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Letter Summary:
The CAC does not support the proposed change to NI 52-107 to permit the use of PE GAAP in the circumstances set out. PE GAAP is only GAAP when applied to private enterprises. The PE standards assume a disclosure environment that does not exist when applied to publicly accountable enterprises. The inappropriate use of PE GAAP would have an unacceptable negative impact on the quantity and quality of information users of financial statements have available to make informed financial decisions. The CAC does not support the reduction in information provided to investors and lenders that would result from the proposed use of PE GAAP. The proposed changes do not support the securities commissions’ primary objective of investor protection. The CAC is unconvinced that the changes provide any benefit to investors or any significant cost savings to issuers. The use of Canadian GAAP and now IFRS has already been subjected to and justified by an extensive cost benefit analysis by the accounting standards boards. Further, the proposed relief from IFRS in this context is applying a lower audit standard than now exists under Canadian GAAP and is merely a deferral of the cost and effort to convert to IFRS.
Overview of the Council’s Comments:
The Canadian Advocacy Committee of the CFA Institute2 Societies of Canada (the CAC) appreciates the opportunity to comment to the Canadian Securities Commissions on the proposal contained in NI 52-107 regarding the use of Private Equity Generally Accepted Accounting Principles (PE GAAP) for the Business Acquisition Reports and Prospectuses of publicly accountable enterprises.