Compliance Auditing – FAQs and Guidance for Person Centred Societies

A compliance audit helps to assess whether a PCS is following the financial terms set out in the PCS contract and funding agreement. This is a collaborative process between CLBC and PCS that strengthens a shared commitment to the delivery of services.

CLBC’s compliance audit program supports its responsibility to ensure government funds are used efficiently and effectively, as required by the BC Government’s Taxpayer Accountability Principles.

CLBC encourages the use of extended family members (such as aunts, uncles, and siblings) to deliver supports and services. However, a PCS cannot pay an immediate family member (i.e., a parent, spouse, or child of the supported individual) to provide services unless an exception has been granted as outlined in the Services Provision by Family Members Policy.

No person listed on a PCS’s Board of Directors can be paid to deliver CLBC services. If a board member wishes to provide paid services, they must first resign from their position on the board.

Funds that a PCS receives from CLBC can only be used to hire support workers, or to pay for other allowable expenses as outlined in the contract. Please refer to the Managing the Money: Person Centred Society Guide for details of allowable expenses. CLBC expects a PCS to spend the funding in line with the approved amounts for each type of service.

Please note that funds cannot be used to provide loans to family members or any member of the Board of Directors, even if the loan would be repaid within the year.

Excess funds refers to CLBC funding that is unspent or uncommitted, and the value exceeds one (1) month’s worth of funding. These excess funds must be reported and returned to CLBC, unless CLBC has approved otherwise.

CLBC may ask for the excess funds to be repaid directly, or may reduce future payments by the same amount. For more information, please see the “Repaying the Funds” section in the Managing the Money – Person Centred Society Guide.

Example:

A PCS receives $1,000 in funding each month from CLBC. At the end of the reporting period, the PCS has $1,500 remaining in CLBC funding that was not committed to pay for allowable expenses. As this amount exceeds one month’s funding (i.e., $1,000), the PCS needs to report the excess (i.e., $500) and return it to CLBC.

The main types of financial documents that CLBC requires are as follows:

• Receipts and invoices for all costs
• Payroll records for all staff employed by the PCS, including staff who are responsible for providing care
• Cash/bank records, including e-transfer documentation, paid cheques, etc.

Please note that this list only includes the most common examples, and additional documentation may be needed for audit purposes. If you have any questions about documentation requirements, please contact your CLBC Quality Service Analyst.

Additionally, all expenses included in the PCS’s accounting records must show the actual amount spent, not the budgeted amount.

CLBC needs all documentation, books, and/or records to be in an appropriate form (e.g., Excel or PDF formats). Documentation must contain enough information to show how much was spent and what it was spent on. The level of detail provided when reporting to the Canada Revenue Agency (CRA) is generally suitable for CLBC.

For payroll records, CLBC needs enough detail to determine if the time spent by an employee or sub-contractor matches the contract’s terms.

Wherever possible, additional evidence of all transactions should be kept for audit purposes (e.g., email approvals, project communications). As outlined in the Managing the Money: Person Centred Society Guide, CLBC requires a PCS to keep its documents and records for up to seven (7) years after a fiscal period ends.

If a PCS is unable to provide the necessary documents, expenses may need to be repaid to CLBC. Therefore, it is essential to keep accurate records, and to promptly reach out to your CLBC Quality Service Analyst if you are having any challenges meeting these requirements.

A PCS needs written approval in advance from CLBC if they want to keep funding that has been spent on activities that are not supported by either:

• The payment table of the PCS contract
• The Component Service Schedule (CSS), or
• Agreed-upon budget (e.g., payments made to a subcontractor outside the terms of an approved contract).

This written approval must come in the form of a digital or physical letter, or email confirmation. For advance approval requests that require contract changes or revisions, please contact your CLBC Quality Service Analyst as these changes will require written agreement between you and CLBC. There are no set deadlines for these requests, but please inform your CLBC Quality Service Analyst as soon as you identify the need.

CLBC funding is intended for the PCS to hire employees. A PCS may only fully or substantially subcontract CLBC services where the services are:

• Respite (Individual and Family Wellness Support)
• Home Sharing;
• Live-in Support;
• Supports to Shared Living; or
• Services for which the PCS has obtained CLBC’s prior written approval to subcontract.

Whenever a PCS uses a subcontractor in the delivery of services, the PCS must ensure that all subcontractors have appropriate training, qualifications and clearances; be properly overseen by the PCS; meet all contract standards and policy requirements; be enrolled in WorkSafe BC; and operate under a written agreement that meets requirements set out in Section 18 (Subcontracts and Assignment) of the Service Terms and Conditions between CLBC and Person Centred Societies.

Any unspent funding relating to misclassifications between employees and subcontractors must be repaid to CLBC. Please refer to the Other Related Laws, Regulations, and Best Practices section below on this webpage for additional details on this topic.

Although PCS financial statements do not need to be prepared by a Chartered Professional Accountant (CPA), they must be prepared by someone with experience in bookkeeping or accounting. Depending on how much funding your PCS receives from CLBC, there are different requirements for who must review your financial statements:

• If your PCS receives less than $100,000: Your financial statements are not required to be subject to a professional accounting engagement.
• If your PCS receives between $100,000 and $250,000: Your financial statements must be subject to a compilation engagement completed by an accountant with an active CPA designation.
• If your PCS receives over $250,000: Your financial statements must be subject to a review engagement completed by an accountant with an active CPA designation.

All financial statements must follow Generally Accepted Accounting Principles (GAAP) and be submitted to CLBC within 90 days after each reporting period ends. This requirement is separate from any audit that CLBC may perform.

The classification between an employee and a contractor is important and can have different tax impacts. CLBC recommends that PCSs consult an accountant or legal professional to ensure they follow the BC Societies Act, Canada Revenue Agency regulations, and other relevant legislation. For further support, please refer to the How to Find Out If Your Support Workers are Employees or Contractors guide on CLBC’s website.

Best practices for record-keeping include, but are not limited to:

• Keeping electronic and hard copies of all records well-organized and easily accessible
• Using a consistent file naming system to make it easier to track and find files
• Regularly backing up digital records to make sure they are stored securely
• Checking documentation regularly for accuracy and completeness
• Storing and keeping financial records at your location rather than at a bookkeepers’ premises so you can easily access them if you change bookkeepers in the future.