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Bulletin #0471-C

Compliance
Audited Form 1 Filing Process

Contact: Laura
Milliken
BULLETIN #0471–C
Director, Financial Compliance
March 23, 2011
Phone: 416-943-5843
E-mail: lmilliken@mfda.ca *
REPLACES BULLETIN #0300-C*

MFDA Bulletin

Compliance

For Distribution to Relevant Parties within your Firm and Audit Firm

Audited Form 1 Filing Process

MFDA Rule 3.5.1(b) requires each Member to file annually with the MFDA, through its auditor,
audited financial information of the Member within 90 days of the Member’s fiscal year end.
The audited financial information must be reported in the prescribed format and filed using the
MFDA’s web-based application, the Electronic Filing System (“EFS”). For a transitional period
of time, the MFDA will have two separate prescribed reporting forms and respective filing
systems: (i) Form 1 based upon Canadian Generally Accepting Accounting Principles, except as
modified by the MFDA (“Form (CGAAP)”); and (ii) Form 1 based upon International Financial
Reporting Standards, except as modified by the MFDA (“Form (IFRS)”). This Bulletin relates
only to annual audited reports prepared in accordance with the Form (CGAAP), which are to
be filed through the MFDA’s electronic filing system relating to this form, EFS (CGAAP).


In order to comply with Rule 3.5.1(b), the following conditions must be satisfied:
ƒ In accordance with MFDA Rule 3.6.8, the Member’s auditor’s reports must be signed by
an engagement partner authorized to do so in accordance with applicable legislation in
the jurisdiction in which the principal office of the Member is located. In addition, the
Member’s auditor must have acknowledged in writing to the MFDA and the Member that
it is familiar with the current MFDA requirements that relate to the matters to be reported
upon. Consequently, all audit engagement partners are required to sign a Letter of
Acknowledgement (Schedule H.1 in the MFDA Membership Application Package
http://mfda.ca/regulation/forms/schedule-h.pdf) prior to commencing a financial audit of
a Member. One requirement the engagement partner acknowledges is that all working
papers relating to the audit engagement are to be made available for review by the MFDA
and the MFDA Investor Protection Corporation.
ƒ Obtain an auditor username and password to EFS (CGAAP) from the MFDA. This
information will be provided directly to the Member’s auditor upon receipt of a Letter of
Acknowledgement and/or direct authorization from a responsible person of the Member.

link to page 4 link to page 5 link to page 7 ƒ Ensure that the annual audited Form (CGAAP) is electronically created and filed with the
MFDA through EFS (CGAAP) by following the steps outlined in MFDA Electronic
Filing System User Documentation (https://www.mfda.ca/efs/help/help.pdf). The annual
audited Form (CGAAP) must be filed electronically within 90 days of the Member’s
fiscal year end. Please refer to MFDA Bulletin #0465-M – 2011 Financial Filing
Deadlines
for a complete list of submission dates and specific details relating to late
filing fees.
ƒ IMPORTANT NOTE: Given system limitations associated with the EFS (CGAAP), the
on-line and PDF versions of the Table of Contents and the Part I and Part II Auditors’
Reports continue to reflect the prescribed Form (CGAAP) version dated December 11,
2008 (i.e. V2.6.2 on EFS (CGAAP)). However, the Table of Contents and Part I and Part
II Auditors’ Reports have in fact been replaced with the prescribed Form (CGAAP)
version dated March 23, 2011. Specifically, the Part I and Part II Reports have been
superseded and replaced with the Independent Auditor’s Report for Statements A, D and
E, and the Independent Auditor’s Report for Statements B, C and F. The Report on
Compliance for Insurance and the Report on Compliance for Segregation of Cash and
Securities remain unchanged.
ƒ In addition to the electronic version, two complete and appropriately signed audited
Forms (CGAAP) must also be submitted to the MFDA by the Member’s auditor in paper
format. The Forms (CGAAP) are expected to be received by the MFDA within three
business days of the filing due date. A complete paper filing of an audited Form
(CGAAP) includes the following appropriately completed forms:
(i)
Table of Contents, version dated March 23, 2011; (see attached)
(ii)
Independent Auditor’s Report for Statements A, D and E, version dated March
23, 2011; (see attached)

