SPECIAL PURPOSE FINANCIAL STATEMENTS

3(a) Pension Fund Financial Statements Filed with a Regulator — Transition
to New Financial Reporting Framework — Auditor’s Report Refers to
the Current Period Only

• The financial statements are for the year ended December 31,
2011 to meet the expressed needs of the pension regulator.
• The financial reporting framework is prescribed by law or
regulation, which requires that pension fund financial statements
be prepared in accordance with “Canadian generally accepted
accounting principles” (GAAP) except that they exclude
information relating to pension obligations.
• As indicated in “Changes to accounting standards” in the
introduction to this Guide, the CPA Canada Handbook –
Accounting has been restructured to move away from a single
financial reporting framework referred to as Canadian GAAPto
include various different financial reporting frameworks in
Canadian GAAP. Many laws and regulations have not been
changed to reflect this fact. Therefore, management chooses
the financial reporting framework in Canadian GAAP that is
designed for that type of entity. For some entities, the CPA
Canada Handbook – Accounting provides a choice of financial
reporting frameworks. For pension plans, CPA Canada Handbook
– Accounting requires the entity to apply Part IV, Canadian
accounting standards for pension plans. Accordingly, the
financial statements for filing with the pension regulator have
been prepared by management in accordance with Canadian
accounting standards for pension plans excluding information
relating to pension obligations.
• In applying Canadian accounting standards for pension plans
excluding information relating to pension obligations, the
pension plan has chosen to apply the general financial statement
presentation requirements in Part II of the CPA Canada Handbook
– Accounting.
• The financial statements describe the financial reporting
framework by reference to the financial reporting provisions of
the respective legislation or regulation.
• The notes to the financial statements describe the significant
interpretations of the law or regulation that management
made in the preparation of the financial statements, including
that management has applied Canadian accounting standards
for pension plans excluding information relating to pension
obligations.
• The auditor’s report refers to the current period only.
• The audit is conducted in accordance with Canadian Auditing
Standards.
• An Emphasis of Matter paragraph is required. Use of the auditor’s
report is restricted but distribution of the auditor’s report is not
restricted. Other choices are permitted. (Refer to Q&A 2(b) in this
Guide for the permitted choices.)
(Please read Introduction to Illustrative Reports)
1. When Canadian accounting standards for pension plans are
adopted, a pension plan applies the general financial statement
presentation requirements, including “comparative information”, in
either IFRSs in Part I or Canadian accounting standards for private
enterprises in Part II of the CPA Canada Handbook – Accounting.
A pension plan that applies Canadian accounting standards for
pension plans for the first time, including the general financial
statement presentation requirements in Part II of the CPA Canada
Handbook – Accounting, is not required to include an opening
statement of financial position and other related disclosures.
2. Accordingly, the entity’s first financial statements prepared in
accordance with Canadian accounting standards for pension plans
excluding information relating to pension obligations would include
the entity’s statement of net assets as at:
(a) December 31, 2011; and
(b) December 31, 2010.
3. The auditor may have performed an audit of the entity’s financial
statements prepared using pre-changeover accounting standards
excluding information relating to pension obligations for the year
ended December 31, 2010. However, these financial statements are
not included in the first financial statements of the entity prepared
in accordance with Canadian accounting standards for pension
plans excluding information relating to pension obligations. Rather,
the first financial statements prepared in accordance with Canadian
accounting standards for pension plans excluding information
relating to pension obligations include the financial statements
for the year ended December 31, 2010 prepared in accordance
with Canadian accounting standards for pension plans excluding
information related to pension obligations. Unless specifically
engaged to do so, the auditor will not have audited and reported
on these financial statements. The auditor will have performed
procedures with respect to the comparative information as
required by paragraphs 7-9 of CAS 710, Comparative Information —
Corresponding Figures and Comparative Financial Statements, but
these procedures are not necessarily themselves sufficient for the
auditor to opine on the comparative information.
4. These are special purpose financial statements because the
financial reporting framework used in preparing the financial
statements is designed to meet the needs of specific users, as
discussed in paragraph 6 of CAS 800, Special Considerations —
Audits of Financial Statements Prepared in Accordance with Special
Purpose Frameworks. Accordingly, the special considerations in
CAS 800 apply.
5. Because the financial reporting framework comprises financial
reporting standards established by an authorized or recognized
standards setting organization, supplemented by law or regulation,
the auditor considers the requirements in paragraph 18 of
CAS 210, Agreeing the Terms of Audit Engagements. One of the
considerations in accepting the engagement will be whether the
description of the applicable financial reporting framework in the
financial statements is amended accordingly (i.e., the description
of the framework does not imply full compliance with Canadian
accounting standards for pension plans).
6. Paragraph A6 of CAS 800 applies. In the absence of indications
to the contrary, a financial reporting framework established by a
regulator for a certain type of entity to meet the financial reporting
requirements of that regulator is presumed acceptable for special
purpose financial statements prepared by such an entity.
7. It has been assumed that this is a fair presentation framework.
(Refer to Q&A 2(d) in this Guide with respect to fair presentation
and compliance frameworks.)
INDEPENDENT AUDITOR'S REPORT
[Trustees of ABC Pension Plan]
We have audited the accompanying fund financial statements of ABC
Pension Plan, which comprise the statement of net assets available for
benefits as at December 31, 2011, and the statement of changes in net
assets available for benefits for the year then ended, and a summary of
significant accounting policies and other explanatory information. The
fund financial statements have been prepared by management based
on the financial reporting provisions of Section X of the Y Act.
Management's Responsibility for the Fund Financial Statements
Management is responsible for the preparation and fair presentation
of these fund financial statements in accordance with the financial
reporting provisions of Section X of the Y Act, and for such internal
control as management determines is necessary to enable the
preparation of fund 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 fund financial
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 fund
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the fund financial statements.
The procedures selected depend on the auditor's judgment, including
the assessment of the risks of material misstatement of the fund
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 fund financial
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 entity'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 fund financial 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 fund financial statements present fairly, in all material
respects, the net assets available for benefits of ABC Pension Plan as at
December 31, 2011, and the changes in net assets available for benefits
for the year then ended in accordance with the financial reporting
provisions of Section X of the Y Act.
Basis of Accounting and Restriction on Use
Without modifying our opinion, we draw attention to Note Z to the
fund financial statements, which describes the basis of accounting.
The fund financial statements are prepared to assist the Trustees of
ABC Pension Plan to meet the requirements of Pension Regulator. As
a result, the fund financial statements may not be suitable for another
purpose. Our report is intended solely for the Trustees of ABC Pension
Plan and Pension Regulator, and should not be used by parties other
than the Trustees of ABC Pension Plan or Pension Regulator.
Comparative Information
Without modifying our opinion, we draw attention to Note Z to the
financial statements which describes that ABC Pension Plan adopted
Canadian accounting standards for pension plans excluding information
relating to pension obligations on January 1, 2011 with a transition
date of January 1, 2010 to assist ABC Pension Plan to comply with
Section X of the Y Act. These standards were applied retrospectively
by management to the comparative information in these fund
financial statements. We were not engaged to report on the restated
comparative information, and as such, it is unaudited.
[Auditor's signature]
[Date of the auditor's report]
[Auditor's address]

