A contract for services is when there is an oral or written agreement for your non-profit to pay a person or company for performing a service (e.g. employment agreements, professional services, cleaning contractors, etc).

A contract for services is when there is an oral or written agreement for your non-profit to pay a person or company for performing a service (e.g. employment agreements, professional services, cleaning contractors, etc).

Remuneration is when a non-profit gives money to its directors for being a director (e.g. wages, honoraria).

Remuneration does not include gifts (i.e. small, irregular tokens of appreciation).

Remuneration does not include reimbursing a director for expenses caused by being a director (e.g. travel to a meeting). 

An audit is when your financial statements are reviewed by a third party to ensure they fairly and accurately represent the non-profit’s finances.

Audits are intended to help non-profits detect fraud.

If a non-profit pays its directors for being a director (e.g. wages, honoraria, meeting fee), then the financial statements must disclose the amount. Directors cannot be remunerated unless the bylaws allow.

If the director is paid for services to the non-profit other than being a director, that also needs to be disclosed.

The non-profit can cover a director's expenses caused by being a director, such as travel to a meeting. That is considered reimbursement, not remuneration.

Financial statements are a broad overview of the non-profit’s financial position, presented for member approval at each AGM.

Financial statements generally include four documents:

• Income Statement
• Balance Sheet (Statement of Financial Position)
• Statement of Cash Flows
• Equity Statement (Statement of Retained Earnings)

A fiscal year is a one-year period of time that a non-profit uses for accounting purposes and preparation of its financial statements.

For example, non-profits have their fiscal year aligned with the calendar year (January 1 to December 31) or government year end (March 31).

Other non-profits set their fiscal period to align with a natural break in their operations, such as a summer camp with a fiscal year of September 1 to August 31.