(iii)
Independent Auditor’s Report for Statements B, C and F, version dated March 23,
2011; (see attached)

(iv)
Report on Compliance for Insurance, version V.2.6.2;
(v)
Report on Compliance for Segregation of Cash and Securities, version V.2.6.2;
(vi)
Certificate of Partners or Directors, version V2.6.2;
(vii)
Statements A to F (including Notes to the Financial Statements), version V2.6.2,
date and time stamped with the electronic version filed on EFS (CGAAP); and
(viii) Schedules 1 to 4, version V2.6.2, date and time stamped with the electronic
version filed on EFS (CGAAP).

Audit firms wanting to submit the Auditors Reports, Notes to the Financial Statements, and any
other relevant documents associated with the electronic filing of the annual audited Form
(CGAAP) may email the documents to the MFDA prior to submission of the electronic filing to
membershipservices@mfda.ca. MFDA Membership Services staff will then forward the
documents to the financial compliance staff responsible for the specific Member. The financial
compliance staff will verify that the documents submitted by the auditor are complete and
confirm directly to the auditor that the MFDA has received the documents. A formal review of
the electronically filed Reports and Notes will be undertaken by MFDA staff upon receipt of the
completed audited Form (CGAAP), in both electronic and paper formats.
(DM#246937)

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Members and auditors requiring guidance in using the EFS (CGAAP) should contact the
MFDA’s Membership Services Department at membershipservices@mfda.ca or 1-888-466-
6332.

(DM#246937)

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Print Form
March 23, 2011

FORM 1
MFDA FINANCIAL QUESTIONNAIRE AND REPORT

___________________________________________________
(Firm Name)

_______________________________________
(Date)

TABLE OF CONTENTS

GENERAL NOTES AND DEFINITIONS

INDEPENDENT AUDITOR’S REPORT FOR STATEMENTS A, D AND E [at audit date only]

INDEPENDENT AUDITOR’S REPORT FOR STATEMENTS B, C AND F [at audit date only]

PART I
STATEMENT
A (3 pages) Statements of assets and of liabilities and shareholder/partner capital
B
Statement of risk adjusted capital
C
Part I – Statement of early warning excess
C
Part II – Early warning tests
D
Summary statement of income
E
Statement of changes in capital and retained earnings (corporations)

or undivided profits (partnerships)
F
Statement of changes in subordinated loans

CERTIFICATE OF PARTNERS OR DIRECTORS

PART II
REPORT ON COMPLIANCE FOR INSURANCE [at audit date only]

REPORT ON COMPLIANCE FOR SEGREGATION OF CASH AND SECURITIES [at audit date only]

SCHEDULE
1
Analysis of securities owned and sold short at market value
2
Analysis of clients’ debit balances
3
Income taxes
4
Insurance


Print Form
March 23, 2011
MFDA FINANCIAL QUESTIONNAIRE AND REPORT
PART I – INDEPENDENT AUDITOR’S REPORT FOR STATEMENTS A, D AND E
TO: The Mutual Fund Dealers Association of Canada and the MFDA Investor Protection Corporation.

We have audited the accompanying Statements of
, which comprise of:

(Member)

Statement A

Statements of assets and of liabilities and shareholder/partner capital as at

and

(date)

(date)
Statement D

Summary statement of income for the years ended


(date)

and



(date)

Statement E

Statement of changes in capital and retained earnings (corporations) or undivided profits

(partnerships) for the year ended




(date)

and a summary of significant accounting policies and other explanatory information. These Statements have been
prepared by management based upon the financial reporting provisions of the Notes and Instructions to Form 1
prescribed by the Mutual Fund Dealers Association of Canada.

