Table Of ContentGuide for Auditors of
Registered Electoral
District Associations
Appointed under the
Canada Elections Act
15-288_EN_Guide for Auditors of Electoral District Assoc_cover.indd 1 2/26/2016 10:57:49 AM
Guide for Auditors of
Registered Electoral
District Associations
Appointed under the
Canada Elections Act
DISCLAIMER
This guide was prepared by the Chartered Professional Accountants of Canada
(CPA Canada) as non-authoritative guidance.
It has not been approved by the Auditing and Assurance Standards Board. CPA Canada
and the authors do not accept any responsibility or liability that might occur directly or
indirectly as a consequence of the use, application or reliance on this material.
© 2016 Chartered Professional Accountants of Canada
All rights reserved. This publication is protected by copyright and written permission is required
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mechanical, photocopying, recording, or otherwise).
For information regarding permission, please contact [email protected]
Cataloguing information available from the National Library of Canada
Disponible en français
iii
Table of Contents
Foreword vii
Chapter 1: Introduction 1
Background Information on the Roles and Responsibilities of Registered
Associations, Financial Agents and Electoral District Agents 1
The Financial Agent 2
Electoral District Agents 2
Who May Be Appointed Auditor 2
Change of Auditor 3
Auditor Independence and Objectivity 3
Audit Requirement 4
Audit Fee 5
Chapter 2: Preparation of the Financial Transactions Return 7
Initial Financial Reporting Following Registration 7
Annual Financial Transactions Return 7
Financial Reporting Framework for Preparing the Annual Financial
Transactions Return 8
Composition of the Registered Association Financial Transactions
Return (EC20081) 8
Part 1 9
Part 2 9
Part 3 9
Part 4 9
iv Guide for Auditors of Registered Electoral District Associations
Appointed under the Canada Elections Act
Chapter 3: Audit of the Return 11
General Principles and Responsibilities 12
Acceptability of the Financial Reporting Framework 12
Engagement Letter 14
Initial Engagement 15
Legal and Regulatory Framework 15
Fraud 16
Documentation 17
Communications with Management and Those Charged
with Governance 17
Risk Assessment and Response to Assessed Risks 17
Obtaining an Understanding of the Registered Association 17
Risk Assessment 18
Materiality 19
Response to Assessed Risks 20
Audit Evidence 20
Completeness 20
Opening Balances 21
Analytical Procedures 22
Representation Letter 22
Subsequent Events 23
Generally Accepted Accounting Principles 23
Loans 24
Transfers from the Registered Party, Another Registered Association,
Candidates, Leadership Contestants and Nomination Contestants 24
Transfers to the Registered Party, Another Registered Association,
Candidates, Leadership Contestants and Nomination Contestants 25
Inventory of Supplies 26
Tangible Capital Assets 26
Contributions 27
Expenses 28
Fund-Raising Activities 28
Commercial Values 29
The Auditor’s Report 29
Special Considerations 30
Opinion and Scope Limitation 31
Table of Contents v
Description of the Applicable Financial Reporting Framework 32
Prior-Year Information in Part 4 33
Corresponding Figures Audited 34
Corresponding Figures Unaudited 35
Emphasis of Matter 35
Other Matter 36
Addressee 36
Other Statements 36
Date of the Auditor’s Report 37
Exhibit 1: Example of Auditor’s Consent and Registration 39
Exhibit 2: Sample Audit Engagement Letter 41
Exhibit 3: Sample Representation Letter 49
Exhibit 4: Sample Note Describing the Financial
Reporting Framework Applied to Preparing the
Financial Transactions Return 53
Exhibit 5: Independent Auditor’s Report 55
Exhibit 6: Suggested Safeguards to Mitigate
Self-Review Threats 59
Exhibit 7: Considerations in Designing Audit Program 61
vii
Foreword
The purpose of this Guide is to provide practical guidance to auditors
appointed under the Canada Elections Act (the Act) and reporting on the
“Registered Association Financial Transactions Return” of registered electoral
district associations to comply with the significant accounting and financial
reporting requirements of the Act.
This Guide is now in its seventh edition. Changes to this edition have been
made primarily to reflect changes to the Act with respect to Bill C-23 – Fair
Elections Act and changes to the Political Financing Handbook for Electoral
District Associations and Financial Agents (EC 20089) — September 2015. The
sections relating to the audit of the Candidate’s Financial Return contains ref-
erences to Canadian Auditing Standards (CASs). This Guide has been prepared
based on the CPA Canada Handbook – Assurance, updated in September 2014;
this edition of the Guide is being published in preparation for the 2015 federal
election.
CPA Canada expresses its appreciation to Don Dafoe, FCPA, FCA, Wei Hua,
CPA, CA, Dawn McGeachy, FCPA, FCGA, William Molson, CPA, CA, Harry
Mortimer, CPA, CMA, Bernard G. Nayman, CPA, CA and Ben Seto, FCPA, FCA,
members of the Federal Elections Audit Guides Advisory Committee and
Akanksha Arora, CPA, CA, project director, for preparing this Guide. Thanks
are also expressed to Juli-ann Gorgi, CPA, CA, Principal at CPA Canada
responsible for audit and assurance initiatives within the research, guidance
and support function of CPA Canada, and François Leblanc, CPA, CMA of
Elections Canada for their assistance and advice.
