1998/99 Legislative Session: 3rd Session, 36th Parliament
THIRD READING


The following electronic version is for informational purposes only.
The printed version remains the official version.


BILL 98 -- 1999

COOPERATIVE ASSOCIATION ACT

... continued ...

 

Part 7 -- Auditors

Division 1 -- Appointment of Auditor

Application of the Company Act

107 The provisions of this Part are to be read together with the relevant provisions of the Company Act that, in section 5 of this Act or by a regulation under section 5 (2), are adopted by reference for the purposes of this Act.

Auditors

108 (1) Subject to section 109 (1), every association must have an auditor.

(2) The directors of an association may appoint the first auditor of the association to hold office until the close of the first annual general meeting.

(3) Subject to section 109 (1), an association, at each annual general meeting, must appoint an auditor by ordinary resolution to hold office until the close of the next annual general meeting, but if an appointment is not made at that meeting, the auditor in office continues as auditor until a successor is appointed.

(4) The directors may fill any casual vacancy in the office of auditor.

(5) If an association that has not waived the appointment of an auditor under section 109 does not have an auditor, the court, on the application of a member, investment shareholder or creditor of the association, may

(a) appoint a qualified person as auditor of the association until the close of the next annual general meeting, and

(b) fix the remuneration to be paid by the association for the person's services as auditor.

(6) The association must promptly give written notice to an auditor of the auditor's appointment.

Exception

109 (1) An association that is not a reporting association may waive the appointment of an auditor

(a) by a special resolution of members, and

(b) if the association has issued investment shares, by separate resolutions of investment shareholders of each class of issued investment shares.

(2) A resolution referred to in subsection (1) is effective for one financial year of the association.

Qualifications

110 (1) A person is qualified to act as an auditor of an association if not disqualified under section 111 and if

(a) the person is a member of

(i) a Provincial or Territorial Institute / Ordre of Chartered Accountants within Canada, or

(ii) the Certified General Accountants Association of British Columbia,

(b) the person is certified by the Auditor Certification Board under the Company Act,

(c) the person is a federation and acts as auditor only

(i) for its member associations, and

(ii) through persons who are qualified under paragraph (a) or (b) or who perform auditing functions under the supervision of persons who are so qualified, or

(d) in the case of an association that is a reporting issuer, the person is

(i) a person referred to in paragraph (a) or (b), or

(ii) authorized under the Securities Act to perform the audit.

(2) An interested person may apply to the court for an order exempting an auditor from disqualification under section 111, and the court, if satisfied that an exemption would not unfairly prejudice the association's members and investment shareholders, may make an exemption order on the terms the court considers appropriate.

(3) An order under subsection (2) may have retrospective affect.

Persons not qualified as auditors

111 (1) A person other than a federation must not be the auditor of an association if the person is not independent of the association, its affiliates and its directors and officers.

(2) For the purposes of this section, independence is a question of fact, but

(a) a person is not independent if the person is a director, officer or employee of the association or of an affiliate of the association, or if the person is a partner, employer or employee of that director, officer or employee or if the person is a member of the immediate family of that director or officer,

(b) a person is not independent if the person, a member of the person's immediate family, the person's partner or a member of the immediate family of the person's partner beneficially owns or controls, directly or indirectly, any interest in a share or a debt obligation of the association or of any of its affiliates, and

(c) a person is not independent if the person is appointed a trustee of the estate of the association under the Bankruptcy Act (Canada) or if the person is a partner, employer of, employee of or member of the immediate family of, that trustee.

(3) For the purposes of subsection (2),

(a) the immediate family of the person referred to includes

(i) his or her spouse, parent and child, and

(ii) any relative of the person, or his or her spouse, who resides with the person, and

(b) a partner of the person referred to means any person with whom the person carries on in partnership the profession of public accounting.

(4) Every auditor, within 90 days after becoming aware that the auditor's appointment as auditor contravenes this section, must either

(a) eliminate the circumstances that cause the auditor to be in contravention, or

(b) resign as auditor.

(5) If an auditor contravenes this section, any interested party may apply to the court, whether or not the period referred to in subsection (4) has expired, for an order that the auditor be removed on terms and conditions the court considers appropriate.

Remuneration

112 The remuneration of the auditor of an association must be set by ordinary resolution or, if the association so resolves, by the directors, but the remuneration of an auditor appointed before the first annual general meeting or to fill any casual vacancy may be set by the directors.

Removal of auditor

113 (1) Every association, by ordinary resolution passed at a general meeting called for the purpose, may remove an auditor before the expiration of the auditor's term of office, and must by ordinary resolution at that meeting appoint another auditor in the removed auditor's place for the remainder of the removed auditor's term.

