ACCOUNTING COMMUNICATION PROCESS - PLAYERS
Canadian securities commission is a forum for the 13 securities regulators of Canada's provinces and territories
established to harmonize regulation of the Canadian capital markets. Their mission is to protect investors from unfair
improper or fraudulent practices.
Accounting standards board (AcSB) is responsible for establishing standards of accounting and reporting by Canadian
companies. It sets standards such as GAAP
Canadian Public Accountability Board - Federal agency which oversees Canadian accounting firms (independent
auditors) that perform auditing engagements of public companies.
External auditors ensure that the companies prepare financial statements in accordance with these standards.
Stock exchanges contributes to quality assurance by undertaking ongoing surveillance of their reporting and trading
Corporate Governance Standards (Stock Exchanges) - Along with provincial governments, set overall corporate
governance standards. (The most prominent is the Ontario Securities Commission).
Responsible for the information in the financial statements and disclosures.
CEO - highest officer in the company
CFO - highest officer associated with the accounting and financial side of the business
the accounting staff prepare the details of the reports and bear professional responsibility for the accuracy of the
3) Board of directors
They are elected by the shareholders to represent their interests. They are responsible for ensuring that processes are in
place for maintaining the integrity of the company’s accounting, financial statement preparation, and financial reporting.
The audit committee of the board is composed of non-management (independent) directors with financial knowledge
and is responsible for hiring the company’s independent auditors. They also meet separately with the auditors to discuss
management’s compliance with their financial reporting responsibilities.
Provincial securities commission requires publicly traded companies to have their statements audited by independent
accountants following international standards on accounting. They follow established auditing standards to assess the
fairness of the financial statements and related presentations
An unqualified, or clean, opinion states that the financial statements are fair presentations in all material respects in
conformity with IFRS. This adds credibility to the statements. This lowers the risk that the company’s statements have
5) Information intermediaries
Most investors rely on financial analysts and information services to gather and analyze information.
Financial analysts – receive accounting information about a company from electronic information services,
conversations with company executives and visits to company facilities and competitors. Then using this information
they form an analyst report. Analyst reports normally include forecasts of share price and future quarterly and annual
earnings per share; a buy, sell or hold recommendation for the company's shares. They basically make earnings
forecasts (predictions of earnings for future accounting periods)
Information services - Canadian companies file financial statements electronically with SEDAR which is the official site
for the filing of documents by public companies as required by securities law in Canada. 6) USERS
Institutional investors - managers of private pension funds (unions and employees of specific companies), public
pension funds (provincial and municipal employees), mutual funds, endowment funds, and other funds that invest on
behalf of others. They control majority of the publicly traded shares of Canadian companies.
Private investors include individuals who purchase shares in companies. Eg: CEO, company's directors
Lenders (creditors) Include suppliers and financial institutions that lend money to companies. Eg: suppliers, banks,
commercial credit companies. Lenders are often the primary external user group for financial statements of private
THE DISCLOSURE PROCESS
A written public news announcement normally distributed to major news services. They are used to announce Initial
announcement of hiring of new vice-president of sales and also to announce quarterly and annual earnings as soon as
the verified figures are available. Sometimes they also include condensed unaudited financial statements.
Annual reports for private companies are relatively simple documents that include the 4 basic financial statements,
related notes and a report of independent accountants (auditor’s opinions).
Annual reports for public companies are significantly more elaborate because of additional reporting requirements
imposed on these companies. The report is split into two sections: non financial section (includes letter to shareholders,
company's products and successes, prospects for the future, photographs of the products and facilities, etc) and
financial section. This section includes:
Summarized financial data for 5 or 10 year Notes