Management’s Responsibility for the Statements

Management is responsible for the preparation and fair presentation of these Statements in accordance with the
financial reporting provisions of the Notes and Instructions to Form 1 prescribed by the Mutual Fund Dealers
Association of Canada and for such internal control as management determines is necessary to enable the
preparation of Statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these Statements based on our audit. We conducted our audit in
accordance with Canadian generally accepted auditing standards. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Statements
are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
Statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the Statements, whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the Member’s preparation and fair presentation of the Statements in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Member’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

Opinion

In our opinion, the Statements present fairly, in all material respects, the financial position of

as at

and
and
(Member)
(date)

(date)

the results of its operations for the years then ended in accordance with the financial reporting provisions of
the Notes and Instructions to Form 1 prescribed by the Mutual Fund Dealers Association of Canada.


Basis of Accounting and Restriction on Use

Without modifying our opinion, we draw attention to Note

to the Statements which describes the basis

(note)

of accounting. The Statements are prepared to assist

to meet the

(Member)

requirements of the Mutual Fund Dealers Association of Canada. As a result, the Statements may not be suitable
for another purpose. Our report is intended solely for
, the Mutual Fund
(Member)

Dealers Association of Canada and the MFDA Investor Protection Corporation and should not be used by parties
other than
,
the Mutual Fund Dealers Association of Canada and the
(Member)

MFDA Investor Protection Corporation.

Unaudited Information

We have not audited the information in Statement C Part II, and Lines 1 and 2 in Statement D, of Part I of Form 1
and accordingly do not express an opinion on this information.

[Audit Firm]

[Signature]

[Date]
[Address]



Print Form

MFDA FINANCIAL QUESTIONNAIRE AND REPORT
FORM 1 – INDEPENDENT AUDITOR’S REPORT FOR STATEMENTS B, C AND F


To: The Mutual Fund Dealers Association of Canada and MFDA Investor Protection Corporation

We have audited the accompanying Statements of Form 1 (the “Statements”) of
,

(Member)
which comprise of:


Statement B – Statement of risk adjusted capital as at

and

(date)

(date)
Statement C Part I – Statement of early warning excess as at

(date)

Statement F – Statement of changes in subordinated loans for the year ended

(date)

These Statements have been prepared by management based on the financial reporting provisions of the Notes
and Instructions to Form 1 prescribed by the Mutual Fund Dealers Association of Canada.

Management’s Responsibility for the Statements

Management is responsible for the preparation of the Statements of Form 1 in accordance with the financial
reporting provisions of the Notes and Instructions to Form 1 prescribed by the Mutual Fund Dealers Association
of Canada, and for such internal control as management determines is necessary to enable the preparation of
Statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Statements based on our audit. We conducted our audit in
accordance with Canadian generally accepted auditing standards. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Statements
are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
Statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the Statements, whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the Member’s preparation of the Statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Member’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

Opinion

In our opinion, the financial information in Statements B as at
and
(date)

(date)
Statement C Part I as at

and in Statement F for the year ended

is
(date)

(date)

prepared, in all material respects, in accordance with the financial reporting provisions of the Notes and
Instructions to Form 1 prescribed by the Mutual Fund Dealers Association of Canada.




Basis of Accounting and Restriction on Use

Without modifying our opinion, we draw attention to Note

to the Statements which describes the basis
(note)

of accounting. The Statements are prepared to assist
to meet the requirements of
(Member)

the Mutual Fund Dealers Association of Canada. As a result, the Statements may not be suitable for another
purpose. Our report is intended solely for
, the Mutual Fund Dealers
(Member)

Association of Canada and the MFDA Investor Protection Corporation and should not be used by parties other
than,
, the Mutual Fund Dealers Association of Canada and the
(Member)

MFDA Investor Protection Corporation.

[Audit Firm]

[Signature]

[Date]
[Address]