Last week, the OSC's Investment Funds and Structured Products Branch released a notice reminding investment fund issuers that, where an auditor has not performed a review of an investment fund's interim financial report, s. 2.12 of NI 81-106 requires the report to be accompanied by a notice indicating that fact.
In the course of its IFRS review, Branch staff identified non-compliance with this notice requirement. While the instrument does not specify the form of notice, the Companion Policy states that the notice should be on a separate page appearing immediately before the interim financial report. According to Branch staff, a lack of the required notice implies that a review was conducted and that the auditor did not express a reservation. Marking interim financial reports as "unaudited" does not fulfill this requirement.
In cases where the reports appeared to have been reviewed by the auditor, the Branch found a lack of clarity in respect of whether the reviews were in accordance with section 7060 Auditor Review of Interim Financial Statements of the CPA Canada Handbook.
As such, Branch staff have requested that investment fund issuers refile their interim financial reports for the period ending June 30, 2014 with the required notice and accompanied by a news release explaining the information being filed. Branch staff also reminded investment fund managers that a deficiency in the required disclosure could ultimately result with the issuer being placed on the default list.
This is the second notice released by the Branch in connection with its review the first IFRS interim financial reports for the period ended June 30, 2014. The first notice was released in October. The OSC is continuing to monitor compliance with requirements regarding the disclosures respecting auditor review and may release further notices as necessary.
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