Best practices; Retention periods - Segment 5

Transcript

We're going to talk a little bit about some best practices. Now, just a word of caution on this slide; none of these are requirements by the CRA. So no bullet here "CRA Requires," but it is information that we've collected over the years while we do these sessions and we go out and speak to the sector, and so we've collected these best practices and I wanted to share them with you. So, first is keeping your books and records in one place. It sounds simple, but if you're audited and your volunteers are asked to collect information or your treasurer is asked to collect information, if all of your books and records are in one place, it just makes it that much easier for everybody to find what they're looking for.

The charity is ultimately responsible for maintaining their books and records, so we recommend that you keep a backup of those documents and that you keep that backup at a separate location. So you can buy those large hard drives and you can back up all of your documents and then store that somewhere else, just in case.

Your financial statements and your books and records must be supported by source documents. So make sure, if you're entering transactions or you're reflecting activities in your books and records or financial statements, that you have the source documents there to support those. Source documents are things such as receipts, invoices, contracts that you've signed with fundraising companies or anything of that nature. Employee contracts, for example.

If the charity hires a third party, it's still responsible, ultimately responsible, for its books and records. So we do recommend that you do a little research on who you're hiring. Ensure that that person has experience and that understands what needs to be included in your books and records and understands how to properly report your financial information. Third parties could be anyone from a bookkeeper to an accountant, to application service providers, so anybody of that nature could be considered a third party.

Service clubs and fraternal societies. Some charities are the charitable arm of a service club or a fraternal lodge -- or fraternal society, rather. It's important that the charitable arm, so the charity, so the registered charity, understands that they need to keep separate books and records from that other organization. So you must maintain your own, and have documentation for all of the donations received and all of the activities that you've undertaken and associated expenditures.

We talk about how long records must be kept, your retention periods. There's specific retention periods for each document and they're outlined in our Income Tax Regulations, as well as in I.C.78-10R4, books and records retention destruction. So, those two documents outline all of the retention periods for all of the various documents. What we've included on this slide is some of the common ones that we do get regular questions about.

Duplications of donation receipts is usually asked quite frequently. That only -- those documents only need to be retained for two years following -- a minimum of two years following the calendar year for which the receipt was issued. So this is the one exception. Normally, the retention periods follow the fiscal period, so it's the number of years after the fiscal period end. With donation receipts it's two years following the calendar year. So, for example, if you issued a receipt February 28, 2005, they must be retained until December 31, 2007.

Other documents have to be retained for the lifetime of the charity plus an additional period of time after the charity ceases to operate or dissolves. Some examples of this, 10-year gifts. If you receive 10-year gifts, documentation of those need to be kept for the lifetime of the charity. Your meeting minutes. You need to make sure you keep your meeting minutes for the lifetime of the charity as well as your governing documents and any by-laws. Those need to be kept for the lifetime of the charity. If, for some reason, you wish to destroy books and records prior to the retention period, you can ask for permission by requesting this from the Minister. You would write in and ask for permission to destroy and that permission would either be granted or not granted. If it's granted, then you could proceed, at that point, with destroying the information earlier than stated in the Income Tax Regulations.

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