Fraud Prevention And Governance For Non-Profits 2025 — How To Protect Your Organization And Build Donor Trust

Fraud and mismanagement can devastate a non-profit’s finances and reputation. In 2025, CRA and Revenu Québec have made governance transparency and internal controls a central focus of charity compliance. Mackisen CPA Auditors Montreal implements fraud prevention frameworks, governance audits, and financial reporting systems to safeguard organizations and restore donor confidence.

Legal and Regulatory Framework

Income Tax Act (Canada) Section 149.1: Requires charities to use funds exclusively for charitable purposes and maintain proper books.
Not-for-Profit Corporations Act (Canada) Section 148: Establishes director duties, conflict-of-interest policies, and recordkeeping obligations.
Taxation Act (Quebec): Mandates financial transparency and board accountability for provincially registered charities.
CRA Guidance CG-016: Outlines acceptable governance and financial oversight standards.
Charities Accounting Act (Ontario): Regulates asset management and misuse penalties.

Key Court Decisions

Toronto Humane Society v. Canada (2020): Reiterated that mismanagement and lack of board oversight can justify CRA suspension.
Children’s Aid Society v. Ontario (2018): Reinforced fiduciary duties of directors in safeguarding charitable assets.
United Way of Canada v. The Queen (2019): Validated CRA’s power to revoke status for unapproved fund transfers abroad.

Why CRA and Revenu Québec Target Governance

Auditors assess internal controls, segregation of duties, and documentation of expenditures. Red flags include inconsistent financial records, missing receipts, or executive expense misuse. CRA’s Charity Integrity Initiative cross-verifies financial disclosures against banking data. Mackisen performs governance audits to identify vulnerabilities and install preventive safeguards.

Mackisen’s Strategy

1. Risk Assessment — Review existing controls and identify exposure points.

2. Governance Audit — Examine board oversight, financial policies, and reporting accuracy.

3. Fraud Prevention Systems — Implement dual-authorization, digital accounting, and real-time reporting.

4. Training and Policy Implementation — Educate staff and boards on fiduciary responsibilities.

5. Crisis Management — Support investigations and remediation if fraud is detected.

Real Client Experience

A Quebec health foundation discovered unauthorized credit card use. Mackisen implemented an internal control system that prevented future losses and restored CRA confidence. A Montreal arts organization facing reputational damage from audit errors rebuilt donor trust through Mackisen’s governance reforms.

Common Questions

How can I prevent internal fraud? Through segregation of duties and regular audits.
Can CRA revoke status for poor governance? Yes, if funds are misused or oversight fails.
Do I need a financial policy manual? Yes, CRA expects documented control procedures.

Why Mackisen

Mackisen CPA Auditors Montreal specialize in governance and fraud prevention for charities and non-profits. We install robust internal controls, train boards, and protect organizations from compliance risks. Call Mackisen CPA Auditors Montreal today for your 2025 Governance Audit Consultation. The first meeting is free and ensures your charity stays transparent, compliant, and trusted.