NIN 96/33 - Blanket Order #96/16 Reconciliation Requirements for Certain Foreign Issuers under the Prompt Offering Qualification System [NIN - Rescinded]
| Published Date: | 1996-09-27 |
|---|---|
| Effective Date: | 1996-09-26 |
Section 2(5) of the Securities Rules requires an issuer that prepares financial statements in accordance with foreign generally accepted accounting principles to state in the notes to the financial statements which principles have been applied and explain and quantify any significant differences between these principles and the generally accepted accounting principles set out in the CICA Handbook ("Canadian GAAP"). Section 2(6) of the Securities Rules requires that if an audit is performed on an issuer's financial statements and the auditor's report on those financial statements is prepared in accordance with foreign generally accepted auditing standards, the auditor's report explain any significant differences between these standards and the generally accepted auditing standards set out in the CICA Handbook ("Canadian GAAS"). Section 2(7) of the Securities Rules requires that where a public accountant performs the procedures necessary to issue a public accountant's report on an issuer's financial statements and the public accountant's report is prepared in accordance with foreign procedures, the public accountant's report must explain any significant differences between the procedures performed to issue the public accountant's report and the procedures necessary to prepare a public accountant's report under the CICA Handbook ("Canadian Procedures").
Sections 2(5), 2(6) and 2(7) of the Securities Rules apply to all financial statements whether filed under the continuous disclosure requirements of Part 10 of the Securities Rules or contained in a prospectus or incorporated by reference into a short form prospectus under division 2 of Part 7 of the Securities Rules.
BOR#96/16 only provides POP Filing SEC Registrants relief from the requirements of sections 2(5), 2(6) and 2(7) of the Securities Rules for purposes of the continuous disclosure requirements of Part 10 of the Securities Rules. Therefore, if a POP Filing SEC Registrant issuer chooses to avail itself of the relief provided in BOR#96/16 for the filing of its financial statements under Part 10 of the Securities Rules and subsequently files a preliminary short form prospectus, short form prospectus or securities exchange take-over bid circular that incorporates by reference those financial statements, the issuer will be required to comply with the requirements of sections 2(5), 2(6) and 2(7) of the Securities Rules as they apply to prospectuses and securities exchange take-over bid circulars.
In that case, a POP Filing SEC Registrant should include in its prospectus or other document the reconciliation of financial statements to Canadian GAAP under section 2(5) as a separate schedule of financial information that should be audited when it relates to annual financial statements. The explanation of the differences in the auditing standards applied in the audit of the financial statements and Canadian GAAS under section 2(6) should be presented as a separate statement signed by the auditor immediately preceding or following the audited schedule of financial information. The explanation of the differences in the procedures performed and Canadian Procedures under section 2(7) should be presented as a separate statement signed by the public accountant immediately preceding or following the schedule of financial information. In addition, the POP Filing SEC Registrant should include the information and discussion required by NP 47 on selected consolidated financial information and management's discussion and analysis. Reference is made to footnote 24 of NP 47 for further guidance on the additional information and discussion required in a short form prospectus if the issuer does not include a reconciliation of its financial statements to Canadian GAAP in the notes to its financial statements.
BOR#93/1 that implements NP 47 currently exempts issuers required to reconcile their financial statements to Canadian GAAP under section 2(5) of the Securities Rules from providing the reconciliation in the notes to the financial statements that are incorporated by reference into a preliminary short form prospectus, short form prospectus or securities exchange take-over bid circular provided the reconciliation is included in the relevant document as required by NP 47.
BOR#96/16 provides relief from the requirement of section 2(6) of the Securities Rules to provide an explanation of the significant differences in the auditing standards applied and Canadian GAAS in an auditor's report provided the explanation is included in the preliminary short form prospectus, short form prospectus or securities exchange take-over bid circular. BOR#96/16 also provides relief from the requirement of section 2(7) of the Securities Rules to provide an explanation of the significant differences in the procedures applied and Canadian Procedures in a public accountant's report provided the explanation is included in the preliminary short form prospectus, short form prospectus or securities exchange take-over bid circular.
A POP Filing SEC Registrant may choose not to avail itself of the relief provided in BOR#96/16 when filing its financial statements under Part 10 of the Securities Rules. In that case, the issuer must comply with sections 2(5), 2(6) and 2(7) of the Securities Rules and no further requirements will apply if the issuer subsequently files a preliminary short form prospectus, short form prospectus or securities exchange take-over bid circular that incorporates by reference the relevant financial statements.
DATED at Vancouver, British Columbia, on September 26, 1996.
Douglas M. Hyndman
Chair
REF: BOR#96/16
BOR#93/1
BOR#95/8
BOR#95/9