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Bulletin #0472-P

Policy
Approval of Housekeeping Amendments to MFDA Form 1 – Financial Questionnaire and Report

Contact: Laura Milliken
BULLETIN #0472–P
Director, Financial Compliance
March 23, 2011
Phone: 416-943-5843
E-mail: lmilliken@mfda.ca

MFDA Bulletin

Policy

For Distribution to Relevant Parties within your Firm

Approval of Housekeeping Amendments to MFDA Form 1 – Financial
Questionnaire and Report

The securities regulatory authorities in British Columbia, Alberta, Saskatchewan, Manitoba,
Ontario, New Brunswick and Nova Scotia (the “Recognizing Regulators”) have approved/not
objected to housekeeping amendments to MFDA Form 1 (International Financial Reporting
Standards) (“IFRS”) and MFDA Form 1 – Financial Questionnaire and Report (Canadian
Generally Accepted Accounting Principles) (“CGAAP”). The housekeeping amendments are
effective immediately and will be brought forward for ratification at the December 2011 Annual
General Meeting of Members. The amendments to the IFRS and CGAAP versions of the Form 1
are attached as Schedule “A” and Schedule “B”, respectively, to this Bulletin.

Background

For a transitional period of time, the MFDA will have two separate prescribed financial reporting
forms for its membership in order to comply with the reporting requirements under MFDA Rule
3.5.1. The existence of two forms is a result of recent changes to the Canadian accounting
standards that now require all publicly accountable enterprises (“PAEs”) to prepare their
financial reports in accordance with IFRS. As such, the MFDA recently amended its financial
reporting form to align it with IFRS, except as modified by the MFDA, and mandated one
reporting standard for its membership. The new MFDA Form 1 (“Form (IFRS)”) was approved
by the Recognizing Regulators on January 21, 2011 for implementation by Members
commencing with their fiscal years beginning on or after January 1, 2011. Until such time as all
Members are required to transition to the new basis of reporting under the Form (IFRS), they
continue to report under the old MFDA Form 1 (“Form (CGAAP)”), which is based upon
CGAAP, except as modified by the MFDA.


Reasons for Amendments

Auditor’s Reports – Form (IFRS)

The current auditors’ reports were drafted and approved together with all the other amendments
to the old Form 1 made to align with IFRS. Reference to Statement F (Statement of Changes in
Subordinated Loans) was incorrectly included in the “fair presentation” report rather than the
“compliance” framework report. Consequently, amendments to each of the Independent
Auditor’s Reports and related references throughout the Form (IFRS) have been made to ensure
auditors are able to comply with CAS.

In addition to amending the auditor’s reports, additional housekeeping amendments to the Form
1 General Notes and Definitions have been made to correctly reflect that the respective
Statements within the Form (IFRS) are either captured under a reporting framework, or
supplemental financial information required by the MFDA.

Auditor’s Reports – Form (CGAAP)

Just as the Canadian Accounting Standards Board (“AcSB”) pronounced that international
accounting standards would replace Canadian standards, the Canadian Auditing and Assurance
Standards Board (“AASB”) also made the decision to replace Canadian standards with the
international standards. Consequently, the AASB pronounced that International Standards on
Auditing (“ISA”) would replace Generally Accepted Auditing Standards for audits of financial
statements as the Canadian Auditing Standards (“CAS”) effective for audits of financial
statements for periods ending on or after December 14, 2010. Consequently, the Part I and II
Auditors’ Reports contained in the Form (CGAAP) has to be amended in order for auditors of
MFDA Members to comply with the new CAS effective for audit years ending December 14,
2010 or later.

The amendments will result in the replacement of the Part I and II reports with two Independent
Auditor’s Reports that are consistent with those approved for the Form (IFRS).

Description of Amendments

Auditor’s Reports – Form (IFRS)

The following is a summary of the amendments that are reflected in Schedule “A”:

Table of Contents – updated to remove reference to Statement F from the independent
auditor’s report based upon the fair presentation framework and to include it in the report
based upon the compliance framework.

