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Bulletin #0558-P

Policy
Amendments to MFDA Form 1

Contact: Paige
Ward
BULLETIN #0558 – P
General Counsel & Vice-President, Policy
February 1, 2013
Phone: 416-943-5838
E-mail: pward@mfda.ca

MFDA Bulletin

Policy

For Distribution to Relevant Parties within your Firm

Amendments to MFDA Form 1

Amendments to the MFDA Form 1 have received all requisite approvals and are now effective.
The amendments are intended to update the two Independent Auditor’s Reports contained within
Form 1 to comply with MFDA reporting requirements, which are based upon International
Financial Reporting Standards (“IFRS”).

The General Notes and Definitions to Form 1 state that comparative figures on all statements are
required at the audit date. However, for the first fiscal year that Members were required to
provide audited financial reports using the new Form 1, a transitional provision was granted
allowing comparative balances to be excluded from the statements in the audited Form 1. As
such, the two prescribed Independent Auditor’s Reports within Form 1 did not contain reference
to comparative balances. Consequently, the proposed amendments will update: (i) the
Independent Auditor’s Report for Statements A, D and E; and (ii) the Independent Auditor’s
Report for Statements B, C and F so that auditors can refer to the date of comparative balances as
required by the General Notes and Definitions to Form 1. The amended Form is attached as
Schedule “A”.

DOCs# 321579
Page 1 of 9


Schedule “A”


FORM 1 – TABLE OF CONTENTS
___________________________________________________
(Member Name)

_______________________________________
(Date)

Updated
GENERAL NOTES AND DEFINITIONS
Dec-2011
CERTIFICATE OF PARTNERS OR DIRECTORS
Jan-2011
INDEPENDENT AUDITOR’S REPORT FOR STATEMENTS A, D AND E [at
Feb-2013
audit date only]
INDEPENDENT AUDITOR’S REPORT FOR STATEMENTS B, C AND F [at
Feb-2013
audit date only]

PART I

STATEMENT

A
Statement of financial position
Jan-2011
B
Statement of risk adjusted capital
Jan-2011
C
Statement of early warning excess
Jan-2011
D
Statement of income and comprehensive income
Jan-2011
E
Statement of changes in capital and retained earnings (corporations)
Jan-2011
or undivided profits (partnerships)
F
Statement of changes in subordinated loans
Jan-2011
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
Jan-2011
2
Analysis of clients’ debit balances
Jan-2011
3
Current Income taxes
Jan-2011
4 Insurance
Jan-2011
5
Early warning tests
Jan-2011
6
Other supplementary information [not required at audit date]
Jan-2011

Page 2 of 9


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


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

We have audited the accompanying Statements
which comprise
of

(Member)

the statement of financial position as
(Statement A) and the statement of
at
income

(date)

and comprehensive income (Statement D) and statement of changes in capital and retained earnings
(Statement E)
for the year then
and a summary of significant accounting policies and
ended
other

(date)

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.

We have audited the accompanying Statements of
, which comprise:

(Member)

Statement A

Statement of financial position as at

and


(date)

(date)
Statement D

Statement of income and comprehensive income for the years ended




(date)

and



(date)

Statement E

Statement of changes in capital for the year ended
and changes


(date)

in retained earnings (corporations) or undivided profits (partnerships) for the years ended

and


(date)

(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
Page 3 of 9


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 the results of its operations for the year

as at

and
and
(Member)

(date)

(date)

(Member)

(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.
prescribed by the Mutual Fund Dealers Association of Canada.

Going Concern [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
in the Statements which indicates
Note
that
(note)

incurred a net loss
during the year ended
of
(Member)
($
amount)

and, as of that ‘s
current
date,
liabilities
(date)
(Member’s)

exceeded its total assets
. These conditions, along with other matters as set forth
by
in
($
amount)

in Note

indicate the existence of a material uncertainty that may cast significant doubt about

(note)

‘s ability to continue as a going concern.
(Member’s)

Basis of Accounting and Restriction on Use

Without modifying our opinion, we draw attention to
to the Statements which describes
Note
the
(note)

Page 4 of 9


basis of accounting. The Statements are prepared to to
meet
assist
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
, the Mutual
for
(Member)

Fund Dealers Association of Canada and the MFDA Investor Protection Corporation and should not be
used by
parties other

, the Mutual Fund Dealers Association of Canada
than
and
(Member)

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]

Page 5 of 9


FORM 1 – INDEPENDENT AUDITOR’S REPORT FOR STATEMENTS B, 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)
which comprise:

Statement B – Statement of Risk Adjusted Capital as at


(date)

Statement B – Statement of risk adjusted capital as at

and


(date)

(date)
Statement C – Statement of Eearly wWarning eExcess as at

(date)

Statement F – Statement of cChanges in sSubordinated lLoans 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

Page 6 of 9


In our opinion, the financial information in Statements B and C of Form 1 as at
and in

(date)

Statement F for the year ended
is prepared, in all material respects, in accordance with the financial

(date)

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

(date)

(date)
Statement C 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.

Page 7 of 9


Basis of Accounting and Restriction on Use

Without modifying our opinion, we draw attention to

to the Statements which describes
Note
the
(note)

basis of accounting. The Statements are prepared to

to
assist
(Member)

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

, the Mutual Fund Dealers
than
(Member)

Association of Canada and the MFDA Investor Protection Corporation.

[Audit Firm]

[Signature]

[Date]

[Address]


Page 8 of 9


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.

Page 9 of 9