July 2005
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Guidance Bulletin
for Practitioners
Providing voluntary services
CGAs are well respected in the business community, a reputation that stems in part
from their willingness to contribute volunteer services to their communities. This
bulletin provides guidance to members who offer voluntary services by outlining
the differences between the various types of volunteer activities and your
professional responsibilities in relation to these.
Specifically, it is important to be able to differentiate between providing public
accounting services versus treasury services. It is also key that you understand your
role when serving on the board or governing body of an organization, whether for
profit or not-for-profit (for example, charities, professional associations,
condominium strata councils, day cares, community centres, clubs, and churches).
As a CGA, protecting the public interest is your paramount consideration. But you
should also be concerned about protecting yourself. The Association recommends
and at times requires members to consider and/or meet certain requirements when
engaged in voluntary services.
Types of volunteer services to not-for-profit
organizations
Treasurer services
Treasurer services are not considered public accounting, and therefore members
who are solely providing treasurer services on a volunteer basis are not required to
register in public practice with their Association.
A treasurer is considered an officer of an organization. All financial statements
issued by the treasurer should include a communication attached to the statement,
entitled Treasurer’s Report. It is not appropriate for the treasurer to issue any form
of third-party communication, such as an Audit or Review Engagement Report or a
Notice to Reader. If any form of third-party communication is attached to a
financial statement other than a Treasurer’s Report, the member providing treasurer
services is considered to be practising public accounting and may no longer serve as
treasurer for that organization.
The role of the treasurer in an organization is distinctly different from that of a
public accountant.
GUIDANCE BULLETIN FOR PRACTITIONERS
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A treasurer is defined as “a person appointed to administer or manage the financial
assets and liabilities of a society, company or other body.”
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A treasurer is an officer of the organization.
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As stated above, a treasurer issues a Treasurer’s Report whereas a public
practitioner issues third-party communications attached to financial statements.
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A treasurer does not act independently and is involved in management decisions of
an organization. For this reason, a treasurer is not able to perform audits or review
engagements for the organization.
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The following are some of the duties that may be assigned to a treasurer:
preparation and approval of the financial statements and the corresponding
Treasurer’s Report
bookkeeping services
participation in management decisions
cheque signing
communication with auditors and coordination of the audit of the organization
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If you volunteer as a treasurer, you should ensure that the organization receiving your
services has sufficient directors and officers insurance, as well as errors and
omissions insurance. It is strongly recommended to confirm that adequate insurance
coverage exists before accepting a position on a Board. In particular, you should
review what activities or services might be excluded under the coverage.
Positions on a governing body
Members serving on a Board of Directors (the Board) or other governing body of an
organization are essentially acting as agents for the organization. The Board has been
given the power and duty to manage the affairs of the organization, and the directors
act on behalf of the organization. The Board is generally responsible for supervising
senior staff, providing strategic planning to the organization, and developing and
implementing corporate policy.
Traditionally, the position and honour associated with directorship on a Board has
helped to attract capable individuals. However, these are not the only attributes
attached to directorship. The law imposes a wide variety of duties and liabilities on
directors such that one needs to carefully consider the offer of a directorship position.
The liabilities to which directors are exposed have increased in recent years. This is
due in part to jurisprudence widening the exposure of directors to personal liability,
and also because of increased awareness of directors’ obligations. Members of the
organization and the public are now more prepared to hold directors accountable in
fulfilling such obligations.
A director’s role is to provide the best advice and expertise possible and to assist the
organization to succeed. The director’s job is to work for the benefit of the
organization and to make decisions and develop plans that will permit it to achieve
its objectives. A director uses his or her experience, business expertise, common
sense, and integrity to present and support ideas and decisions that they believe best
benefit the organization. Judgment needs to be applied in an unbiased and objective
manner. It is important that directors apply themselves diligently to the job they have
volunteered to perform.
By sitting on a Board, a director is instrumental in making a positive impact on
society, and members are encouraged to represent their professional designation in
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GUIDANCE BULLETIN FOR PRACTITIONERS
their community. However, one must realize that a director on a Board assumes
liability and faces possible exposure to personal financial loss. Directors may be held
personally liable in the following situations.
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Directors enter into a contract without proper authorization, or on behalf of a nonexistent corporation.
The director’s own actions are tortuous.
Directors breach their fiduciary duty (i.e., fail to act in the best interests of the
corporation, to be loyal and honest, and to act in good faith).