General Notes and Definitions [Note 2 – Presentation] – updated to properly reflect
Statement E, Statement of changes in capital and retained earnings (corporations) or
undivided profits (partnerships),
as a financial statement falling within the IFRS
reporting framework rather than supplemental financial information required by the
MFDA.
Page 2 of 3

Independent Auditors’ Report for Statements A, D, E and F – updated to remove
reference to Statement F in this report.

Independent Auditors’ Report for Statements B and C – updated to include reference to
Statement F in this report.

Auditor’s Reports – Form (CGAAP)

The following is a summary of the amendments that are reflected in Schedule “B”:

Table of Contents – updated to remove reference to Part I Auditors’ Report, Part II
Auditors’ Report and include two Independent Auditor’s Reports to address opinions
based upon the fair presentation and compliance frameworks. In addition, Statement C
has been separated into Part I, Statement of Early Warning Excess and Part II, Statement
of Early Warning Tests to facilitate disclosure in the auditor’s report that the early
warning tests are not audited information which is consistent with the Form (IFRS)
requirements.

Part I Auditors’ Report – deleted;

Part II Auditors’ Report – deleted;

Independent Auditor’s Report for Statements A, D and E – this report is consistent with
the fair presentation framework report contained in the Form (IFRS) but has been
modified to ensure the terminology aligns with Form (CGAAP) terminology (e.g.
Statement A refers to “Statement of Assets and of Liabilities and Shareholder/Partner
Capital” rather than “Statement of Financial Position”).

Independent Auditor’s Report for Statements B, C and F – this report is consistent with
the compliance framework report contained in the Form (IFRS) but has been modified to
ensure the terminology aligns with the Form (CGAAP).

Notes and Instructions to the Auditors’ Reports – updated to ensure consistency with the
Form (IFRS).

DM#246987
Page 3 of 3


Schedule “A”

FORM 1 – TABLE OF CONTENTS

___________________________________________________
(Member Name)

_______________________________________
(Date)

GENERAL NOTES AND DEFINITIONS

CERTIFICATE OF PARTNERS OR DIRECTORS

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

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

PART I
STATEMENT
A
Statement of financial position
B
Statement of risk adjusted capital
C
Statement of early warning excess
D
Statement of income and comprehensive income
E
Statement of changes in capital and retained earnings (corporations)

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

Notes to the Form 1 financial statements

PART II
REPORT ON COMPLIANCE FOR INSURANCE AND 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
Current Income taxes
4
Insurance
5
Early warning tests
6
Other supplementary information [not required at audit date]

FORM 1 – GENERAL NOTES AND DEFINITIONS

GENERAL NOTES:

1. Each Member must comply with the requirements in Form 1 as approved and amended from time to time by the board of
directors of the Mutual Fund Dealers Association of Canada (the Corporation).

Form 1 is a special purpose report that includes financial statements and schedules, and is to be prepared in accordance
with International Financial Reporting Standards (IFRS), except as prescribed by the Corporation. Each Member must
complete and file all of these statements and schedules.

2. The following are Form 1 IFRS departures as prescribed by the Corporation:

Prescribed IFRS departure
Trading balances
When reporting trading balances relating to Member and client securities and

other investment transactions, the Corporation allows the netting of
receivables from and payables to the same counterparty.
Preferred shares
Preferred shares issued by the Member and approved by the Corporation are
classified as shareholders’ capital.
Presentation
Statements A and D contain terms and classifications (such as allowable and
non-allowable assets) that are not defined under IFRS. In addition, specific
balances may be classified or presented on Statements A, and D and E in a
manner that differs from IFRS requirements. The General Notes and
Definitions, and the applicable Notes and Instructions to the Statements,
should be followed in those instances where departures from IFRS
presentation exists.

Statements B, C, E and F are supplementary financial information, which are
not statements contemplated under IFRS.
Separate financial
Consolidation of subsidiaries is not permitted for regulatory reporting
statements on a
purposes except for related companies that meet the definition of “related
non-consolidated
Member” in MFDA By-law No. 1 and the Corporation has approved the
basis
consolidation.

