Financial Issues Within MAAC

Article 1. A Director was Denied Access to Financial Records.

In this article you will find:-

• Excerpts from the Canada Not-for-Profit Corporations Act, showing what is required of a NFP Corporation with regard to directors’ access to the accounts.
• Details showing The Act having been deliberately violated.

The Canada Not For Profit Corporations Act includes some very specific instructions concerning the keeping and examination of financial records.  Subsection 3 of section 21 – Corporate Records, states:-

Directors’ records

(3) A corporation shall prepare and maintain adequate

accounting records and records containing minutes of

meetings of the directors and any committee of directors

as well as resolutions adopted by the directors or any

committee of directors.

Further details of what shall be in those records, etc., can be found in the regulations of the Act, which has not been reproduced here – in the interests of brevity and because, at this point, it is irrelevant to the discussion.  However, subsection 7 of Section 21 of The Act further stipulates:-

Directors’ access to records

(7) The records described in subsections (1) and (3) shall

at all reasonable times be open to inspection by the directors.

The corporation shall, at the request of any director,

provide them with any extract of the records free of

charge.

It is very clear that a director of a federally-registered NFP Corporation may not only inspect the accounting records but may also take away an extract of those records – and no limit is placed upon the size or content of that extract, so it could cover the whole record, if requested.  These two aspects of the access are also separate – it is not necessary for a director to have inspected the records prior to requesting an extract from them.

In the recent past, repeated requests by a director of MAAC to access and obtain files containing the financial accounts have been refused by the corporation’s Secretary/Treasurer.  This is a clear violation of The Act, on a financial matter.  That violation was supported by members of the Board.

This violation of the CNCA is a serious one – not just because it concerns a key financial principle – but also because it strikes at the heart of the principles of the governance of a NFP Corporation.  In order to properly govern such a corporation every director of it must be comfortable that they are fully informed of its financial status and records.  Each director must be able to check for him/herself that the records reflect their understanding of the financial situation and activity.  There is a need for clarity and transparency with the membership, if anything this is even more crucial with the directors.

This is a clear violation of the provisions within the Canada Not-For-Profit Corporations Act but we have included it in the Financial Issues page because of the serious implications it has to the financial management of the corporation by the Board.