Audit vs Review Engagement: What an Ontario Nonprofit Board Gets

Reviewed by Bader A. Chowdry, CPA, CA, LPA on November 10, 2026

An Ontario nonprofit board that weighs an audit vs review engagement is choosing between two different reports: an audit report rests on testing each item in the financial statements, while a review engagement report rests on narrower work, mainly enquiry, discussion and analysis. Under the Not-for-Profit Corporations Act, 2010 (ONCA), in force since October 19, 2021, annual revenue decides which one the members may choose, and only a licensed public accountant may sign either.

This article is written for directors and treasurers in Mississauga and across Ontario who have to put one of those reports in front of the members. It does not repeat the question of a funder that wants an audit below the threshold; that is covered in what to do when a funder requires an audit under the ONCA threshold.

The default under ONCA is an auditor or a review engagement, every year

The starting point is section 68(1) of ONCA, which is in force: at each annual meeting, the members appoint either an auditor or a person to conduct a review engagement, by ordinary resolution. That rule is made subject to section 76, which is where the revenue thresholds sit.

At the annual meeting itself, section 84(1) requires the directors to place before the members the financial statements the board approved, together with the report of the auditor or the review practitioner. That report is the document the board actually receives, signs off around and answers for. Choosing the engagement is, in practice, choosing the report.

What an audit report gives the board

An audit is the deeper engagement. Ontario’s own guide to ONCA describes it as an independent examination in which each financial statement item is tested, so that the auditor can be reasonably sure the statements reflect the corporation’s financial position.

The output is the auditor’s report on the statements, written by a licensed person who must be independent of the corporation (s.69(1)), so the board can point members, funders and lenders to more than management’s own figures. Under section 4 of O. Reg. 395/21, the general regulation under ONCA, that report on the financial statements is prepared under the generally accepted auditing standards in the Assurance part of the CPA Canada Handbook.

An audit also brings the auditor into the governance cycle. ONCA s.75 entitles the auditor to attend members’ meetings and be heard, and s.80 lets the corporation have an audit committee of directors that reviews the statements before the board approves them (s.83(3)).

What a review engagement report gives the board

A review engagement is narrower by design. Ontario’s guide describes it as enquiry, discussion and analysis, and states plainly that it is less extensive than an audit. Short of waiving both engagements, it is the one alternative to an audit that ONCA lets members choose.

The review practitioner also prepares a report for the members, and Ontario’s guide puts the two side by side: both the auditor and the person conducting a review engagement must report on the corporation’s finances. The difference is the work behind the report. The guide reserves item-by-item testing for the audit, so a board should not read a review engagement report as if every figure had been tested. Where the members have chosen a review properly under s.76, ONCA accepts it in place of the audit, and s.84(1) puts that report before the members in the same way.

What a review is not: it is not a compilation. A compilation engagement assembles statements from the organization’s records. Section 2(3) of the Public Accounting Act, 2004 treats a compilation that carries the prescribed notice as outside public accounting. A compilation therefore does not satisfy ONCA where a review engagement or an audit is required.

Which report ONCA requires: the revenue thresholds

Section 76 of ONCA, in force since October 19, 2021, lets the members step down from an audit only by extraordinary resolution, and only within revenue bands that depend on whether the corporation is a public benefit corporation. The measure is the corporation’s annual revenue in the financial year being reported on.

Public benefit corporations (every charity, and some non-charities)

• Annual revenue of $100,000 or less: the Act provides that members may resolve to have neither an audit nor a review engagement.
• More than $100,000 and less than $500,000: the Act provides that members may resolve to have a review engagement instead of an audit.
• $500,000 or more: no waiver is available, so the Act requires an audit.

Corporations that are not public benefit corporations

• Annual revenue of $500,000 or less: under s.76(2), in force, members may resolve to have neither an audit nor a review engagement.
• More than $500,000: members may resolve to have a review engagement instead of an audit.

Every charitable corporation is a public benefit corporation by definition. Under ONCA s.1(1), a non-charitable corporation also becomes one if it receives more than $10,000 in a financial year in donations or gifts from people who are not its members, directors, officers or employees, or in grants or similar assistance from any level of government. Ontario’s guide says the status applies in the financial year after the money is received. A fuller walk through the bands is in does my Ontario nonprofit need an audit.