3(b) Pension Fund Financial Statements Filed with a Regulator — Auditor’s
Report Refers to the Current Period Only

• The financial statements are for the year ended December 31, 2010
to meet the expressed needs of the pension regulator.
• The financial reporting framework is prescribed by law or
regulation, which requires the financial statements to be prepared
in accordance with pre-changeover standards except that they
exclude disclosures relating to pension obligations. This example
is also relevant if the financial reporting framework prescribed by
law or regulation requires the financial statements to be prepared
in accordance with Part IV of the CPA Canada Handbook –
Accounting. (Refer to Q&A 1(c) in this Guide for the wording of the
opinion paragraph for different financial reporting frameworks.)
• The financial statements describe the financial reporting
framework by reference to the financial reporting provisions of the
respective legislation or regulation.
• The auditor’s report refers to the current period only.
• The audit is conducted in accordance with Canadian Auditing
Standards.
• An Emphasis of Matter paragraph is required. Use of the auditor’s
report is restricted but distribution of the auditor’s report is not
restricted. Other choices are permitted. (Refer to Q&A 2(b) in this
Guide for the permitted choices.)
(Please read Introduction to Illustrative Reports)
1. These are special purpose financial statements because the
financial reporting framework used in preparing the financial
statements is designed to meet the needs of specific users, as
discussed in paragraph 6 of CAS 800, Special Considerations —
Audits of Financial Statements Prepared in Accordance with Special
Purpose Frameworks. Accordingly, the special considerations in
CAS 800 apply.
2. Because the financial reporting framework comprises financial
reporting standards established by an authorized or recognized
standards setting organization, supplemented by law or regulation,
the auditor considers the requirements in paragraph 18 of
CAS 210, Agreeing the Terms of Audit Engagements. One of the
considerations in accepting the engagement will be whether the
description of the applicable financial reporting framework in the
financial statements is amended accordingly, (i.e., the description
of the framework does not imply full compliance with prechangeover
accounting standards).
3. Paragraph A6 of CAS 800 applies. In the absence of indications
to the contrary, a financial reporting framework established by a
regulator for a certain type of entity to meet the financial reporting
requirements of that regulator is presumed acceptable for special
purpose financial statements prepared by such an entity.
4. It has been assumed that this is a fair presentation framework.
(Refer to Q&A 2(d) in this Guide with respect to fair presentation
and compliance frameworks.)
INDEPENDENT AUDITOR’S REPORT
[Trustees of ABC Pension Plan]
We have audited the accompanying fund financial statements of ABC
Pension Plan, which comprise the statement of net assets available for
benefits as at December 31, 2010, and the statement of changes in net
assets available for benefits for the year then ended, and a summary of
significant accounting policies and other explanatory information. The
fund financial statements have been prepared by management based
on the financial reporting provisions of Section X of the Y Act.
Management’s Responsibility for the Fund Financial Statements
Management is responsible for the preparation and fair presentation
of these fund financial statements in accordance with the financial
reporting provisions of Section X of the Y Act, and for such internal
control as management determines is necessary to enable the
preparation of fund 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 fund financial
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 fund
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the fund financial statements.
The procedures selected depend on the auditor’s judgment, including
the assessment of the risks of material misstatement of the fund
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 fund financial
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 entity’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 fund financial 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 fund financial statements present fairly, in all
material respects, the net assets available for benefits of ABC Pension
Plan as at December 31, 2010, and the changes in net assets available
for benefits for the year then ended in accordance with the financial
reporting provisions of Section X of the Y Act.
Basis of Accounting and Restriction on Use
Without modifying our opinion, we draw attention to Note Z to the
fund financial statements, which describes the basis of accounting.
The fund financial statements are prepared to assist the Trustees of
