REPORTS FOR AUDITS CONDUCTED IN ACCORDANCE WITH BOTH CANADIAN AUDITING STANDARDS AND THE STANDARDS OF THE PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD (UNITED STATES)

Introduction

1. These Illustrative Reports deal with the specific circumstances of
reporting in accordance with the reporting standards in the Canadian
Auditing Standards (CASs) and in the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB). It is assumed
that the auditor has complied with the requirements in paragraphs 44
and 45 of CAS 700, Forming an Opinion and Reporting on Financial
Statements. Paragraph A44 of CAS 700 indicates that when there is a
conflict between the requirements in the CASs and the requirements
in national auditing standards, the auditor’s report refers only to the
auditing standards in accordance with which the auditor’s report has
been prepared. The PCAOB standards require an explanatory paragraph
in certain circumstances. CAS 706, Emphasis of Matter Paragraphs and
Other Matter Paragraphs in the Independent Auditor’s Report, permits
the auditor to add an emphasis of matter paragraph or an other matter
paragraph to the auditor’s report. Accordingly, CAS 706 permits the
auditor to avoid conflicts with PCAOB reporting standards by adding the
relevant explanatory paragraph to the auditor’s report.
2. The Illustrative Reports have been designed to comply with the reporting
standards of both the CASs and the PCAOB standards.
3. The Illustrative Reports assume that the auditor has audited the entity’s
internal control over financial reporting but chooses to issue separate
reports on the financial statements and internal control over financial
reporting. The auditor may choose to issue a combined report on
the financial statements and internal control over financial reporting.
An example of a combined report is not included in these Illustrative
Reports.
4. Accordingly, each Illustrative Report omits reference in the auditor’s
responsibility section to the phrase that the auditor’s consideration of
internal control is not for the purpose of expressing an opinion on the
effectiveness of internal control, as required by paragraph 31(b) of CAS
700. Each Illustrative Report also includes an Other Matter paragraph
referring to the fact that the auditor has audited, in accordance with
the standards of the PCAOB, the entity’s internal control over financial
reporting. This Other Matter paragraph is required under PCAOB
standards; however, it is permitted but not required under the CASs.
5. The US Securities and Exchange Commission requires that when financial
statements are prepared in accordance with IFRSs the financial reporting
framework should be described as “International Financial Reporting
Standards as issued by the International Accounting Standards Board.”
This wording is required to be reflected in the auditor’s report. (Refer
to Q&A 1(b) in this Guide for discussion of the reference to the financial
reporting framework in the practitioner’s report.)
6. In the event that the auditor is not engaged to report on internal control
over financial reporting, the Illustrative Reports 5(a)-(c) would be
affected as follows:
(a) the Other Matter paragraph referred to above would not be required;
(b) the sentence “In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances.” would be
deleted; and
(c) the following would be added to the end of the first paragraph of
the auditor’s responsibility section of the auditor’s report:
We were not engaged to perform an audit of the Company’s internal
control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such
opinion.

5(a) Financial Statements Prepared in Accordance with Pre-Changeover
Accounting Standards for the Year Ended December 31, 2010, with
Reconciliation between United States (US) GAAP and Pre-changeover
Accounting Standards — Auditor’s Report

• The financial statements are prepared in accordance with prechangeover
accounting standards.
• The auditor’s report refers to all periods presented.
• The audit is conducted in accordance with Canadian Auditing
Standards and with the standards of the Public Company
Accounting Oversight Board (PCAOB).
• The auditor’s report includes an Other Matter paragraph referring
to the separate report on internal control over financial reporting.
(Please read Introduction to Illustrative Reports)
1. Paragraph A10 of CAS 700, Forming an Opinion and Reporting
on Financial Statements, states that when financial statements
prepared in accordance with one financial reporting framework
describe the extent to which the financial statements comply
with another financial reporting framework, such description is
supplementary financial information and is considered an integral
part of the financial statements and, accordingly, is covered by the
auditor’s opinion. When the reconciliation between US GAAP and
pre-changeover accounting standards is included in the notes to
the financial statements, it is integral to the financial statements
and is covered by the auditor’s opinion. Paragraph A47 of CAS 700
indicates that supplementary information that is covered by the
auditor’s opinion does not need to be specifically referred to in the
introductory paragraph of the auditor’s report when the reference
to the notes in the description of the statements that comprise the
financial statements in the introductory paragraph is sufficient.
INDEPENDENT AUDITOR’S REPORT OF REGISTERED PUBLIC
ACCOUNTING FIRM
To the Shareholders
We have audited the accompanying financial statements of ABC
Company, which comprise the balance sheets as at December 31, 2010
and December 31, 2009, and the statements of income, changes in
shareholders' equity, comprehensive income and cash flows for each
of the years in the three-year period ended December 31, 2010, and
a summary of significant accounting policies and other explanatory
information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation
of these financial statements in accordance with Canadian generally
accepted accounting principles, and for such internal control as
management determines is necessary to enable the preparation of
financial 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 financial statements
based on our audits. We conducted our audits in accordance with
Canadian generally accepted auditing standards and the standards
of the Public Company Accounting Oversight Board (United States).
Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.9
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including
the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
entity's preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the
circumstances. 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 financial statements.
We believe that the audit evidence we have obtained in our audits is
sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material
respects, the financial position of ABC Company as at December 31,
2010 and December 31, 2009, and the results of its operations and
its cash flows for each of the years in the three-year period ended
December 31, 2010 in accordance with Canadian generally accepted
accounting principles.
Other Matter
We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), ABC Company's
internal control over financial reporting as of December 31, 2010, based
on the criteria established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated [date of auditor’s report on internal
control over financial reporting] expressed an unqualified opinion on
ABC Company’s internal control over financial reporting.
[Auditor’s signature]
[Date of the auditor’s report]
[Auditor’s address]

