Notice to the Profession: Cemetery and funeral establishment requirements for audit reports and engagement review reports

The Bereavement Authority of Ontario (BAO) wants you to know and act on legally required audit reports and engagement review reports for cemetery and funeral establishment operators.

What is an audit report?

An audit report of cemetery or funeral home operators is a comprehensive examination and verification of the financial records, trust funds, and/or Care and Maintenance Fund/Account established by cemetery operators and/or funeral home operators. This audit report ensures compliance with regulatory requirements regarding the handling and reporting of prepaid trust money and/or care and maintenance funds. The audit process involves an independent review to confirm accuracy, accountability, and adherence to specified guidelines. Audit reports are to be prepared by a public accountant licensed under the Public Accounting Act, 2004.

Care and Maintenance Trust Funds (Cemeteries only)

As per O. Reg. 30/11, s. 109 (5), for a cemetery, an audit report must be submitted if one of the following conditions is met:

1. If the operator has a cumulative total of $500,000 or more in all of their care and maintenance funds.
2. If there is a funeral establishment within any of the cemeteries operated by the operator.

In summary, if a cemetery operator manages $500,000 or more in their Care and Maintenance Fund/Account and/or has a funeral establishment within any of their cemeteries, they must annually provide an audit report along with other financial statements to the Registrar, of the Funeral, Burial and Cremation Services Act, 2002 (the Act), at the BAO.

An audit report must cover the prior fiscal year and be submitted within six months of the fiscal year end.

Please be advised that cemeteries cannot conduct a review engagement report for their Care and Maintenance (C&M) Funds/Accounts and must submit an audit report if the above criteria are met.

However, if a cemetery has less than $500,000 in their Care and Maintenance Fund/Account, but has prepaid funds, they have the option to submit either a review engagement report or an audit report. A review engagement report must be submitted within three months of the fiscal year end.

Prepaid Trust Funds: All operator classes  

Operators overseeing trust accounts for prepaid services must submit either a review engagement or an audit report annually.

However, if a pooled prepaid trust fund holds less than $100,000 throughout the reporting year, the requirement for a review engagement report or an audit report doesn’t apply. (This applies when only a pooled trust fund exists.)

An audit report must cover the prior fiscal year and be submitted within six months of the fiscal year end. A review engagement report must be submitted within three months of the fiscal year end.

Licensed professionals

Regarding the preparation of a review engagement report or an audit report for trust money:

• A review engagement report must be prepared by an independent public accountant licensed under the Public Accounting Act, 2004
• An audit report must be prepared by an independent public accountant licensed under the Public Accounting Act, 2004 

Additionally, in accordance with section 108 (6) of Ontario Regulation 30/11, it is imperative that audit reports and review engagements include a written statement from the accountant confirming the fund’s compliance with the relevant regulations.

Under section 108 of Ontario Regulation 30/11, a review engagement and an audit report concerning prepaid trust money and Care and Maintenance Fund/Account trust money must adhere to the following guidelines:
(a) Prepared by a public accountant licensed under the Public Accounting Act, 2004, independent of the operator.
(b) Include the name, address, and licence number of the public accountant.
(c) Include the public accountant’s written statement regarding whether or not the trust money has been held and dealt with in accordance with the Act.

To determine if your accountant has a public accounting licence, you may view the public accounting licence directory at: https://myportal.cpaontario.ca/s/pal-directory.

The written statement must provide assurance, under Canadian Standard on Assurance Engagements CSAE 3530 “Attestation Engagements to Report on Compliance engagement” or a CSAE 3531 “Direct Engagements to Report on Compliance engagement” of the Chartered Professional Accountants (CPA) of Canada handbook, specifically addressing compliance with:

• Sections 83, 84, 86, 87, 88, 89, 90, 91, 92, 93, 106, 108 and 109 of Ontario Regulation 30/11 for a Care and Maintenance Fund/Account audit, and
• Sections 76, 78, 79, 80, 81, 82, 99, 106, 108 and 109 of Ontario Regulation 30/11 for a Prepaid Trust Fund Audit Report or review engagement report.

For reference, please consult the CPA Canada implementation tool for practitioners on CSAE 3530 and 3531 available at: https://www.cpacanada.ca/-/media/site/operational/rg-research-guidance-and-support/docs/02175-rg-implementation-tool-for-practitioners-csae-3530-3531-may-2019.pdf.
We kindly request that external auditors be informed of these requirements, emphasizing the inclusion of the details, such as the name, address, and licence number of the public accountant.

This BAO Notice applies to the audit report and review engagement submissions for the year 2023 and all subsequent years. Your diligence in implementing this is crucial for maintaining compliance with the regulatory framework. Thank you.

For any related questions, please contact our Financial Compliance Team at 647-483-2645 or Trust@TheBAO.ca.