How to Change Bookkeeping Firms Without Losing Your Charity's Financial History

Changing providers is straightforward. Losing six years of transaction history because the accounting file was cancelled rather than transferred is also straightforward, and it happens. The difference is a handful of steps taken in the right order, before you give notice rather than after.

What do you actually own when you leave a bookkeeping firm?

Your books and records belong to your charity, not to the firm that maintains them. That is not a courtesy. As a registered charity you are required to keep adequate books and records, and the obligation sits with you regardless of who does the data entry.

There is a location rule attached to it that catches charities out. Your original books and records must be kept at a Canadian address that CRA has on file for your charity. Keeping them outside Canada and making them accessible electronically from Canada does not satisfy the requirement.

That matters at transition. "Our old bookkeeper has everything" is not automatically non-compliant, because a third party can hold records. It becomes non-compliant if the location where they are held is not the books-and-records address CRA has on file, or if your charity cannot produce or access them on request. In practice a departing provider usually fails the second test, which is why this is worth settling before you give notice rather than after.

The subscription to the accounting software is a separate question from the data inside it. Read the next-to-last section before you assume the two travel together.

The same distinction applies at the other end of the transition. Records physically or digitally remaining with the outgoing firm are a problem where the address on file with CRA no longer matches where they sit, or where your charity cannot get to them. Fix both by moving the records and confirming your address of record.

How much notice do you have to give?

Thirty days in writing is the common term, and the notice period is working time, not dead time. Check your engagement letter, because the specifics vary.

A typical monthly arrangement lets you cancel at any time with 30 days' written notice. During that period the outgoing firm completes pending work and assists with transitioning your records. Fees for work already performed are usually not refundable, and any prepaid future period is prorated back to you.

Use the 30 days deliberately. It is the only window in which you have a cooperative outgoing provider, current-year knowledge and file access all at the same time. Charities that give notice and then go quiet for a month lose that window.

Our FAQ page sets out cancellation and refund terms as an example of what to look for in your own agreement.

What do you need to collect before access is switched off?

Work from the retention rules rather than from a general sense of what looks important. Different record types have different retention periods, and the differences are larger than most treasurers expect.

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If your registration is revoked, financial statements, source documents and T3010 copies must be kept for two years after the date of revocation.

Beyond the items listed above, ask for the working papers that support your balances: reconciliations, restricted fund schedules, grant tracking spreadsheets, continuity schedules and the notes explaining unusual entries. These are your records and your work product, and they save your next provider a great deal of time you would otherwise pay for.

Draw one distinction here, because it avoids an argument. Your records and the work product prepared for you should be transferred. A provider's own proprietary working papers, internal checklists and engagement programs may remain the firm's property and do not have to be handed over. Ask for what supports your numbers rather than for everything in the file.

Our guide to keeping proper books and records covers the wider record-keeping obligation.

When in the year should you switch?

The worst time is inside the sixty days before your T3010 deadline. The best time is immediately after a completed year-end.

Your T3010 is due within six months of your fiscal period end. A December 31 year end means a June 30 deadline. Switching providers in May, with the return unfiled and the year-end incomplete, means your new provider is reconstructing a year they did not record while a hard deadline runs down.

The clean options are these. Switch right after the year-end file is closed and the return is filed, so the new provider starts from an established opening position. Or switch at a month end early in the fiscal year, when only a few months need to be picked up.

If you must switch mid-year under pressure, make completing the current reconciliation the outgoing firm's final deliverable. A clean cut-off at a reconciled month end is worth more than an extra week of notice.

How do you transfer the accounting file without breaking history?

Transfer ownership of the file using your platform's own transfer procedure, before anyone cancels billing. This is where charities lose access to history, and it is almost always avoidable.

Cloud accounting files are usually held under a billing account or subscription that may sit with your bookkeeping firm rather than with you. Each platform names the controlling role differently, and each handles cancellation differently. Some retain data in a read-only state for a period; some do not. What you are left with after a badly sequenced cancellation may be whatever was exported beforehand, and an export is a set of reports rather than a working ledger with audit trail, attachments and reconciliation history intact.

The right sequence is to have the outgoing firm transfer the platform's primary administrator, subscriber or organization-owner role to your charity or your new provider while the subscription is live, then move billing, then remove the old firm's users. Confirm in writing that the transfer is complete before you send the final payment.

Ask four questions before you give notice. Who currently holds the controlling role on the accounting file? Whose payment method is the subscription on? What is the vendor's documented procedure for transferring ownership? And what does the vendor say happens to the data if the subscription lapses?

Then check what else is tied to the departing firm. Bank feeds may need to be reauthorized. If the outgoing firm was an authorized representative on your CRA account, that authorization should be removed and your new provider added. Payment processor and donation platform logins often sit with the person who set them up.

What goes wrong most often?

Four failures account for most bad transitions, and all four are avoidable in the notice period.

The subscription is cancelled before the file is transferred, and history is lost. Records stay with the outgoing firm at a location that no longer matches the books-and-records address on file with CRA, or that the charity cannot access. Restricted fund balances are handed over as a total rather than a schedule, so the new provider cannot tell which fund holds what. And nobody removes the old firm's CRA authorization, which stays live long after the relationship ends.

Handle those four in your first week of notice and the rest of the transition is administrative. Our article on common pitfalls in charity accounting covers the wider set of failures.

If you are moving providers and want to know what a clean onboarding looks like from the other side, our charity bookkeeping service page sets out the process. Our guide to hiring a charity bookkeeper covers the selection questions.

Frequently Asked Questions

Does our bookkeeping firm have to give us our records?

Your charity is responsible for keeping and producing its books and records. Your records and the work product prepared for you should be transferred; a provider may separately own proprietary working papers and internal checklists, which it does not have to supply. Engagement terms usually provide for records to be transitioned during the notice period, so get the transfer done inside that window rather than relying on goodwill afterwards.

Can we switch bookkeepers in the middle of a fiscal year?

Yes, and it is common. Aim for a clean cut-off at a reconciled month end, and avoid the two months before your T3010 deadline if you can. Make the current reconciliation the outgoing firm's last deliverable.

What happens to our QuickBooks or Xero file?

It can transfer intact if ownership is moved through the platform's own transfer procedure while the subscription is still active. Retention behaviour after a cancelled subscription varies by vendor, so confirm it with the vendor rather than assuming. Establish who holds the controlling role on the file before you give notice.

How far back do we need to keep records after switching?

Financial statements, source documents and T3010 copies must be kept six years from the end of the last tax year to which they relate. Duplicate donation receipts, other than for 10-year gifts, are two years from the end of the calendar year. Governing documents and minutes are kept as long as you are registered plus two years.

Do we need to tell CRA that our bookkeeper changed?

You do not need to notify CRA that you changed providers. You should update authorized representatives on your CRA account so the outgoing firm no longer has access and the incoming one does. You must also make sure your records remain at the Canadian address CRA has on file for your charity.

This article provides general information about bookkeeping practice and Canadian charity compliance. It is not accounting, tax or legal advice. Speak with a qualified adviser about your organization's circumstances.

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