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2018-2019 accountability of cooperatives: Avenues for improvement

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Published on March 4, 2019

The Order’s Working group on cooperatives wants to build member awareness of the weaknesses in financial reports observed by network stakeholders:

Financial report filings must include the auditor’s or public accountant’s engagement report; financial reports are all too often submitted to the Ministère de l’Économie et de l’Innovation without these reports.
The reports to be issued have undergone significant changes for periods ending on or after December 15, 2018. Please be sure to use the new sample reports published by the Working group.
The annual financial report of cooperatives must include certain information required by the Cooperatives Act and the regulation thereunder. Since for many cooperatives the annual financial statements serve as their annual financial report, it is important to provide the Ministère de l’Économie et de l’Innovation with the additional information provided for in the legislative and regulatory requirements:
- in the notes to or in appendices in the financial statements; or
- in the Ministère’s form [PDF] (in French only) intended for this purpose.

This information includes disclosures that are required of all cooperatives (names of the directors and executive officers, number of members, date of the annual meeting, etc.) under section 132 of the Cooperatives Act.

It should be noted that some housing cooperatives (i.e. those owning a building constructed, acquired, restored or renovated under a government housing assistance program) are also required to provide information on the maintenance and preservation done on the building in the annual report (or in a note to the financial statements in the absence of a separate annual report) or in the form on additional information to be submitted to the Ministère. Under section 221.2.3 of the Cooperatives Act, these cooperatives are required to provide the following information in their annual report:

the date of the last inspection of the building;
the maintenance and preservation work done;
the budgets related to the five-year plan on the maintenance and preservation work.

Housing cooperatives must allocate revenues and expenses between their residential and non-residential components. Furthermore, there must be a reasonable basis for allocating expenses, applied on a consistent basis. Lastly, paragraph A9 of Section 4470 in Part III of the CPA Canada Handbook – Accounting Standards for Not-for-Profit Organizations states the following: “The bases adopted for allocation of expenses are accounting policies to which ACCOUNTING CHANGES, Section 1506 in Part II of the Handbook, applies when a change is made.”