Federal Elections Audit Guides Harry Mortimer, CPA, CMA
Advisory Committee Bernard G. Nayman, CPA, CA
Don Dafoe, FCPA, FCA Ben Seto, FCPA, FCA
Wei Hua, CPA, CA
Project Director
Dawn McGeachy, FCPA, FCGA
Akanksha Arora, CPA, CA
William Molson, CPA, CA
1
CHAPTER 1
Introduction
Electoral district associations (an association of members of a federally reg-
istered political party in an electoral district) are permitted to register with
Elections Canada. Although registration is not mandatory, unregistered asso-
ciations cannot accept contributions, provide goods or services or transfer
funds to candidates, the registered party, or another registered association
of that party, or accept surplus funds from a candidate, leadership contes-
tant or nomination contestant (section 447).
As part of its application for registration, the names and addresses of both
the financial agent of the association and the appointed auditor are to be
included, accompanied by their consent to so act (subsections 448(1) and
(2)). An example of the auditor’s consent and registration in a standard form1
is set out in Exhibit 1.
Background Information on the Roles and
Responsibilities of Registered Associations,
Financial Agents and Electoral District Agents
Elections Canada has issued a Political Financing Handbook for Electoral Dis-
trict Associations and Financial Agents2 which is designed to assist electoral
district associations and their financial agents. It is a tool that helps in the
financial administration of the association. This document is not intended to
replace the Act. In all cases, the Act takes precedence over information and
explanations provided in this handbook. How the Act applies to a particular
case will depend on the circumstances of that case.
1 Refer to General Form – Electoral District Association (EC20383) — May 2013 (Elections Canada), p. 5
(www.elections.ca).
2 Political Financing Handbook for Electoral District Associations and Financial Agents (EC20089) —
September 2015, Elections Canada (www.elections.ca).
2 Guide for Auditors of Registered Electoral District Associations
Appointed under the Canada Elections Act
The responsibilities of the financial agent and electoral district agents as set
out in the Act are as follows:
The Financial Agent
The financial agent is the person who has the capacity to enter into legal
contracts on behalf of the association, and must be capable of managing the
association’s financial affairs. The financial agent is responsible for filing all
the registered association’s financial reports with the Chief Electoral Officer.
A corporation incorporated under the laws of Canada or a province is eligible
to be the financial agent of a registered association (Section 457(1)). The Act
also defines persons who are not eligible to be a financial agent or electoral
district agent (Section 457(2)).
Electoral District Agents
A registered association may appoint as electoral district agents persons who
are authorized by the association to accept contributions and to incur and pay
expenses on behalf of the association. The appointment is subject to any terms
and conditions it specifies (subsection 456(1)). Within 30 days of their appoint-
ment, the association must provide the Chief Electoral Officer with a written
report, certified by its financial agent, setting out the names and addresses
of the persons appointed and any terms and conditions under which they are
appointed (subsection 456(2)). Only the financial agent, however, can accept
or transfer goods or funds on behalf of the association (subsection 475(4)(a
and b)).
Who May Be Appointed Auditor
“Auditor Eligibility” is set out in section 458 of the Act and is the same as the
eligibility requirements for an auditor of a federal election candidate.
The auditor is defined in subsection 458(1) as “a person who is a member in
good standing of a corporation, an association or an institute of professional
accountants; or a partnership of which every partner is a member in good
standing of a corporation, an association or an institute of professional accoun-
tants.” Elections Canada in their Political Financing Handbook for Electoral
District Associations and Financial Agents (EC 20089) — September 2015 states
that provincially incorporated professional accounting designations include:
Chartered Professional Accountant (CPA), Chartered Accountant (CA), Certi-
fied General Accountant (CGA) or Certified Management Accountant (CMA).
CHAPTER 1 | Introduction 3
Subsection 458(2) lists those who are not eligible to be an auditor for a regis-
tered association:
• election officers and members of the staff of returning officers
• chief agents of registered parties or eligible parties and registered agents
of registered parties
• candidates and official agents of candidates
• electoral district agents of registered associations
• leadership contestants and their leadership campaign agents
• nomination contestants and their financial agents
• financial agents of registered third parties
Change of Auditor
If an auditor ceases to hold office for any reason or ceases to be qualified or
eligible or the appointment is revoked, another auditor must be appointed
without delay, and the change reported in writing to the Chief Electoral Offi-
cer within 30 days. The chief executive officer of the association must certify
the report outlining the change (sections 460, 461 and 463).
Auditor Independence and Objectivity
Auditors must comply with the independence rules of those professional
organizations of which they are members, so as to ensure their objectivity
has not been impaired. The independence rules released by the respective
CPA provincial bodies3 contain a requirement that threats to independence
must be considered before an audit is accepted and that, if there are threats,
action must be taken to reduce the risk to an acceptable level. There are five
categories of independence threats in the rules:
1. a self-interest threat (the auditor could benefit from a financial interest in,
or other self-interest conflict with, the client)
2. a self-review threat (the auditor is in a position to exert significant influ-
ence over subject matter)(refer to Exhibit 6 on suggested safeguards to
mitigate self-review threats)
3. an advocacy threat (the auditor promotes the client’s position or opinion
to the point that objectivity may be impaired)
4. a familiarity threat (the auditor, by virtue of a close relationship with the
client, becomes too sympathetic to the client’s interests)
5. an intimidation threat (the auditor may be deterred from acting objectively
and exercising professional skepticism by threats from the client)
3 For further information, please consult your respective CPA provincial body.
