The Securities Commission has granted an exemption to an issuer from the requirement that audited financial statements must be accompanied by an auditor’s report expressing an unmodified opinion, as per National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards. This decision was made in the context of an acquisition where the target company’s auditors, appointed in September 2020, could not observe physical inventory counts from earlier dates. Despite this, the auditors were able to perform alternative procedures for the year-end 2019 and the December 31, 2018 closing balance, but could not confirm the opening inventory figures for 2018, leading to a modified opinion.
The exemption was granted under the condition that the target company includes in its Information Circular the audited annual financial statements for the year ended December 31, 2019, with an unmodified audit opinion, and the reviewed interim financial statements for the nine-month period ended September 30, 2020. The only modification in the auditor’s report should be related to the inventory qualification for the specified periods.
This decision is based on the understanding that the target’s business is not seasonal and that the exemption is necessary for the issuer to obtain approval for the acquisition and to comply with the requirements of the securities legislation. The principal regulator concluded that the exemption meets the test set out in the legislation.