Régie des rentes du Québec

NOTICE

Audited financial statements for pension plans and Canadian generally accepted accounting principles (GAAP)

Date: May 2010, Revised: February 2011

Due to rapid changes in standards, the Régie des rentes du Québec has received several questions regarding the conformity of the financial statements of pension plans to Canadian GAAP.

The following question has been asked:

Is it enough to meet the requirements in Part V, Section 4100 "Pension Plans" of the CICA Handbook - Accounting or must we comply with other chapters of the Handbook such as section 3862 "Financial Instruments - Disclosures"?

Here is our answer:

It is not enough to meet only the requirement in Section 4100 of the CICA Handbook – Accounting. Under section 161 of the Supplemental Pension Plans Act, the financial statements of pension plans must be audited by an accountant in the cases determined by regulation. Furthermore, the Guide to the Annual Information Return requires that the financial reports of pension plans be in accordance with GAAP.

However, the Régie allows the following exceptions:

Thus, in all other cases the financial statements provided to the Régie must be prepared in accordance with the CICA Handbook, Section 5400, "The auditor's standard report" or Section 5600, "Auditor's report on financial statements prepared using a basis of accounting other than generally accepted accounting principles".

Note that, for a report prepared in accordance with Section 5600 of the CICA Handbook-Accounting, the auditor should disclose the presence of any exceptions, on the basis of accounting used, in a note to the financial statement and by doing so will not have to include a reservation in the report.

Section 3862, "Financial instruments – disclosures", in Part V of the CICA Handbook - Accounting applies to annual or interim financial statements for fiscal years beginning on or after 1 October 2007. The Régie therefore expects pension plans to provide audited financial statements for fiscal years that ended on 30 September 2008, or later, that respect these requirements.

Lastly, the CICA's Accounting Standards Board approved section 4600, "Pension Plans" in Part IV of the Handbook. This new section is based on section 4100, "Pension Plans", currently in Part V of the Handbook, and implements major changes. The new standards apply to financial statements for fiscal years beginning on or after 1 January 2011. However, early application is authorized.

For further information concerning this notice, contact: