41 Accounting principles permitted for annual and interim financial statements of foreign issuers FOREIGN ISSUERS ACCOUNTING PRINCIPLES SEC foreign issuers Designated foreign issuers Other foreign issuers Statement of reserves data and other information (NI 51-101F1) • • • U.S. GAAP • No Canadian GAAP reconciliation required • Canadian GAAP reconciliation may be required • Canadian GAAP reconciliation required IFRS • • • Foreign accounting principles used in an SEC filing (annual f/s reconciled to U.S. GAAP) • If ≤ 10% Canadian shareholders Accounting principles accepted in the designation jurisdiction (no reconciliation) • Foreign accounting principles reconciled to Canadian GAAP • • • Source: Acceptable Accounting Principles & Auditing Standards and National Instrument 71-102: Continuous Disclosure and Other Exemptions Relating to Foreign Issuers Note 1. This decision chart provides general guidance and should be read in conjunction with National Instrument 52-107, Companion Policy 71-102CP and National Instrument 51-102. The decision chart does not relate to financial statements other than those of reporting issuers. 2. Foreign Issuers who are not foreign issuers are required to fully comply with National Instrument 51-102. 3. A Canadian GAAP reconciliation would not be required if the designated foreign jurisdiction accepts financial statements prepared in accordance with U.S. GAAP. See the second last row of this chart. Responsibilities of the CFO Since auditor independence standards often restrict auditor assistance in financial statement preparation, your company’s management will have to be responsible for preparing your financial statements. As one of the most important players in a successful listing, your chief financial officer (CFO) should be capable of preparing financial statements in accordance with one of the acceptable GAAP regimes. The Exchanges expect the CFO to have the necessary proficiency in acceptable accounting framework, the ability to converse in the local language in which the business is conducted, and sufficient understanding of local business laws and customs. In addition, the CFO should spend a significant amount of time observing operations in the places where business is conducted so that appropriate oversight of controls occurs and all transactions are duly recorded.
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