Standard 6: Financial and Asset Management
The land trust manages its finances and assets in a responsible and accountable way.
Background
Sound financial and asset management is critical for a land trust. Federal and provincial laws have financial reporting requirements, and financial records should be available to donors upon request. Poor financial management may jeopardize the future of the land trust and its land conservation programs. It could even lead to legal challenges against the land trust. Even a small land trust with modest revenue and expenditures should have annual budget and periodic financial reports, although the format of these may be simple. Organizations with larger budgets must follow specific reporting formats. Assuring sound financial management is one of the core responsibilities of the full board, no matter who keeps the books or prepares financial reports.
Relevant Law
- Society Act, RSBC 1996, c. 433, s. 39, 41.
- Canada Not-for-profit Corporations Act, SC 2009, c. 23, s. 179-194.
- Society Act, RSBC 1996, c. 433.
- Canada Corporations Act, RSC 1970, c. C-32.
- Society Act, RSBC 1996, c. 433, s. 30.
PRACTICE
B. Financial Records
The land trust keeps accurate financial records, in a form appropriate to its scale of operations and in accordance with Generally Accepted Accounting Principles (GAAP).
Background
The purpose of financial records is to provide the information necessary for financial reports. The reports are used by the board to guide and ensure the health of the organization, by staff to monitor operations, and by external parties to assess the stability and management of the organization and how wisely it uses its funds. Good recordkeeping, as the foundation for the organization’s financial management, is essential. For financial records to be clear and credible, they should conform to Generally Accepted Accounting Principles (GAAP) set forth by the Canadian Institute of Chartered Accountants.
Assessment Questions
CLTA Assessment Questions
- Does the land trust have written procedures that govern its financial reporting and financial management?
- Has the land trust established a system to ensure that all restricted funds are properly recorded and expended only in accordance with the restrictions?
- Is the annual financial report presented in accordance with Generally Accepted Accounting Principles (GAAP)?
