OSC Staff Notice 51-718 - Key Considerations Relating to an Auditor's Involvement with Interim Financial Reports
Review Results

Review Results

We reviewed a sample of 72 issuers, comprised of 28 non-venture and 44 venture issuers, where it appeared that the interim financial statements had been reviewed by its auditor. We asked these issuers to confirm that their interim financial statements had been reviewed in accordance with securities legislation and Section 7050 auditor review of interim financial statements (Section 7050) of the Canadian Institute of Chartered Accountants Handbook (the Handbook).

Overall, we found that 35% of the issuers reviewed, consisting of four non-venture and 21 venture issuers, did not comply with the disclosure requirements relating to an auditor’s involvement with interim financial statements. Specifically, 48% of venture issuers and 14% of non-venture issuers selected, confirmed that an auditor did not perform a review of its interim financial statements and yet these statements were not accompanied by a notice indicating that fact. Given the importance of this information to investors, we requested that these issuers refile their third quarter interim financial statements with the disclosure that its previously filed interim financial statements were not reviewed by its auditor. The reasons cited for noncompliance by issuers included a general lack of awareness about their disclosure obligations or confusion about what would constitute a review under securities legislation and Section 7050 of the Handbook. To improve the level of compliance going forward, we have highlighted below the relevant securities law requirements relating to an auditor’s involvement with interim financial reports.