ABC Pension Plan to meet the requirements of Pension Regulator. As
a result, the fund financial statements may not be suitable for another
purpose. Our report is intended solely for the Trustees of ABC Pension
Plan and Pension Regulator and should not be used by parties other
than the Trustees of ABC Pension Plan or Pension Regulator.
[Auditor’s signature]
[Date of the auditor’s report]
[Auditor’s address]

3(c) Financial Statements Prepared in Accordance with the Terms of
a Purchase and Sale Agreement — Auditor’s Report Refers to the
Current Period Only

• The financial statements are for the year ended December 31, 2010
to meet the expressed needs of the parties to the purchase and
sale agreement.
• The financial reporting framework is prescribed by the purchase
and sale agreement, which requires the financial statements to
be prepared in accordance with pre-changeover standards except
that the property has been valued at appraised values rather than
in accordance with the accounting standards. This example is also
relevant if the financial reporting framework prescribed by the
purchase and sale agreement requires the financial statements to
be prepared in accordance with other Parts of the CPA Canada
Handbook – Accounting. (Refer to Q&A 1(c) in this Guide for the
wording of the opinion paragraph for different financial reporting
frameworks.)
• The financial statements describe the financial reporting
framework by reference to the financial reporting provisions of the
purchase and sale agreement.
• The auditor’s report refers to the current period only.
• The audit is conducted in accordance with Canadian Auditing
Standards.
• An Emphasis of Matter paragraph is required. Use of the auditor’s
report is restricted and distribution of the auditor’s report is not
restricted. Other choices are permitted. (Refer to Q&A 2(b) in this
Guide for the permitted choices.)
(Please read Introduction to Illustrative Reports)
1. These are special purpose financial statements because the
financial reporting framework used in preparing the financial
statements is designed to meet the needs of specific users, as
discussed in paragraph 6 of CAS 800, Special Considerations —
Audits of Financial Statements Prepared in Accordance with Special
Purpose Frameworks. Accordingly, the special considerations in
CAS 800 apply.
2. Paragraph A8 of CAS 800 applies to this situation. The financial
reporting framework is acceptable if it exhibits the attributes
normally exhibited by acceptable financial reporting frameworks as
described in Appendix 2 to CAS 210, Agreeing the Terms of Audit
Engagements.
3. It has been assumed that this is a fair presentation framework.
(Refer to Q&A 2(d) in this Guide for guidance with respect to fair
presentation and compliance frameworks.)
INDEPENDENT AUDITOR’S REPORT
[Directors of ABC Company]
We have audited the accompanying financial statements of ABC
Company, which comprise the balance sheet as at December 31, 2010,
and the statements of income, retained earnings and cash flows for
the year then ended, and a summary of significant accounting policies
and other explanatory information. The financial statements have been
prepared by management based on the financial reporting provisions
of Section X of the purchase and sale agreement between ABC
Company and DEF Company.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of
these financial statements in accordance with the financial reporting
provisions of Section X of the purchase and sale agreement between
ABC Company and DEF Company, 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 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 financial
statements are free from material misstatement.
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, but not for the purpose of expressing an opinion on
the effectiveness of the entity’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 financial 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 financial statements present fairly, in all material
respects, the financial position of ABC Company as at December 31,
2010, and the results of its operations and its cash flows for the year
then ended in accordance with the financial reporting provisions of
Section X of the purchase and sale agreement between ABC Company
and DEF Company.
Basis of Accounting and Restriction on Use
Without modifying our opinion, we draw attention to Note Y to the
financial statements, which describes the basis of accounting. The
financial statements are prepared to assist ABC Company to comply
with the financial reporting provisions of the purchase and sale
agreement referred to above. As a result, the financial statements may
not be suitable for another purpose. Our report is intended solely for the
Directors of ABC Company and DEF Company and should not be used
by parties other than the Directors of ABC Company or DEF Company.
[Auditor’s signature]
[Date of the auditor’s report]
[Auditor’s address]