Because Statement D only reflects the operational results of the Member, a
Member must not include the income (loss) of an investment accounted for
by the equity method.
Statement of cash
A statement of cash flow is not required as part of Form 1.
flow
Valuation
Securities are to be valued and reported at “market value”.

3. The following are Form 1 prescribed accounting treatments based on available IFRS alternatives:

Prescribed accounting treatment
Hedge accounting
Hedge accounting is not permitted for regulatory reporting purposes. All
security and derivative positions of a Member must be marked-to-market at
the reporting date. Gains or losses of the hedge positions must not be
deferred to a future point in time.
Securities owned
A Member must categorize all investment positions as held-for-trading
and sold short as
financial instruments. These security positions must be marked-to-market.
held-for-trading

Because the Corporation does not permit the use of available for sale and
hold-to-maturity categories, a Member must not include other comprehensive
income (OCI) and will not have a corresponding reserve account relating to
marking-to-market available for sale security positions.
Valuation of a
A Member must value subsidiaries at cost.
subsidiary

4. These statements and schedules should be read in conjunction with the Corporation’s Bylaws, Rules and Policies.

5. For purposes of these statements and schedules, the accounts of related companies that meet the definition of “related


GENERAL NOTES AND DEFINITIONS (Continued)

Member” in MFDA By-law No. 1 may be consolidated.

6. For purposes of the statements and schedules, the capital calculations must be on a trade date reporting basis unless
specified otherwise in the Notes and Instructions to Form 1.

7. Comparative figures on all statements are required only at the audit date. As a transition exemption for the changeover to
International Financial Reporting Standards (IFRS) from Canadian Generally Accepted Accounting Principles
(CGAAP), Members are not required to file comparative information for the preceding financial year as part of the first
audited Form 1 under IFRS.

8. All statements and schedules must be expressed in Canadian dollars and must be rounded to the nearest dollar.

9. Supporting details should be provided, as required, showing a breakdown of any significant amounts that have not been
clearly described on the statements and schedules.

10. Mandatory security counts. Securities held in segregation and safekeeping must be counted once in the year in
addition to the count as at the year-end audit date.

11. Mandatory reconciliations. Reconciliations must be performed monthly in addition to the year-end audit date between
the Member’s records and the records of the depository or custodian where the Member holds its own and client
securities in nominee name accounts.


DEFINITIONS :

1. “acceptable entity” means:

(a) Acceptable institutions.

(b) Government of Canada, the Bank of Canada and Provincial Governments.

(c) Insurance companies licensed to do business in Canada or a province thereof.

(d) Canadian provincial capital cities and all other Canadian cities and municipalities, or their equivalents.

(e) All crown corporations, instrumentalities and agencies of the Canadian federal or provincial governments which are
government guaranteed as evidenced by a written unconditional irrevocable guarantee or have a call on the consolidated
revenue fund of the federal or provincial governments.

(f) Canadian pension funds which are regulated either by the Office of Superintendent of Financial Institutions or a
provincial pension commission.

(g) Corporations (other than Regulated Entities) with a minimum net worth of $75 million on the last audited balance sheet,
provided acceptable financial information with respect to such corporation is available for inspection.

(h) Members of the Corporation.

(i) Regulated entities.

2. “acceptable institutions” means:

(a) Canadian banks, Quebec savings banks, trust companies licensed to do business in Canada or a province thereof.

(b) Credit and central credit unions and regional caisses populaires.

3. “acceptable securities locations” means those entities considered suitable to hold securities on behalf of a Member, for
both inventory and client positions, without capital penalty, given that the locations meet the requirements outlined in the
segregation Bylaws, Rules or Policies of the Corporation including, but not limited to, the requirement for a written
custody agreement outlining the terms upon which such securities are deposited and including provisions that no use or


GENERAL NOTES AND DEFINITIONS (Continued)

disposition of the securities shall be made without the prior written consent of the Member and the securities can be
delivered to the Member promptly on demand. The Corporation will maintain and regularly update a list of those foreign
depositories and clearing agencies that comply with these criteria. The entities are as follows:

(a) Depositories

i. Canada
CDS Clearing and Depository Services Inc.

ii. United States

Depository Trust Company

(b) Government of Canada, the Bank of Canada and Provincial Governments.

