52-508 - US GAAP and US GAAS for SEC Issuers [BCI - Rescinded]

The British Columbia Securities Commission, having considered it to be in the public interest, orders that the attached BC Instrument 52-508 entitled “US GAAP and US GAAS for SEC Issuers” is made, effective May 2, 2003. 

May 2, 2003

Douglas M. Hyndman
Chair

________________________________________________________________  
(This part is for administrative purposes only and is not part of the Order)

Authority under which Order is made:
Act and sections: not applicable
Other (specify): Securities Rules, section 3(8)

BC Instrument 52-508

US GAAP and US GAAS for SEC Issuers

Order under section 3(8) of the Securities Rules

Definitions

1. In this Instrument:

“SEC” means the Securities and Exchange Commission of the United States of America;

“SEC issuer” means an issuer that:

(a) has a class of securities registered under section 12 of the 1934 Act or is required to file reports under section 15(d) of the 1934 Act; and

(b) is not registered or required to be registered as an investment company under the Investment Company Act of 1940 of the United States of America;

“US GAAP” means generally accepted accounting principles in the United States of America that the SEC has identified as having substantial authoritative support, as supplemented by Regulation S-X and Regulation S-B under the Securities Exchange Act of 1934 of the United States of America; and

“US GAAS” means generally accepted auditing standards in the United States of America, as supplemented by the SEC’s rules on auditor independence.

US GAAP and US GAAS for SEC issuers

2.  Provided the conditions in section 3 are satisfied, an SEC issuer is exempt from the following provisions of the Securities Rules in relation to financial statements filed with the Commission:

(a) section 2;

(b) the requirement in subsection 3(3) that financial statements required by the Securities Act or the regulations must be prepared in accordance with generally accepted accounting principles; and

(c)  the requirement in subsection 3(6) that an audit must be performed and that an auditor must prepare an auditor’s report in accordance with generally accepted auditing standards.

3. If an SEC issuer relies on section 2, then:

(a)  the SEC issuer’s financial statements must be prepared in accordance with US GAAP;

(b) if the SEC issuer previously filed financial statements prepared in accordance with Canadian GAAP, the notes to the first two sets of  the issuer’s annual financial statements after the change from Canadian GAAP to US GAAP and the notes to the issuer’s interim statements for interim periods during those two years must:

(i) explain the material differences between Canadian GAAP and US GAAP that relate to recognition, measurement and presentation;

(ii) quantify the effect of material differences between Canadian GAAP and US GAAP that relate to recognition, measurement and presentation including a tabular reconciliation between net income reported in the financial statements and net income computed in accordance with Canadian GAAP; and

(iii) provide disclosure consistent with Canadian GAAP requirements to the extent not already reflected in the financial statements;

(c) if the SEC issuer previously used Canadian GAAP and has used US GAAP to prepare the financial information for the most recent period presented in its financial statements, the issuer must present financial information for the comparative periods as follows:

 (i) as previously reported in accordance with Canadian GAAP;

(ii) as restated and presented in accordance with US GAAP; and

(iii) supported by an accompanying note that:

(A) explains the material differences between Canadian GAAP and US GAAP that relate to recognition, measurement and presentation; and

(B) quantifies the effect of material differences between Canadian GAAP and US GAAP that relate to recognition, measurement and presentation including a tabular reconciliation between net income as previously reported in the financial statements computed in accordance with Canadian GAAP and net income as restated and presented in accordance with US GAAP;

(d) the comparative information specified in paragraph (c)(i) must be presented on the face of the balance sheet and statements of income and cash flows or in the note to the financial statements required by paragraph (c)(iii);

(e) if the SEC issuer previously filed financial statements prepared in accordance with Canadian GAAP and has filed financial statements prepared in accordance with Canadian GAAP for one or more interim periods of the current year, the issuer must:

(i) restate those interim financial statements in accordance with US GAAP;

(ii) comply with subsections (b), (c) and (d); and

(iii) re-file the restated interim financial statements; and

(f) if the financial statements are required to be audited, they must be audited in accordance with Canadian GAAS or US GAAS and be accompanied by an auditor’s report that:

(i) contains an unqualified opinion;

(ii) identifies all financial periods presented for which the auditor has issued an auditor’s report, and if the issuer has changed its auditor and one or more of the comparative periods presented in the financial statements were audited by a different auditor, the auditor’s report refers to any former auditor’s reports on the comparative periods; and

(iii) identifies the auditing standards used to conduct the audit and the accounting principles used to prepare the financial statements.