What Information Should Accountants Include in Their Annual Maintenance Instruction Letter to Clients?

Most Corporations choose to appoint an accountant and for good reason.  Accountants are an invaluable tool for corporations to ensure they remain compliant with the CRA and also make favourable tax planning decisions.

What do accountants have to do with corporate record keeping?

Every year, within six months of a company’s fiscal year-end, its accountant will complete their financial statements for that fiscal year. Once financial statements are complete, they are typically accompanied by a letter from the accountant informing the client of what should be recorded in their company’s records regarding their Financial Statements. 

Here is a list of the information that should be included for a company to carry out their Annual Maintenance thoroughly:

1. The date of the Engagement Report (Review, Compilation, or Audit Engagement Report Date—in the past, this was often referred to as the “Notice to Reader” date).
2. Whether the financial statements were audited or unaudited. 
3. If Management Bonuses were paid out:
   1. The date they were accrued as payable
   2. Who were they paid out to?
   3. How much did each person receive?
   4. The total amount paid out.
4. If Dividends were paid out:
   1. The date that they were declared
   2. The date that they were paid.
   3. Whether they were eligible or non-eligible dividends.
   4. Whether they are capital dividends.
   5. To which shareholder(s)?
   6. On what Class of Shares?
   7. How much was paid out to each shareholder?
5. If Shares were Redeemed:
   1. What class of shares were redeemed?
   2. The redemption price of each share.
   3. Date(s) of redemption.
   4. Number of shares redeemed.
   5. Total redemption amount.

What should a company do once they receive their financial statements and the Instructions Letter from their accountant?

It’s time to carry out Annual Maintenance!

Once the financial statements are complete and the accountant has provided the company with the above information, the company should then arrange a Directors Meeting, after which they will give notice of their Annual General Meeting of Shareholders—or pass resolutions in lieu of these meetings.  

Directors

Every director is required to receive a copy of the Financial Statements. Whether it’s a meeting or a resolution, it is important that all of the information provided by the accountant and the financial statements are confirmed and approved by the company’s directors. 

Shareholders

Shareholders are also required to receive a copy of the financial statements, and they need to acknowledge receipt of the financial statements every year by resolution or AGM. 

We hope this article gives you a better understanding of what to expect from an Accountant once they’ve completed your company’s financial statements.  If you have any questions or need assistance carrying out your company’s Annual Maintenance, please don’t hesitate to contact us here. Our annual maintenance package also includes the annual return filing. Click here to get started!

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