Directors fail to meet the numerous statutory obligations imposed on them under
federal and provincial legislation.
There are several reasons to ensure that an organization has adequate directors and
officers insurance coverage before accepting a position on a Board. Without adequate
coverage, an organization may not be able to protect its directors in their roles. It is
also important for members to note that professional accountants may be held
disproportionably liable for financial issues of an organization due to the degree of
reliance that the Board may place on their professional designation.
Directors and officers insurance policies typically protect against claims arising out
of Board decisions or omissions, or out of actions or activities performed directly
under the auspices of the Board. There are as many different kinds of directors and
officers insurance policies as there are insurance companies. Typically, these policies
protect directors and officers for the following:
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damages which they become legally obligated to pay and for which the
organization cannot or will not pay
claims made against a director or officer whom the organization is obligated to
indemnify
Since there are varying types of insurance policies, a prospective director should also
confirm the type and extent of insurance coverage of the organization before agreeing
to sit on the Board.
How can you protect yourself as a director and officer?
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Know why you are there. Review your interest in the organization and make sure
you are able to serve it to the best of your ability without a conflict of interest.
Above all, make sure you are qualified to sit on the Board.
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Review the bylaws of the organization. Make sure these bylaws are as strong, fair,
and supportive of the directors and officers as possible. Specifically, review the
indemnification provisions of these bylaws.
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Be familiar with the legislative act regulating your activities and the organization
being served, such as the Society Act, Corporations Act, or Condominium Act.
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Research and do your homework. Know what you are talking about. Understand
the strategic direction of the organization and its goals and objectives. Be prepared
to assist the organization to achieve these to the best of your ability.
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Ask questions. Do not take things for granted and make sure you understand all
the issues discussed at meetings. Always question items that cause you
uncertainty.
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Attend meetings and educate yourself about the organization’s mandate and all
aspects of its operations to ensure you are knowledgeable and ready to make
informed decisions affecting the organization.
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GUIDANCE BULLETIN FOR PRACTITIONERS
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Exercise independent judgment when voting for all corporate decisions.
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Make sure that the Board has access to outside professional expertise and use it if
unsure of a direction or position taken by the organization.
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Review the organization’s financial statements. Question problems, deal with
them, and make sure they are resolved.
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Keep pace with current legal trends. Be aware of litigation that affects
corporations and organizations and how it may possibly affect you in your
capacity as a director.
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Ensure that the organization has appropriate and sufficient errors and omissions
insurance.
Public accounting services
Members are often approached by not-for-profit organizations to volunteer their
services without remuneration or honorarium. While the Association encourages and
commends taking an active role in local communities through volunteer activities,
members are cautioned to ensure they have the experience and skills to conduct the
engagement.
When considering providing public accounting services to not-for-profit
organizations on a volunteer basis, members should first contact the Association.
You will be required to register in public practice and must obtain errors and
omissions insurance coverage. The good news is that coverage under the CGACanada Professional Liability Insurance is free when providing volunteer public
accounting services to not-for profit organizations. Attention should be paid to what
services are excluded under the coverage.
Members must also comply with the rules of professional practice contained in
section 500 of the CGA Code of Ethical Principles and Rules of Conduct (CEPROC).
Depending on the Association, practice reviews and education requirements may also
be required.
When providing voluntary public accounting services, members must adhere to
professional standards in the conduct of such engagements. Professional standards
include the standards, principles, and practices generally accepted by the profession
that apply to accounting, financial reporting, assurance and non-assurance
engagements, and related services. CGA-Canada’s Public Practice Manual provides
guidance, including sample letters and checklists, and the Accounting and Assurance
Handbooks establish recommendations covering many of these standards, principles,
and practices. You should also be familiar with other rules in CEPROC that apply.
These include Rule R201 – Confidentiality, Rule R202 – Independence, Rule R301 –
Competence, and Rule R305 – Terms of Engagement.
Conclusion
Members find that volunteering their time and professional expertise with an
organization can be both rewarding and satisfying. However, before accepting a
professional engagement or appointment to a Board, you must ensure that you have
both the resources and technical expertise to provide the service and that there is
appropriate and adequate insurance. Also, before volunteering, you should contact
your Association to obtain additional information, complete necessary
documentation, and take advantage of the resources available.
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References
CGA Code of Ethical Principles and Rules of Conduct: Rules R201, R202, R301, R304,
R305
CGA Independence Standard
CGA-Canada Public Practice Manual
CICA Handbooks, Assurance and Accounting
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