3(d) Financial Statements of a Co-operative Housing Association Filed with
Canada Mortgage and Housing Corporation — Auditor’s Report Refers
to the Current Period Only

• The financial statements are for the year ended December 31,
2010 to meet the expressed needs of Canada Mortgage and
Housing Corporation (CMHC) under the terms of the mortgage
agreement.
• The financial reporting framework is prescribed by the mortgage
agreement, which requires the financial statements to be
prepared in accordance with pre-changeover standards except
that the property has been amortized at a rate equal to the annual
principal reduction on the mortgage rather than in accordance
with the accounting standards; capital assets purchased from
accumulated surplus are charged to operations in the year the
expenditure is incurred, and capital assets purchased from the
replacement reserve are charged against the replacement reserve
account, rather than being capitalized on the balance sheet
and amortized over their estimated useful lives; and, a reserve
for future capital replacement is appropriated annually from
operations. (Refer to Q&A 1(c) in this Guide for the wording of the
opinion paragraph for different financial reporting frameworks.)
• The financial statements describe the financial reporting
framework by reference to the financial reporting provisions of
the mortgage agreement with CMHC.
• The auditor’s report refers to the current period only.
• The audit is conducted in accordance with Canadian Auditing
Standards.
• An Emphasis of Matter paragraph is required. Use of the auditor’s
report is restricted but distribution of the auditor’s report is not
restricted. Other choices are permitted. (Refer to Q&A 2(b) in this
Guide for the permitted choices.)
(Please read Introduction to Illustrative Reports)
1. These are special purpose financial statements because the
financial reporting framework used in preparing the financial
statements is designed to meet the needs of specific users, as
discussed in paragraph 6 of CAS 800, Special Considerations —
Audits of Financial Statements Prepared in Accordance with Special
Purpose Frameworks. Accordingly, the special considerations in
CAS 800 apply.
2. Because the financial reporting framework comprises financial
reporting standards established by an authorized or recognized
standards setting organization, supplemented by law or regulation,
the auditor considers the requirements in paragraph 18 of
CAS 210, Agreeing the Terms of Audit Engagements. One of the
considerations in accepting the engagement will be whether the
description of the applicable financial reporting framework in the
financial statements is amended accordingly, (i.e., the description
of the framework does not imply full compliance with prechangeover
accounting standards).
3. Paragraph A8 of CAS 800 applies to this situation. The financial
reporting framework is acceptable if it exhibits the attributes
normally exhibited by acceptable financial reporting frameworks as
described in Appendix 2 to CAS 210.
4. It has been assumed that this is a fair presentation framework.
(Refer to Q&A 2(d) in this Guide for guidance with respect to fair
presentation and compliance frameworks.).
INDEPENDENT AUDITOR’S REPORT
[Directors of ABC Housing Co-operative]
We have audited the accompanying financial statements of ABC
Housing Co-operative, which comprise the balance sheet as at
December 31, 2010, and the statements of income, retained earnings
and cash flows for the year then ended, and a summary of significant
accounting policies and other explanatory information. The financial
statements have been prepared by management based on the financial
reporting provisions of Section X of the mortgage agreement between
ABC Housing Co-operative and Canada Mortgage and Housing
Corporation (CMHC).
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of
these financial statements in accordance with the financial reporting
provisions of Section X of the mortgage agreement between ABC
Housing Co-operative and CMHC, 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 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 financial
statements are free from material misstatement.
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, but not for the purpose of expressing an opinion on
the effectiveness of the entity’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 financial 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 financial statements present fairly, in all material
respects, the financial position of ABC Housing Co-operative as at
December 31, 2010, and the results of its operations and its cash flows
for the year then ended in accordance with the financial reporting
provisions of Section X of the mortgage agreement between ABC
Housing Co-operative and CMHC.
Basis of Accounting and Restriction on Use
Without modifying our opinion, we draw attention to Note Y to the
financial statements, which describes the basis of accounting. The
financial statements are prepared to assist ABC Housing Co-operative
to comply with the reporting provisions of the mortgage agreement
referred to above. As a result, the financial statements may not be
suitable for another purpose. Our report is intended solely for the
Directors of ABC Housing Co-operative and CMHC and should not be
used by parties other than the Directors of ABC Housing Co-operative
or CMHC.
[Auditor’s signature]
[Date of the auditor’s report]
[Auditor’s address]

