Proposed Regulatory Changes for Ontario Not-for-Profits

The Ontario Regulatory Registry (“Registry”) is seeking feedback on proposed changes to the audit requirements set out in the regulations (“Regulations”) of the Not-for-Profit Corporations Act, 2010 SO 2010, c 15 (“ONCA”). These changes would allow Ontario not-for-profits greater flexibility in choosing a review engagement rather than a financial audit.

What are the Proposed Changes?

The proposed amendments would do two key things:

•  Increase the mandatory financial audit threshold from $500,000 to $1 million annual revenue; and

• Allow review engagements for public benefit corporations with $100,000 to $1 million in annual revenue, subject to member approval.

According to the Registry, the intention of the regulatory amendments is to “give more not-for-profit corporations the option, subject to member approval, to rely on an exemption, which could help reduce administrative burden and costs, while maintaining appropriate financial transparency and accountability.”

The amendments would allow organizations greater flexibility under ONCA, but the not-for-profit’s board would still retain authority to choose an audit or a review engagement. The proposed changes would not affect the decision of government funders, regulators, donors, boards, or lenders to obtain an audit if required by legal terms, agreements, or other requirements.

What Could This Mean for Ontario Not-for-Profits?

Financial accountability is an essential part of good governance for every Christian charity. Regardless of size or revenue, organizations should steward their resources well and maintain adequate books and records. The level of financial oversight should be proportionate to the organization’s size, complexity, and level of risk.

Across Canada, audit requirements for not-for-profits vary by jurisdiction. The Canada Revenue Agency recommends a financial statement audit when a charity’s annual income is more than $250,000. However, audits can be costly, particularly for smaller organizations. The Ontario Registry anticipates that this change will reduce compliance costs and administrative burdens by allowing more organizations to rely on review engagements where appropriate.

Of course, the choice will vary from charity to charity, taking into account a range of factors. Many charities can demonstrate sound financial stewardship without an audit, but some stakeholders may continue to request audited financial statements because they provide independent assurance and can strengthen confidence in an organization’s financial reporting.

What is Next?

The Registry is asking for your feedback in response to six questions:

1. Are you supportive of the proposal to increase the annual revenue threshold for specified exemptions under ONCA from $500,000 to $1,000,000? Why or why not?
2. Are there any changes to the draft proposed regulatory amendment that the ministry may wish to consider to improve its clarity or effectiveness? If so, please describe.
3. Do you anticipate any impacts of this proposal on financial transparency, accountability, or governance within the not-for-profit sector? If yes, please explain.
4. Are there any transition or implementation issues that the ministry should be aware of if the annual revenue threshold is increased effective on January 1st, 2027 (e.g., fiscal year timing, member approvals, interaction with existing practices)? If so, please describe.
5. Are there any risks or unintended impacts associated with increasing the annual revenue threshold that the ministry should consider, including potential impacts on funders, donors, or public confidence? If so, please explain.
6. Do you have any additional comments or considerations related to the proposed amendment that the ministry may wish to consider?

Feedback can be submitted through the Registry’s online portal.

We’re Here to Help

We will provide updates on the proposed amendments to the Regulations here on our blog. If you have questions or would like support, please contact our Member Support Team by phone or email.