Purpose of the British Columbia Financial Services Authority Accountant’s Report
The British Columbia Financial Services Authority (the “BCFSA”) obtains an accountant’s report to verify that a real estate brokerage has, for the fiscal year:
- Maintained its books, accounts and other records in connection with their business as a brokerage as required by the Real Estate Services Act and Real Estate Services Rules;
- Maintained in its brokerage trust accounts and commission trust accounts sufficient funds to discharge its gross trust liabilities as disclosed in its accounts; and
- Prepared a monthly trust reconciliation for all month ends that occurred in the fiscal year.
The BCFSA has provided a template that provides detailed instructions to the accountant as well as a reporting section to be completed by the accountant. The template form is divided into three parts:
- Part A is a list of all savings institutions (bank) accounts of the brokerage that were opened, closed or maintained during the fiscal year. This part of the report is to be completed by the brokerage prior to forwarding the report to the reporting accountant.
- Part B is a prescribed report that is to be completed by the reporting accountant.
- Part C is a certification that is to be completed by both the managing broker of the brokerage and a director, officer, partner or sole proprietor of the brokerage.
Details of the process can be reviewed on the BCFSA’s website here. In addition, the follow resources are available:
It is important to note that as you have been requested to perform specified auditing procedures that there is an applicable section of the CPA Handbook – Assurance to adhere to. CPA Handbook Section 9100 – Reports on the Results of Applying Specified Auditing Procedures to Financial Information other than Financial Statements provides the guidance on how to accept and engage, perform, document and report on these types of engagements. A specified auditing procedures engagement does not constitute an audit or a review engagement as it provides no assurance and no opinion. Rather it is intended to only report the factual results from the procedures performed. In performing your engagement, you should also ensure that your documentation is sufficient to provide evidence that you understand and have adhered to these standards.
Reporting on the Specified Auditing Procedures
One of the key issues to overcome with the BCFSA accountant’s report process is the prescribed form of reporting. As stated above the BCFSA provides a prescribed form for the accountant to complete. The prescribed form uses language that could be interpreted to indicate that the accountant has performed a special audit or review of the brokerage’s compliance with the BCFSA’s regulations and policies rather than a specified auditing procedures engagement which as discussed above is much more limited in its scope. It is also somewhat limited in the space it provides to report on the specific issues identified from the performance of the procedures. As a result, it may not be clear to the BCFSA and to your client what the nature of the engagement is, what was performed, what was not performed, and what the detailed findings were.
This is not an uncommon problem when regulators and other bodies request an accountant to perform specified procedures in a prescribed format. In fact, this issue is specifically addressed in Section 9100 paragraph 12 which states:
When requested to report in prescribed form on financial information, the public accountant should consider the substance and wording of the prescribed form and, when necessary, should make appropriate changes. When the special report is a printed form, it may be preferable to attach an appropriately reworded report rather than make changes to the prescribed form.
As such some firms are issuing their own report to the BCFSA and their client, in accordance with the guidance in paragraphs 11 and 12 in Section 9100, either in addition to, or in lieu of, completing the prescribed forms. This way they can rest assure that they have performed the engagement in accordance with Section 9100 and properly communicated the nature of the engagement, its limitations, and the results of the work performed to both the BCFSA and the client.
CPABC offers a professional development course on performing engagements in accordance with Section 9100. Click here to open the CPABC PD website that has a listing of PD seminars available.