Can financial statements be audited by a Canadian chartered accountant who is unable to state that he or she is an independent certified public accountant? What about other foreign accountants?
In the view of FTC staff, a Canadian or other foreign accountant or accounting firm may audit financial statements for Franchise Rule purposes if the accountant or accounting firm (1) is registered with the Public Company Accounting Oversight Board (“PCAOB”); and (2) recently audited one or more financial statements that have been filed with and accepted by the SEC. Discussion: The question arises from Section 436.5(u) of the amended Franchise Rule (Item 21), which provides that each disclosure document required under the Rule must contain financial statements prepared “according to United States generally accepted accounting principles (GAAP), as revised by any future United States government mandated accounting principles, or as permitted by the Securities and Exchange Commission (SEC).” Further, these financial statements (with a limited exception for those start-up franchisors phasing-in financial statements) “must be audited by an independent certified public accountant (CPA) usin
