What to expect and how to prepare for standard financial and operational reviews.
We've launched a new and improved multi-step Operational Review process and PartnerHub, an online platform to conduct the new Operational Review.
Financial Review
Non-Profit Housing and Service Provider (“Provider”) Operating/Operator Agreements (“Agreement”) with BC Housing include an annual review of your financial information.
BC Housing’s Financial Review is the process of comparing the revenues and expenses submitted by Providers to the approved budget and applicable Agreement requirements, to ensure the the appropriate level of subsidy is provided. The Financial Review process is also used to identify any indicators that may warrant a more in-depth examination of the revenues and expenses submitted by Providers and to ensure Providers are in compliance with the financial terms of their Agreements.
In this section, we have compiled together some key information to help you prepare for the review.
When to submit
You must submit your financial statements within four months of your fiscal year end.
What to submit
- Providers whose subsidy is $100,000 or more annually must submit, each year:
- their audited financial statements, including audited separate schedules of revenues and expenses for each BC Housing funded project ("Audited Project Schedules") in the format prescribed by BC Housing, as applicable
- the auditor's Management Letter (also referred to as the Internal Control Related Matters and/or Audit Findings Report)
- the completed Financial Statement Framework.
- Providers whose subsidy is less than $100,000 annually must submit the completed Financial Statement Framework every year and, optionally, their unaudited financial statements.
What we review
- The revenues and expenses reported in your Financial Statement Framework (which should reconcile to the Audited Project Schedules, as applicable) in comparison to your approved BC Housing budget
- Your accumulated operating fund balances, if necessary
- Your replacement reserve/capital fund balance(s) and annual expenditures to confirm the reserve/capital fund is managed and used in accordance with the terms of your Agreement and with the capital plan. The replacement reserve balance and expenses reported in the Financial Statement Framework should reconcile to the amounts reported in the audited financial statements.
- Repayable Assistance from BC Housing (if required). We’ll arrange for collection of the repayable portion, if the balance is due back to us
After the review
Based on the review findings, there are four possible outcomes:
- No collection or payment is required, as no substantial surpluses or deficits occurred.
- No collection or payment is required, as the Provider is responsible for managing its own operating deficits and surpluses.
- BC Housing will arrange collection of subsidy overpayment or operating surplus.
- BC Housing will pay the subsidy underpayment or operating deficit.
We will notify you of your review results by email.
Important: Please make sure you include all the requested information; otherwise the review process could be delayed.
BC Housing Subsidy Equal to or Over > $100,000 Annual Filing Requirements
1. Audited financial statements, in accordance with CPA Canada Handbook Standards - Part III – Accounting Standards for Not-for-Profit Organizations, which also include the following per your Agreement, as applicable:
- Audited separate schedules of revenues and expenses for each BC Housing funded project
- Statement of Changes in Replacement Reserve/Capital Reserve Fund
- Schedule of Housing Surplus Accounts
- Auditor's note/report indicating that:
- The reserve has been funded and is maintained in accordance with the terms of the Agreement
- The accumulated surplus is being spent and accounted for according to the terms of the Agreement, if applicable
2. The auditor’s Management Letter (also referred to as the Internal Control Related Matters and/or Audit Findings Report) listing the auditors’ recommendations and management responses (or written confirmation from the auditor that no such letter was issued)
3. BC Housing Financial Statement Framework, which includes each project funded by BC Housing
- For Independent Living BC Phase 1:
- Provider must account for shelter and non-shelter operations separately and report only the shelter portion in the Schedule of Operations section
- Provider must account for shelter and non-shelter operations separately and report only the shelter portion in the Schedule of Operations section
- For Independent Living BC Phase 2:
- Provider must account for shelter and hospitality separately from care operations and report only the shelter and hospitality portions in the Schedule of Operations
BC Housing Subsidy Under < $100,000 Annual Filing Requirements
1. Unaudited financial statements (optional) that include the following documents:
- Statement of Financial Position, signed by two directors
- Statement of Operations and Changes in Fund Balances
- Notes to the financial statements
2. BC Housing Financial Statement Framework, which includes each project funded by BC Housing prepared by the Provider
- You must complete the Statement of Financial Position and have it signed by two directors (if you haven't already submitted it as part of the unaudited financial statements).
- For Independent Living BC Phase 1:
- Provider must account for shelter and non-shelter operations separately and report only the shelter portion in the Schedule of Operations
- For Independent Living BC Phase 2:
- Provider must account for shelter and hospitality separately from care operations and report only the shelter and hospitality portions in the Schedule of Operations
Still looking for answers? Consult our Financial Statement Framework Frequently Asked Questions .
Operational Review
The Operational Review helps identify areas of strength and improvement to support BC Housing funded non-profit partners.
What to expect
- A site tour involving one-third of the providers housing portfolio
- A review of rent calculation
- A look at policies and procedures related to Organization & Governance, Asset and Facility Management, Client and Community, and overall understanding of programs and agreements
The Operational Review process has four Core Areas
- Organization and Governance
- Asset and Facility Management
- Client and Community
- Understanding of Agreements and Programs
Each Core Area includes a set of standards and elements. They apply to all BC Housing funded non-profit providers required to complete an operational review.
The Core Area standards and elements allow for flexibility for non-profits to demonstrate compliance. They account for factors impacting their organization such as:
- the provider size and scope
- and the PESTLE (Political, Economic, Sociological, Technological, Legal, Environmental)
Resources
These resources describe how a provider can demonstrate that they meet each of the standards, with PESTLE considerations where applicable.
Note: All information and resources are preliminary versions subject to change.
Core Area 1: Organization and Governance
There are four standards under this core area:
- Core Area 1: Standard 1 establishes board accountability for adherence to laws, regulations, and BC housing agreements.
- Core Area 1: Standard 2 emphasizes the importance and responsibility of operational management positions.
- Core Area 1: Standard 3 focuses on effective strategies, policies, and frameworks to ensure long term success.
- Core Area 1: Standard 4 ensures organizational viability through effective financial management.
Core Area 2: Asset and Facility Management
There are four standards under this core area:
- Core Area 2: Standard 1 ensures that all facilities under the provider are safe, secure, and free of hazards.
- Core Area 2: Standard 2 informs us of strategic and long-term capital planning to ensure that assets are effectively and efficiently resourced.
- Core Area 2: Standard 3 centres on business continuity and resilience through risk assessment and mitigation policies.
- Core Area 2: Standard 4 revolves around environmental stability.
Core Area 3: Client and Community
This core area highlights the value of communication strategies for staff, clients, and community. There are three standards:
- Core Area 3: Standard 1 focuses on improving client and community interactions through staff engagement.
- Core Area 3: Standard 2 informs effective feedback and complaints policy.
- Core Area 3: Standard 2 supports rapport with community stakeholders.
Core Area 4: Understanding of Agreements and Programs
This core area is specific to each funding and program type. The six modules are:
Training Resources
Course: The Operational Review Process and System for Providers
Description: An introduction to Operational Review for housing and service providers. Topics include:
- The Operational Review assessment framework
- The PartnerHub online platform
- The 6 key process steps of an Operational Review (initiate, demonstrate, preliminary, site visit, report, close)
Prerequisites: There are no prerequisites for this course.
Delivery Style: Online, self-paced
Cost: Free ($0)
Registration:
- Sign up for the BC Housing Learning Portal at https://learn.bchousing.org/
- Locate “The Operational Review Process and System for Providers” in the course catalogue and click “enrol now”
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Operational Review: The Process and System | A Handbook for Providers
For more information about the Financial Review process, reach out to your BC Housing contact.