The extraordinary resolution: 80% and one year at a time

Stepping down from an audit is a members’ decision, not a board decision. Under ONCA s.76(4), in force, an extraordinary resolution is one passed at a special meeting of members called for that purpose by at least 80% of the votes cast, or consented to in writing by every member entitled to vote.

Section 76(3) adds the detail boards most often miss: the resolution is valid only until the next annual meeting of the members. A review engagement chosen last year does not carry forward. If the board wants a review again, the members have to pass the resolution again, and revenue has to sit inside the right band again.

Who may sign either report

Both reports are signed by a licensed public accountant. ONCA s.69(1) requires the auditor, or the person conducting the review engagement, to be permitted to do that work under the Public Accounting Act, 2004 and to be independent of the corporation, its affiliates, and its directors and officers.

The Public Accounting Act, 2004, in force, then defines public accounting in s.2(1) to include independent assurance engagements, including an audit or a review engagement, where a third party can reasonably be expected to rely on them. Section 3(1) requires an individual practising public accounting to be licensed, and s.13(1) bars an unlicensed individual from using the title Licensed Public Accountant or the initials LPA. The member reading your statements is exactly the third party the Act has in mind. More on the licence itself is in who can legally sign an audit report for an Ontario charity or nonprofit.

Independence matters as much as the licence. A director or officer of the corporation is not independent of the directors and officers, so a volunteer treasurer who happens to hold a CPA designation cannot sign the corporation’s own audit or review report.

Where federal tax filing fits, and where it does not

The ONCA choice is a corporate-law decision; the Canada Revenue Agency does not make it for you. For registered charities, the CRA states in its charity questions and answers that it does not ask for audited financial statements with the T3010, while noting that other authorities or funders may. The T3010 itself is due every year within six months of the fiscal year-end.

For a nonprofit that is not a charity, the federal filing is the T1044 information return. Under Income Tax Act s.149(12), in force, an organization exempt under paragraph 149(1)(l) files it within 6 months after its fiscal period if its interest, dividends, rents or royalties exceed $10,000, if its total assets at the end of the preceding fiscal period exceeded $200,000, or if it had to file for an earlier period. None of those tests changes which report ONCA requires; the board has to meet both regimes separately.

What an LPA adds: reading the thresholds before year-end, not after

The decision rule Insight Accounting CPA applies is simple to state: take the band from the revenue you expect for the year being reported on, confirm the corporation’s public benefit status for that same year, and have the members pass the extraordinary resolution before the engagement starts. If either input is uncertain, plan for the higher level of assurance and let the members step down only once the year’s figures confirm they may.

The named failure mode is status drift. A non-charity that has never been a public benefit corporation can cross the $10,000 grant or donation line in one year and find, the following year, that its thresholds have changed underneath it. The second is the stale resolution: a board that relies on last year’s vote has no valid resolution at all for this year.

Illustrative example

Illustrative example, with assumed figures. A registered charity incorporated under ONCA expects annual revenue of $420,000 for its year. Because it is a charity, it is a public benefit corporation, and $420,000 sits above $100,000 and below $500,000, so its members may choose a review engagement. At a special meeting where 45 votes are cast, the resolution needs at least 36 in favour.

The following year a new program lifts revenue to $515,000. That is above the $500,000 line, and the earlier resolution lapsed at the annual meeting anyway, so the corporation needs an audit.

Now take a non-charitable community club with revenue of $380,000 that receives $14,000 in municipal grants in one year. As a corporation that is not a public benefit corporation, $380,000 is under the $500,000 line, so its members could waive both engagements. Once the grants make it a public benefit corporation the next year, the same revenue is above $100,000, and the lightest option open to the members is a review engagement.

Insight Accounting CPA is led by Bader A. Chowdry, CPA, CA, LPA, whose licence under the Public Accounting Act, 2004 is what allows him to sign audit and review engagement reports. The firm can look at a corporation’s revenue, status and members’ resolution before year-end and say which report the board should be preparing for.