3(e) Non-consolidated Financial Statements Prepared for a Specific
Purpose in Accordance with a General Purpose Financial Reporting
Framework (Canadian accounting standards for private enterprises) —
Auditor’s Report Refers to the Current Period Only

• The entity is a private enterprise.
• The financial statements are for the year ended December 31,
2010 to assist ABC Company to prepare its corporate income tax
returns filed with the income tax authorities.
• This is not the entity’s first financial statements prepared in
accordance with Canadian accounting standards for private
enterprises.
• The auditor’s report refers to the current period only.
• The audit is conducted in accordance with Canadian Auditing
Standards.
• An Other Matter paragraph has been added in accordance with
paragraph A9 of CAS 706, Emphasis of Matter Paragraphs and
Other Matter Paragraphs in the Independent Auditor’s Report,
to highlight to readers that the financial statements have been
prepared for a specific purpose and to restrict use of the auditor’s
report to these users. Other choices are permitted. (Refer to Q&A
2(c) in this Guide for further discussion of this paragraph.)
(Please read Introduction to Illustrative Reports)
1. These financial statements are prepared for a specific purpose in
accordance with a general purpose framework. They do not meet
the definition of special purpose financial statements as discussed
in paragraphs 12-15 of Q&A 2(c) in this Guide. The auditor’s
report on such financial statements is prepared in accordance
with CAS 700, Forming an Opinion and Reporting on Financial
Statements.
2. Subsidiaries, paragraph 1590.23 in Part II of the CPA Canada
Handbook – Accounting requires that when an enterprise presents
non-consolidated financial statements, it shall describe its financial
statements as being prepared on a non-consolidated basis and
each statement shall be labeled accordingly. The auditor’s report
would refer to each statement as being non-consolidated.
INDEPENDENT AUDITOR’S REPORT
[Appropriate addressee]
We have audited the accompanying non-consolidated financial
statements of ABC Company, which comprise the non-consolidated
balance sheet as at December 31, 2010, and the non-consolidated
statements of income, retained earnings and cash flows for the year
then ended, and a summary of significant accounting policies and other
explanatory information.
Management’s Responsibility for the Non-consolidated Financial
Statements
Management is responsible for the preparation and fair presentation
of these non-consolidated financial statements in accordance with
Canadian accounting standards for private enterprises, and for such
internal control as management determines is necessary to enable the
preparation of non-consolidated 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 non-consolidated
financial 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 non-consolidated financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the non-consolidated
financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material
misstatement of the non-consolidated 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 non-consolidated financial 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 entity’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 non-consolidated financial 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 non-consolidated financial statements present
fairly, in all material respects, the financial position of ABC Company
as at December 31, 2010, and the results of its operations and its cash
flows for the year then ended in accordance with Canadian accounting
standards for private enterprises.
Other Matter
These non-consolidated financial statements have been prepared
to assist ABC Company to prepare its corporate income tax returns.
Our report is intended solely for ABC Company and the income tax
authorities and should not be used by parties other than ABC Company
or the income tax authorities.
[Auditor's signature]
[Date of the auditor's report]
[Auditor's address]

