CSA STAFF NOTICE 31-314 NI 31-103 REGISTRATION REQUIREMENTS AND EXEMPTIONS AND RELATED INSTRUMENTS FREQUENTLY ASKED QUESTIONS AS OF FEBRUARY 5, 2010 Background This notice supplements CSA Staff Notice 31-313 – NI 31-103 Registration Requirements and Exemptions and Related Instruments – Frequently Asked Questions as of December 18, 2009. The questions addressed in this notice all relate to financial reporting requirements during the first year under the new registration regime that was introduced on September 28, 2009. NI 31-103 Registration Requirements and Exemptions NI 31-103 QUESTION SECTION PART 12 FINANCIAL CONDITION Division 4 Financial reporting 12.10(3) Annual financial Some registrants were statements previously required by the securities legislation of some provinces to deliver annual audited consolidated financial statements. Subsection 12.10(3) of NI 31-103 requires registrants to deliver financial statements prepared in accordance with National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107) except that the statements must be prepared on a non-consolidated basis. Interim financial information delivered under subsection 12.11(2) of NI 31-103 must also be delivered on a non- consolidated basis. ANSWER For annual audited financial statements for financial years ended on or between September 30, 2009 to August 31, 2010 (and for interim periods within that period), staff will accept financial statements prepared under one of the following two options, even though these do not comply with NI 52-107: 1) non-consolidated financial statements and interim financial information with no comparative figures, or 2) non-consolidated financial statements and interim financial information with non-consolidated comparative figures. CSA staff have concluded that, if a registrant delivers annual non-consolidated financial statements and interim financial information using one of the options above, it would not be appropriate or in the public interest for staff to impose terms and conditions on the registrant. CSA staff have concluded that it would not be appropriate for a registrant to deliver financial statements or interim financial information that includes a current period that is non-consolidated and a comparative period that is presented using a
NI 31-103 QUESTION ANSWER SECTION For registrants that different basis of accounting (e.g. consolidated previously delivered comparative information). audited consolidated financial statements, what comparative figures do regulators expect to be delivered in the first year after the effective date of NI 31-103 (i.e. for financial years ended on or between September 30, 2009 to August 31, 2010)? Subsection 12.10(3) of NI Since the annual non-consolidated financial 31-103 requires a statements are prepared in accordance with a basis registrant to prepare of accounting other than generally accepted annual financial accounting principles, they must be accompanied by statements in accordance an auditor’s report prepared in accordance with CICA with National Instrument Handbook Section 5600 Auditor's Report on Financial 52-107 Acceptable Statements Prepared Using a Basis of Accounting Accounting Principles, other than Generally Accepted Auditing Principles Auditing Standards and that does not contain a reservation. Reporting Currency, except that the statements must be prepared on a non-consolidated basis. The annual financial statements must be audited. What form of audit report should the auditor be using when auditing financial statements of registrants that are prepared on a non-consolidated basis for regulatory purposes? What is the basis of The non-consolidated financial statements for the accounting and acceptable current period must be prepared in accordance with assurance requirements Canadian generally accepted accounting principles for audited non- for public enterprises, except that they have been consolidated financial prepared on a non-consolidated basis and exclude statements that exclude comparative information. The financial statements comparative figures for must include a note describing this basis of entities registering with accounting, and may not include any other material one or more of the differences from Canadian generally accepted securities regulators for accounting principles for public enterprises. the first time during the period prior to September Since the annual non-consolidated financial 28, 2010? statements are prepared in accordance with a basis of accounting other than generally accepted accounting principles, they must be accompanied by
NI 31-103 QUESTION SECTION What is the basis of accounting and acceptable assurance requirements for non-consolidated comparative figures included in annual audited financial statements for entities registering with one or more of the securities regulators for the first time during the period prior to September 28, 2010? Will an application for registration delivered prior to September 28, 2010 be rejected if the audited non- consolidated financial statements delivered by the applicant do not include audited non-consolidated comparative figures? 12.11(2) Interim financial Some registrants were information previously required by the securities legislation of some provinces to deliver annual audited consolidated financial statements. Subsection 12.10(3) of NI 31-103 requires registrants to deliver financial statements prepared in accordance with National Instrument 52-107 Acceptable Accounting ANSWER an auditor’s report prepared in accordance with CICA Handbook Section 5600 Auditor's Report on Financial Statements Prepared Using a Basis of Accounting other than Generally Accepted Auditing Principles that does not contain a reservation. The non-consolidated financial statements for the current period must be prepared in accordance with Canadian generally accepted accounting principles for public enterprises, except that they have been prepared on a non-consolidated basis. The financial statements must include a note describing this basis of accounting, and may not include any other material differences from Canadian generally accepted accounting principles for public enterprises. Since the annual non-consolidated financial statements are prepared in accordance with a basis of accounting other than generally accepted accounting principles, they must be accompanied by an auditor’s report prepared in accordance with CICA Handbook Section 5600 Auditor's Report on Financial Statements Prepared Using a Basis of Accounting other than Generally Accepted Auditing Principles that does not contain a reservation. No. An application will not be rejected solely on the basis of failure to provide audited non-consolidated comparative figures. However, we encourage such applicants to include non-consolidated comparative figures where possible, even if they are not available in audited form. For annual audited financial statements for financial years ended on or between September 30, 2009 to August 31, 2010 (and for interim periods within that period), staff will accept financial statements prepared under one of the following two options, even though these do not comply with NI 52-107: 1) non-consolidated financial statements and interim financial information with no comparative figures, or 2) non-consolidated financial statements and interim financial information with non-consolidated comparative figures.
NI 31-103 QUESTION SECTION Principles, Auditing Standards and Reporting Currency (NI 52-107) except that the statements must be prepared on a non-consolidated basis. Interim financial information delivered under subsection 12.11(2) of NI 31-103 must also be delivered on a non- consolidated basis. For registrants that previously delivered audited consolidated financial statements, what comparative figures do regulators expect to be delivered in the first year after the effective date of NI 31-103 (i.e. for financial years ended on or between September 30, 2009 to August 31, 2010)? What is the basis of accounting for interim financial information delivered by registrants? ANSWER CSA staff have concluded that, if a registrant delivers annual non-consolidated financial statements and interim financial information using one of the options above, it would not be appropriate or in the public interest for staff to impose terms and conditions on the registrant. CSA staff have concluded that it would not be appropriate for a registrant to deliver financial statements or interim financial information that includes a current period that is non-consolidated and a comparative period that is presented using a different basis of accounting (e.g. consolidated comparative information). The interim financial information must be prepared and presented on a similar basis as the annual non-consolidated financial statements (see discussion above with respect to subsection 12.10(3)).
NI 33-109 Registration Information NI 33-109 QUESTION ANSWER SECTION FORM 33-109F6 Will an application for No. An application will not be rejected solely on the FIRM REGISTRATION registration delivered prior to basis of failure to provide audited non-consolidated September 28, 2010 be comparative figures. However, we encourage such rejected if the audited non- applicants to include non-consolidated comparative consolidated financial figures where possible, even if they are not available statements delivered by the in audited form. applicant do not include audited non-consolidated comparative figures?
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