5(b) Financial Statements Prepared in Accordance with IFRSs for the Year
Ended December 31, 2010 — Auditor’s Report

• The financial statements are prepared in accordance with IFRSs
for the first time in 2010.
• The auditor’s report refers to all periods presented.
• The audit is conducted in accordance with Canadian Auditing
Standards and with the standards of the Public Company
Accounting Oversight Board (PCAOB).
• The auditor’s report includes an Other Matter paragraph referring
to the separate report on internal control over financial reporting.
(Please read Introduction to Illustrative Reports)
INDEPENDENT AUDITOR’S REPORT OF REGISTERED PUBLIC
ACCOUNTING FIRM
To the Shareholders
We have audited the accompanying financial statements of ABC
Company, which comprise the statements of financial position as at
December 31, 2010, December 31, 2009 and January 1, 2009, and the
statements of comprehensive income, statements of changes in equity
and statements of cash flows for the years ended December 31, 2010
and December 31, 2009, and a summary of significant accounting
policies and other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of
these financial statements in accordance with International Financial
Reporting Standards as issued by the International Accounting
Standards Board, and for such internal control as management
determines is necessary to enable the preparation of financial
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 financial statements
based on our audits. We conducted our audits in accordance with
Canadian generally accepted auditing standards and the standards
of the Public Company Accounting Oversight Board (United States).
Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.10
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including
the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
entity's preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the
circumstances. 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 financial statements.
We believe that the audit evidence we have obtained in our audits is
sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material
respects, the financial position of ABC Company as at December 31,
2010, December 31, 2009 and January 1, 2009, and its financial
performance and its cash flows for the years ended December 31, 2010
and December 31, 2009 in accordance with International Financial
Reporting Standards as issued by the International Accounting
Standards Board.
Other Matter
We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), ABC Company's
internal control over financial reporting as of December 31, 2010, based
on the criteria established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated [date of auditor’s report on internal
control over financial reporting] expressed an unqualified opinion on
ABC Company’s internal control over financial reporting.
[Auditor’s signature]
[Date of the auditor’s report]
[Auditor’s address]

5(c) Financial Statements Prepared in Accordance with US GAAP for the
Year Ended December 31, 2010 — Auditor’s Report

• The financial statements are prepared in accordance with US
GAAP.
• The auditor’s report refers to all periods presented.
• The audit is conducted in accordance with Canadian Auditing
Standards and with the standards of the Public Company
Accounting Oversight Board (PCAOB).
• The auditor’s report includes an Other Matter paragraph referring
to the separate report on internal control over financial reporting.
(Please read Introduction to Illustrative Reports)
INDEPENDENT AUDITOR’S REPORT OF REGISTERED PUBLIC
ACCOUNTING FIRM
To the Shareholders
We have audited the accompanying financial statements of ABC
Company, which comprise the balance sheets as at December 31, 2010
and December 31, 2009, and the statements of income, changes in
shareholders' equity, comprehensive income and cash flows for each
of the years in the three-year period ended December 31, 2010, and
a summary of significant accounting policies and other explanatory
information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of
these financial statements in accordance with United States generally
accepted accounting principles,11 and for such internal control as
management determines is necessary to enable the preparation of
financial 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 financial statements
based on our audits. We conducted our audits in accordance with
Canadian generally accepted auditing standards and the standards
of the Public Company Accounting Oversight Board (United States).
Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.12
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including
the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
entity's preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the
circumstances. 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 financial statements.
We believe that the audit evidence we have obtained in our audits is
sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material
respects, the financial position of ABC Company as at December 31,
2010 and December 31, 2009, and the results of its operations and
its cash flows for each of the years in the three-year period ended
December 31, 2010 in accordance with United States generally
accepted accounting principles.
Other Matter
We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), ABC Company's
internal control over financial reporting as of December 31, 2010, based
on the criteria established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated [date of auditor’s report on internal
control over financial reporting] expressed an unqualified opinion on
ABC Company’s internal control over financial reporting.
[Auditor’s signature]
[Date of the auditor’s report]
[Auditor’s address]

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