15 Mar Financial Reporting Requirements for Private Training Institutions
The Private Training Institutions Branch (PTIB) of the Ministry of Advanced Education and Skills Training of British Columbia has recently amended the financial reporting requirements for private training institutions. In this piece we will provide a brief overview of private training institutions and how these changes will impact their financial statements going forward. The revised requirements are effective for institutions with fiscal year ends starting on or after April 30, 2022.
Private training institutions require a certificate from PTIB if they offer one or more career-related programs with 40 hours or more instructional time and charge tuition of at least $4,000. PTIB outlines various requirements for private training institutions in its Private Training Act Policy Manual (the “Policy Manual”) including requirements related to what type of engagement they need to obtain from a CPA firm on their annual financial statements.
Overview of the Revised Requirements
The changes announced by PTIB have reduced the number of different financial reporting requirements for private training institutions which will make the assessment of what is required less complex. In the past, many private training institutions were required to obtain two different engagements from a CPA firm each year. The first was an engagement performed on their annual financial statements and the second was a special engagement performed on specific financial information such as cash, tuition revenue, deferred revenue, etc. The revised requirements have eliminated the second special engagement. Thus they now only require one engagement be performed on the annual financial statements.
The type of engagement that will need to be performed each year is based on the amount of tuition revenue the institution earned in the previous year and their assigned category. The new requirements, as per the Policy Manual published on January 13, 2022, are as follows:
For more information on what is involved in performing a compilation, a review or an audit, you can read our piece that explains the differences between these engagements.
Impact of the Revised Requirements
Although the revised requirements are less complex in terms of the number of different engagement types that could be required, that does not necessarily mean the amount of work that a private institution will need to obtain from their CPA firm will decrease. The amount of work, and the associated cost, will be dependent on where the institution will land on the above table versus its previous financial reporting requirements.
In some cases the amount of work will actually increase. For example, under the previous requirements a category 1 or 2 institution with annual tuition revenue in excess of $5,000,000 would have been required to obtain a review engagement on their annual financial statements and an audit on specific financial information. Under the revised requirements, they will only require one engagement but that engagement will be a full audit of their annual financial statements which is actually more work, and thus likely a higher cost than the two engagements that were previously required.
In other cases, that amount of work will decrease. For instance, under the previous requirements a category 1 or 2 institution with annual tuition revenue of approximately of $2,000,000 would have been required to obtain a review engagement on their annual financial statements and an audit on specific financial information. However, under the revised requirements they will only require a review of their annual financial statements which is significantly less work and thus should cost less.
How Clearline CPA Can Help
Clearline assists private training institutions in meeting their financial reporting requirements under the Policy Manual as well as their other accounting and taxation compliance needs. We are fully licensed with CPABC to perform compilations, reviews and audits of private training institutions and thus can meet the needs of any sized institution. We can also assist institutions in transitioning to the new reporting requirements. If you would like to discuss your institution’s financial reporting requirements or tax planning needs, please contact us to book a meeting to discuss.