(2) Every association, before calling a general meeting for the purpose specified in subsection (1), but at least 14 days before the mailing of the notice of the meeting, must give to the auditor

(a) written notice of the intention to call the meeting, specifying the date on which the notice of the meeting is proposed to be mailed, and

(b) a copy of all material proposed to be sent to members in connection with the meeting.

(3) Every auditor has the right to make to the association, at least 5 days before the mailing of the notice of the meeting, representations in writing respecting the auditor's proposed removal as auditor, and the association, at its expense, must forward with the notice of the meeting a copy of those representations to each member entitled to receive notice of the meeting.

Division 2 -- Duties and Rights of Auditors

Annual audit

114 (1) The auditor of an association must make an examination that will enable the auditor to report to the association's members as required under subsection (2).

(2) The auditor must make a report to the members on the financial statement, other than the part that relates to the period referred to in section 153 (1) (b) (ii), that is to be placed before the association at any annual general meeting during the auditor's term of office, and must state in the report whether, in the auditor's opinion,

(a) the financial statement presents fairly the financial position of the association and the results of its operations for the period under review, and

(b) the financial statement is in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding period.

(3) If the financial statement contains a statement of changes in net assets or a statement of source and application of funds, the auditor must state in the auditor's report whether, in the auditor's opinion, the statement of changes in net assets or the statement of source and application of funds presents fairly that information.

Negative audit report

115 If the report of the auditor under section 114 does not contain the unqualified opinion required by it, the auditor must state the reasons in the report.

Audited statements of subsidiaries

116 Whether or not the assets and liabilities and income and expenses of any one or more subsidiaries of a holding corporation are included in the financial statement of the holding corporation, the report of the auditor of the holding corporation required by this Part may refer to the reports of the auditors of one or more of the subsidiaries, but the reference does not derogate from the duty of the auditor of the holding corporation to comply with section 114 (1).

Auditor's attendance

117 Every member or investment shareholder of an association, whether or not entitled to vote at a meeting of the association, by written notice to the association given at least 5 days before a meeting at which the financial statements of the association are to be considered or the auditor is to be appointed or removed, may require the attendance of the auditor at the meeting at the expense of the association and, in that event, the auditor must attend the meeting.

Procedure

118 (1) At any general meeting the auditor, if present, must answer inquiries directed to the auditor concerning the financial statements of the association and the opinion on them stated in the auditor's report.

(2) At the request of any member attending the annual general meeting, the report of the auditor must be read to the meeting.

Amendment of financial statements and report

119 (1) If facts come to the attention of the officers or directors,

(a) that could reasonably have been determined before the date of the last annual general meeting, and

(b) that, if known before the date of the last annual general meeting, would have required a material adjustment to the financial statement presented to the meeting,

the officers or directors must communicate the facts to the auditor who reported to the members under this Part, and the directors must promptly amend the financial statement and send it to the auditor.

(2) If facts described in subsection (1) come to the attention of the auditor and, in the auditor's opinion necessitate amendment to the auditor's report, the auditor must amend the report in respect of the financial statement presented to the last annual general meeting so that it complies with this Part, and the directors must deliver to the members a copy of the amended report and a statement explaining the effect of the amendment on the financial position and results of the operations of the association.

Access to records

120 The auditor of an association is entitled to access at all times to every record, document, instrument, account and voucher of the association and its subsidiaries, and is entitled to require from the directors, officers and employees of the association and its subsidiaries information and explanations necessary, in the auditor's opinion, to enable the auditor to report as required by this Part.

Information as to foreign subsidiaries

121 If a subsidiary referred to in section 120 is a corporation to which this Act does not apply, the holding corporation must make available to the auditor of the holding corporation the records, documents, instruments, accounts and vouchers of that subsidiary and must require the directors, officers and employees of that subsidiary to make available to the auditor of the holding corporation the information and explanations required by section 120.

Auditor's attendance at meetings

122 (1) The auditor of an association is entitled to attend any general meeting of the association and to receive every notice and other communication relating to the meeting that a member or investment shareholder is entitled to receive, and is entitled to be heard at any general meeting that the auditor attends on any part of the business of the meeting that concerns the auditor in that capacity, or that concerns the financial statements of the association.

(2) At the request of the directors, and subject to receiving adequate notice, the auditor of an association must attend a meeting of the directors specified by the directors in making the request.

Qualified privilege

123 An oral or written statement or report made under this Act by the auditor or former auditor of an association has qualified privilege.


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