(c) Canadian banks, Quebec savings banks, trust companies and loan companies licensed to do business in Canada or a
province thereof.

(d) Credit and central credit unions and regional caisses populaires.

(e) Insurance companies licensed to do business in Canada or a province thereof.

(f) Mutual Funds or their Agents – with respect to security positions maintained as a book entry of securities issued by the
mutual fund and for which the mutual fund is unconditionally responsible.

(g) Regulated entities.

4. “regulated entities” means those that are Members covered by the Canadian Investor Protection Fund or Members of
recognized exchanges and associations. For the purposes of this definition, recognized exchanges and associations are
those that are identified as a “regulated entity” by the Investment Industry Regulatory Organization of Canada.



FORM 1 – INDEPENDENT AUDITOR’S’ REPORT FOR STATEMENTS A, D AND, E AND F

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

We have audited the accompanying Statements of ______________________________ (Member) (the
“Member”), which comprise the statement of financial position as at _______________ (date) (Statement A) and
the statement of income and comprehensive income (Statement D) and statement of changes in capital and
retained earnings (Statement E) for the year then ended ____________________ (date) (Statement E) and the
statement of changes in subordinated loans (Statement F), and a summary of significant accounting policies and
other explanatory information. 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. (“MFDA”).

Management’s rResponsibility 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 MFDA 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 rResponsibility

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 entity’s 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 entity’s 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 the
Member____________________________ (Member) as at __________ (date), and the results of its operations
and its changes in subordinated loans for the year then ended in accordance with the financial reporting provisions
of the Notes and Instructions to Form 1 prescribed by the MFDAMutual Fund Dealers Association of Canada.

Going Concern [MFDA Note: EFS to allow for auditor to include emphasis of matter paragraph for Going
Concern – this is an option for auditors but not part of the standard report]

Without modifying our opinion, we draw attention to Note _____ (note) in the Statements which indicates that the
Member ______________________________ (Member) incurred a net loss of _________ ($ amount) during the
year ended ________ (date) and, as of that date, the Member’s___________________________ (Member’s)
current liabilities exceeded its total assets by __________($ amount). These conditions, along with other matters


as set forth in Note _____(note), indicate the existence of a material uncertainty that may cast significant doubt
about the Member’s ____________________________ (Member’s) ability to continue as a going concern.

(EFS to allow for auditor to include other potential Emphasis of Matter and Other Matter paragraphs should one
be required under the CASs or determined appropriate by the auditor to be included in the auditors’ report. Such
wording would be agreed upon with MFDA prior to the filing of Form 1).


Basis of Accounting and Restriction on Use

Without modifying our opinion, we draw attention to Note _____(note) to the Statements which describes the
basis of accounting. The Statements are prepared to assist the Member__________________________ (Member)
to meet the requirements of the MFDAMutual Fund Dealers Association of Canada. As a result, the Statements
may not be suitable for another purpose. Our report is intended solely for the Member.______________________
(Member)
, the MFDA Mutual Fund Dealers Association of Canada and the MFDA Investor Protection
Corporation and should not be used by parties other than the. Member_____________________________
(Member), the MFDA Mutual Fund Dealers Association of Canada and the MFDA Investor Protection
Corporation.

([Note: EFS to allow for auditor to include other potential Emphasis of Matter and Other Matter paragraphs
should one be required under the CASs or determined appropriate by the auditor to be included in the auditor’s
report. Such wording would be agreed upon with MFDA prior to the filing of Form 1).

Unaudited Information

We have not audited the information in Schedule 5 of Part II of Form 1 and accordingly do not express an opinion
on this schedule.

[Audit Firm]

[Signature]

[Date]

[Address]

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


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

We have audited the accompanying Statements of Form 1 (the “Statements”) of ___________________
(Member) name) (the “Member”), which comprise of: as at __________ (year end date).

Statement B – Statement of Risk Adjusted Capital as at ________________________ (date)
Statement C – 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(“MFDA”).

