July 2, 2020

As announced March 30, 2020, the Ontario government has provided amendments to Ontario Regulation 26/05 aimed at the reduction of administration and other overhead expenses associated with financial reporting as follows:

• Replace review engagement report requirement with a Verification Statement for registrants with Ontario gross sales of less than $2 million per year (a TICO form will be provided to registrants).
• Replace audit report requirement with review engagement report for all registrants with Ontario gross sales of more than $10 million per year.

Although the timing of this burden reduction is reflective of the severity of the COVID-19 pandemic, the regulatory amendments with respect to financial documents are not time-limited.  The new requirements will apply moving forward.

Below are responses to commonly asked questions relating to the above amendments:

1. What if a Registrant already completed a Review Engagement or Audit report?

The above amendments are effective March 30, 2020. For the Verification Statement please click here.

Registrants have the option of providing annual financial statements, that meet the requirements of the Regulation for reporting to the Registrar, if they prefer, rather than a Verification Statement.

What if a Registrant already signed an Engagement Letter or is the midst of completing the Review Engagement Report or Audit?

Registrants with year-ends in the months preceding the effective date of the amendments, such as December 2019, January 2020 and February 2020, are required to file either a Review Engagement Report or an Audit (if prior year Ontario gross sales are above $10,000,000) in accordance with the applicable legislative requirements existing and in force as at their year-end. 

For all registrants with year-ends after March 30^th, 2020 who before that date had already engaged their Licenced Public Accountant (LPA) in year-end work, TICO suggests reviewing options with your LPA to find the least costly solution to your existing arrangements. This may include reducing the work to providing a Review Engagement Report if sales are over $10 million instead of an Audit; a Notice to Reader, or alternatively, internal financial statements for sales below $2 million per year. There is no change to reporting requirements for Registrants with annual sales between $2 million and $10 million. A Review Engagement Report must be submitted to TICO. 

If this situation is applicable to you, you are encouraged to contact your LPA as soon as possible to discuss your reporting options.

Please note that TICO will not accept requests for refunds of fees expended and appreciates your continued support and understanding.

2. What if a Registrant’s gross Ontario sales were less than $2 million in the last fiscal year and a Registrant prepares internal financial statements each year. Are they still required to provide a Verification statement?

As noted in Answer 1, all Registrants with year-ends after March 30, 2020, have the option of providing accredited annual financial statements, that meet the requirements of the Regulation for reporting to the Registrar, if they prefer, rather than a Verification Statement.

3. What is the filing deadline for the Verification Statement?

The filing deadline for the Verification Statement remains the same as the Financial Statement Filing deadline (i.e. three months after the registrant’s fiscal year-end). The Verification Statement can be internally prepared by the Registrant and must be attested to by Registrant/Officer/Director/Partner of the entity.

4. What if my gross Ontario sales are above $2 million per year?

Registrants with gross Ontario sales over $2 million per year are required to file Review Engagement Reports. All reporting requirements are based on the prior year’s Ontario gross sales reported.

5. What if my year-end filing is due after March 30^th, 2020 and I haven’t started preparing the financial statements?

If your year-end filing is due after March 30^th, 2020 the new regulations apply as per the above.  

To view the full update to Ontario Regulation 26/05, please click here