NOTICE

Requirements for producing audited financial statements for pension plans to become more stringent

Date: February 2011, Revised: March 2011

Under section 161 of the Supplemental Pension Plans Act, annual information returns must be produced in accordance with strict guidelines. The section states that the plan's financial statements must be audited, except in cases prescribed by regulation.

For a number of years, the Régie des rentes du Québec has specified in its communications that the financial statements it requires must adhere to Canadian generally accepted accounting principles (GAAP). The Annual Information Return, its guide, the notice of June 2009¹ and the notice of May 2010² all mention this obligation.

The Régie allows for one departure from to the GAAP, concerning actuarial liabilities resulting from plan obligations and related information. That information is subject to special requirements under the Act and is contained in a separate actuarial valuation.

This departure was the basis for our decision to also accept pension funds' financial statements.

However, the Régie has noted certain anomalies in the application of the GAAP where financial statements are produced for pension funds. Given the importance of financial statements to its supervisory role, the Régie intends to tighten its requirements for financial statements that accompany the 2010 Annual Information Return and future returns.

Therefore, the Régie will require financial statements for plans (not for funds). The statements must be standard and prepared in accordance with Canadian GAAP. The only possible departure concerns benefit commitments for which the independent auditor's report must include a modified opinion.

For further information concerning this notice, contact:

• the Régie's Direction des régimes de retraite of the Régie, by telephone at 418 643-8282 or toll free at 877 660-8282
• the Régie by email (select Supplemental pension plans)
• the Ordre des comptables agréés du Québec  for questions concerning the application of GAAP and generally accepted auditing standards (GAAS).

¹ Audited financial statements of pension plans and sections 3862, 3863 and 4100 of the CICA Standards and Guidance Collection (CICA Handbook)
² Audited financial statements for pension plans and pension funds and Canadian generally accepted accounting principles (GAAP)