Management’s rResponsibility 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 MFDAMutual 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 entity’s 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 entity’s 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 and C of Form 1 as at ____________ (year enddate)
and in Statement F for the year ended _____________(date) is prepared, in all material respects, in accordance
with the financial reporting provisions of the Notes and Instructions to Form 1 prescribed by the MFDAMutual
Fund Dealers Association of Canada.

Basis of Accounting and Restriction on Use

Without modifying our opinion, we draw attention to Note _____(note) to the Statements which describes the
basis of accounting. The Statements are prepared to assist the Member_______________________ (Member) to
meet the requirements of the MFDAMutual Fund Dealers Association of Canada. As a result, the Statements may
not be suitable for another purpose. Our report is intended solely for the Member______________________


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

[Audit Firm]

[Signature]

[Date]

[Address]


FORM 1 – INDEPENDENT AUDITOR’S’ REPORTS
NOTES AND INSTRUCTIONS

A measure of uniformity in the form of the auditor’s’ reports is desirable in order to facilitate
identification of circumstances where the underlying conditions are different. Therefore, when auditors
are able to express an unqualified opinion, their reports should take the form of the auditor’s’ reports
shown above.

Any limitations in the scope of the audit must be discussed in advance with the Corporation.
Discretionary scope limitations will not be accepted. Any emphasis of matter in the auditor’s’ reports
must be discussed in advance with the Corporation.

Two copies with original signatures must be provided to the Corporation.

December 11, 2008
Schedule “B”

FORM 1
MFDA FINANCIAL QUESTIONNAIRE AND REPORT

___________________________________________________
(Firm Name)

_______________________________________
(Date)

TABLE OF CONTENTS

GENERAL NOTES AND DEFINITIONS

PART I — AUDITORS’ REPORT
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 and
C
Part II – eEarly 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 — AUDITORS’ REPORT [at audit date only]

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


December 11, 2008
MFDA FINANCIAL QUESTIONNAIRE AND REPORT
PART I – AUDITORS’ REPORTINDEPENDENT AUDITOR’S REPORT FOR STATEMENTS
A, D AND E

TO: The MFDA Mutual Fund Dealers Association of Canada and the MFDA Investor Protection
Corporation.

We have audited the following Part I financialaccompanying sStatements of
__________________________________(Member), which comprise of:

(firm)


Statement A — Statements of assets and of liabilities and shareholder/partner capital as at
_________________________ and _________________________;

(date)
(date)


Statement B — Statement of risk adjusted capital,

as at __________________ 20___ and __________________ 20___;

(date)
(date)
Statement C — Statement of early warning excess and early warning tests;

Statement D — Summary statement of income for the years ended _______________ 20___

(date)

and __________________ 20___;

(date)

Statement E — Statement of changes in capital and retained earnings (corporations) or

undivided profits (partnerships) for the year ended; and

______________________________

(date)

Statement F — Statement of changes in subordinated loans for the year ended ______ 20___.

(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.
These financial statements have been prepared for the purpose of complying with the By-laws, Rules
and Policies of the MFDA. These financial statements are the responsibility of the firm’s management.
Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those
standards require that we plan and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.

In our opinion,

(a) the statements of assets and of liabilities and shareholder/partner capital and the summary statement
of income present fairly, in all material respects, the financial position of the firm as at
_________________ 20___ & ________________ 20___ and the results of its operations for

(dates)

the years then ended in the form required by the MFDA in accordance with the basis of accounting
described in the Notes to the Financial Questionnaire and Report.

(b) the statement of risk adjusted capital, as at _______________20____ &

December 11, 2008

(date)

___________ 20___ and the statements of early warning excess and early warning tests,

(date)

changes in capital and retained earnings (corporations) or undivided profits (partnerships), and
changes in subordinated loans, either as at or for the year ended 20

(date)

are presented fairly, in all material respects, in accordance with the applicable instructions of the
MFDA.