3(f) Non-consolidated Financial Statements Prepared in Accordance with
a Special Purpose Financial Reporting Framework (Pre-changeover
accounting standards) — Auditor’s Report Refers to the Current
Period Only

• The entity is not a qualifying enterprise for purposes of selecting
differential reporting options, or is a qualifying enterprise but
has not elected the differential reporting option to use either the
equity method or cost method to account for subsidiaries (i.e., it
prepares consolidated financial statements).
• The financial statements are for the year ended December 31,
2010 to assist ABC Company to prepare its corporate income tax
returns filed with the income tax authorities.
• The income tax authorities do not specify the financial
reporting framework. Therefore, management has a choice
of financial reporting frameworks in the preparation of the
financial statements and has determined that preparing them
in accordance with Part V of the CPA Canada Handbook –
Accounting, except that they are non-consolidated, is acceptable
in the circumstances.
• Each statement in the financial statements is described as being
non-consolidated.
• The auditor’s report refers to the current period only.
• The audit is conducted in accordance with Canadian Auditing
Standards.
• An Emphasis of Matter paragraph is required. Use of the auditor’s
report is restricted but distribution of the auditor’s report is not
restricted. Other choices are permitted. (Refer to Q&A 2(b) in this
Guide for the permitted choices.)
(Please read Introduction to Illustrative Reports)
1. The financial reporting framework is not considered to be a
general purpose framework for this type of entity because Part
V of the CPA Canada Handbook – Accounting does not permit
non-consolidated financial statements except when the entity
is a qualifying enterprise for purposes of selecting differential
reporting options and elects to use either the equity method or
cost method to account for subsidiaries in its general purpose
financial statements. These are special purpose financial
statements because the financial reporting framework used in
preparing the financial statements is designed to meet the needs
of specific users, as discussed in paragraph 6 of CAS 800, Special
Considerations – Audits of Financial Statements Prepared in
Accordance with Special Purpose Frameworks. Accordingly, the
special considerations in CAS 800 apply.
2. Paragraph A8 of CAS 800 applies to this situation. The financial
reporting framework is acceptable if it exhibits the attributes
normally exhibited by acceptable financial reporting frameworks as
described in Appendix 2 to CAS 210, Agreeing the Terms of Audit
Engagements.
3. Because management has a choice of financial reporting
frameworks, paragraph 13(b) of CAS 800 requires the auditor’s
report to make reference to management’s responsibility for
determining that the applicable financial reporting framework is
acceptable in the circumstances.
4. It has been assumed that this is a fair presentation framework.
(Refer to Q&A 2(d) in this Guide for guidance with respect to fair
presentation and compliance frameworks.)
INDEPENDENT AUDITOR’S REPORT
[Appropriate addressee]
We have audited the accompanying non-consolidated financial
statements of ABC Company, which comprise the non-consolidated
balance sheet as at December 31, 2010, and the non-consolidated
statements of income, changes in shareholders’ equity, comprehensive
income and cash flows for the year then ended, and a summary of
significant accounting policies and other explanatory information.
The non-consolidated financial statements have been prepared by
management using the basis of accounting described in Note X.
Management’s Responsibility for the Non-consolidated Financial
Statements
Management is responsible for the preparation and fair presentation
of these non-consolidated financial statements in accordance with the
basis of accounting described in Note X; this includes determining that
the basis of accounting is an acceptable basis for the preparation of
the non-consolidated financial statements in the circumstances, and for
such internal control as management determines is necessary to enable
the preparation of non-consolidated 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 non-consolidated
financial 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 non-consolidated financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the non-consolidated
financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material
misstatement of the non-consolidated 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 non-consolidated financial 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 entity’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 non-consolidated financial 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 non-consolidated financial statements present fairly,
in all material respects, the financial position of ABC Company as at
December 31, 2010 and the results of its operations and its cash flows
for the year then ended in accordance with the basis of accounting
described in Note X.
Basis of Accounting
Without modifying our opinion, we draw attention to Note X to the
non-consolidated financial statements, which describes the basis of
accounting. The non-consolidated financial statements are prepared to
assist ABC Company to prepare its corporate income tax returns. As a
result, the non-consolidated financial statements may not be suitable
for another purpose. Our report is intended solely for ABC Company
and the income tax authorities and should not be used by parties other
than ABC Company or the income tax authorities.
[Auditor’s signature]
[Date of the auditor’s report]
[Auditor’s address]

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