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
D. Financial Review or Audit
The land trust has an annual financial review or audit, by a qualified financial advisor, in a manner appropriate for the scale of the organization and consistent with federal and/or provincial law.
Background
To protect the users of financial statements against any biases of the financial manager or outright misrepresentation by the organization, it is important to have an independent certified professional accountant or other qualified financial professional conduct a yearly audit or review of the organization’s financial systems. An audit is the most extensive form of financial review and is often recommended for organizations with incomes of more than $250,000—although some provinces and public funding programs have lower thresholds. A financial review is a less costly option and suitable for smaller organizations. Where possible, all land trusts should consider a yearly audit, rather than a review. A financial advisor can help determine what approach is best for the land trust. Both a financial review and audit should be performed by a qualified certified accountant.
Assessment Questions
CLTA Assessment Questions
- The land trust conducts an annual:
- Financial Review
- Formal Audit by a Chartered Accountant