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
____________________________
(Member) as at __________ (date) and ________________(date), and 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 ____(date) to the Statements which describes the basis
of accounting. The Statements are prepared to assist __________________________ (Member) to meet the
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 _______________________ (Member), the Mutual Fund
Dealers Association of Canada and the MFDA Investor Protection Corporation and should not be used by parties
other than _________________________ (Member), the Mutual Fund Dealers Association of Canada and the
MFDA Investor Protection Corporation.




December 11, 2008
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]



December 11, 2008

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 _______________(date) and ________________(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 _____________ (date) and
__________________(date), Statement C Part I as at __________________(date) and in Statement F for the year
ended ______________ (date) is 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..



December 11, 2008
Basis of Accounting and Restriction on Use

Without modifying our opinion, we draw attention to Note _____(note) to the Statements which describes the
basis of accounting. The Statements are prepared to assist ________________________ (Member) to meet the
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 ________________________ (Member), the Mutual Fund
Dealers Association of Canada and the MFDA Investor Protection Corporation and should not be used by parties
other than ___________________________(Member), the Mutual Fund Dealers Association of Canada and the
MFDA Investor Protection Corporation.

[Audit Firm]

[Signature]

[Date]

[Address]


December 11, 2008

These financial statements, which have not been, and were not intended to be, prepared in
accordance with Canadian generally accepted accounting principles, are solely for the information
and use of the firm, the MFDA and the MFDA Investor Protection Corporation, to comply with the
By-laws, Rules and Policies of the MFDA. The financial statements are not intended to be and
should not be used by anyone other than the specified users or for any other purpose.

_______________________________________
_______________________________________
[auditing firm name]
[date]
______________________________________
_______________________________________
[signature]
[place of issue]


December 11, 2008
PART I -– INDEPENDENT AUDITOR’S’ REPORTS
NOTES AND INSTRUCTIONS

A measure of uniformity in the form of the auditor’s’ reports is desirable in order to facilitate
identification of circumstances where the underlying conditions are different. Therefore, when auditors
are able to express an unqualified opinion, their report should take the form of the auditors’ report shown
above.

An alternate form of Auditors’ Report is available from the MFDA in the case where the auditor is
unable to express an opinion on previous year’s figures due to not having been the auditor for the
previous year.

Any limitations in the scope of the audit must be discussed in advance with the MFDA. Discretionary
scope limitations will not be accepted. Any emphasis of matter in the auditor’s report must be discussed
in advance with the MFDA.

Two copies with original signatures must be provided to the MFDA.



December 11, 2008

MFDA FINANCIAL QUESTIONNAIRE AND REPORT
PART II – AUDITORS’ REPORT

TO: The MFDA and the MFDA Investor Protection Corporation.

We have audited Part I of the MFDA Financial Questionnaire and Report (“Part I – FQR”)

of__________________________ as at _________________________ and for the year then reported thereon as of

(firm)



(date)


_________________________.
(date)
The additional information set out in Part II of the MFDA Financial Questionnaire and Report Schedules 1 to 4 (“Part II –
FQR”) have been subjected to the procedures applied in the audit of Part I – FQR, and in our opinion, present fairly the
information contained therein, in all material respects, in relation to Part I – FQR taken as a whole.
No procedures have been carried out in addition to those necessary to form an opinion on Part I – FQR.
The additional information set out in Part II – FQR, which have not been, and were not intended to be, prepared in
accordance with Canadian generally accepted accounting principles, are solely for the information and use of the Company,
the MFDA and the MFDA Investor Protection Corporation to comply with the By-laws, Rules and Policies of the MFDA.
The additional information set out in Part II – FQR are not intended to be and should not be used by anyone other than the
specified users or for any other purpose.

___________________________________
_____________________________
[name of auditing firm]
[date]

___________________________________
______________________________
[signature]
[place of issue]

NOTES:

A measure of uniformity in the form of the auditors’ report is desirable in order to facilitate identification of circumstances
where the underlying conditions are different. Therefore, when auditors are able to express an unqualified opinion, their
report should take the above form.

Any limitations in the scope of the audit must be discussed in advance with the MFDA. Discretionary scope limitations will
not be accepted.

Copies with original signatures must be provided to the MFDA.