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Auditor Appointment Under the Election Act
Beyond Numbers · April 2001 by Stella Leung, CA, Professional Standards Advisor, ICABC
As the next provincial election
draws near,
many members will be asked to serve as auditors of candidates, since the Election Act (the Act) requires each registered candidate, registered political party, and registered constituency association to appoint an auditor. While members are encouraged to become involved in their communities, the Institute wishes to
draw its members’ attention to the delicate balance between service to the community and professional obligations.
Accepting Appointment
The act of accepting an audit appointment does not fall within the definition of public accounting; rather, it is the issuance of the auditor’s report that constitutes the practice of public accounting. If you accept this appointment and produce a report for a fee, you must be licenced and insured for the practice of public accounting. If you accept the appointment and issue the auditor’s report as a volunteer, you are considered to be in public practice and need to be licenced and insured. See Mike Essex, CA’s, accompanying article “Impact of Bylaws Changes on Volunteers” to determine
your obligations under the Institute’s
Bylaws and Regulations.
Members contemplating such an appointment should be aware that the Act specifies that an auditor’s report is required only if the total political contributions and/or election expenses to be reported are equal to or exceed $10,000. However, the Chief Electoral Officer may request an auditor’s report even if the total political contributions and election expenses are under the $10,000 limit. We understand from Elections BC that this has been an infrequent request since the Act came into force in 1995. As a result, many auditors will be appointed, but not all will be required to conduct an audit and produce a report.
Auditors appointed under the Act should consider the sensitive nature of the engagements they are undertaking. These clients are engaging in political activities, which frequently come under public scrutiny. As well, all of the reports filed with Elections BC become public documents. Moreover, any violation of the legislation could have serious consequences for the clients. Before accepting an engagement, members should review Rules of Professional Conduct 204.1 and
the related Council Interpretations to ensure that their objectivity is not impaired.
Auditor’s Report
on Election Financing Report
While the Act requires that the financial reports submitted are prepared in accordance with Generally Accepted Accounting Principles, there are certain variations that should be noted:
- All transactions being reflected in the reports must be recorded at fair market value. This has significant implications for the auditor.
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The wording of the Auditor’s Report that is submitted to the client is slightly different from the “standard” audit report wording. The recommended wording takes into account the limitation in the scope of the examination, and the fact that verification
of income and expenses is limited to what has been recorded in the records.
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Expenses for goods and services to
be used during an election campaign but incurred prior to the date of the election writ are considered to be prepaid at the writ date, then expensed during the campaign period.
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Any “opening” inventory of signs
(even used ones previously expensed) must be recorded at market value and expensed during the campaign period.
The above issues, and other related topics, will be dealt with more fully in a guide for auditors of financial information returns
by a candidate to be published by Elections BC. The Institute, in conjunction with the CGA Association of BC, worked with Elections BC on the development of this guide. It will be published on Elections BC’s website at www.elections.bc.ca, along with a number of other useful and already available publications that auditors should review.
If you’d like to discuss this subject
further, please contact:
Doug Wallis, CA
Director of Professional Advisory Services
Tel:
604-488-2629
Email: wallis@ica.bc.ca
or
Stella Leung, CA
Professional Standards Advisor
Tel:
604-488-2609
Email: sleung@ica.bc.ca
The Institute’s general telephone number is 604-681-3264 or toll free in BC at:
1-800-663-2677.
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