or business manager to maintain the financial accounts who has prior accounting and bookkeeping experience, or an accounting degree, C.P.A. credential, or other recognized accounting/financial certification, as appropriate to the size and complexity of the organization; and
  2. all personnel who use the system to receive initial and ongoing training on its use.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • Ongoing staff training needs strengthening.
3
Practice requires significant improvement; e.g.,
  • The organization has a qualified financial officer, but the system is deficient in some significant regard, such as lack of training for some personnel.
4
Implementation of the standard is minimal or there is no evidence of implementation at all.

Fundamental Practice

CA-AFM 11.04

An organization that assumes fiduciary responsibility for, or disburses client funds:
  1. segregates client funds from other organization funds; and
  2. protects client assets.
NA The organization does not assume fiduciary responsibility for, or disburse client or non-fee-for-service funds to service recipients.
Examples: Examples of the types of funds that organizations may assume responsibility for or disburse to clients include:
  1. allowances for children and youth in out-of-home care;
  2. funds under the control of the organization in guardianship cases; and
  3. benefits when the organization serves as the representative payee.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • Procedures for segregation of funds or protection of client assets need strengthening.
3
Practice requires significant improvement; e.g.,
  • One of the elements is not addressed at all.
4
Implementation of the standard is minimal or there is no evidence of implementation at all; e.g.,
  • The organization has no written procedures, and adequate protection and guidelines have not been developed to protect assets of persons served; or
  • There have been instances in which funds for which the organization had a fiduciary responsibility appear to have been misused, e.g., assets or funds have been inappropriately co-mingled or disbursed inconsistently.