Accounting Requirements for Going Public in Canada
Why This Matters
Accounting rarely takes center stage in early go-public conversations. Most founders are focused on capital, valuation, and market timing. But in practice, financial readiness is often the single biggest gating item in any Canadian listing—whether you’re pursuing an IPO, RTO, CPC, or direct listing.
Auditors can’t work with incomplete records. Exchanges can’t approve a listing without clean financials. And investors won’t commit capital if they don’t trust the numbers. In short, get the accounting wrong, and the entire transaction can stall—or fail.
A Common Misstep: Treating Accounting as a Form-Filling Exercise
Many private companies treat financial reporting as a compliance burden, not a strategic input. They assume that as long as they can “catch up” later, they’ll be fine. This mindset creates major risk when transitioning to public markets.
What founders often miss is that public-company accounting is not just more rigorous—it’s foundational to disclosure, investor confidence, and exchange approval.
Here’s what that means in practice:
- Your audit firm must be independent and licensed in the appropriate jurisdiction
- Financials must be prepared under acceptable accounting standards (typically IFRS for Canadian reporting issuers)
- Two or three years of comparative statements may be required, depending on the listing route
- Review engagements are not sufficient—full audits are typically required
- Significant acquisitions may require pro forma financials and separate audits
- Delays in accounting often lead to delays in legal work, valuation, and investor documentation
What the Exchanges Expect
Each Canadian exchange has its own listing manual, but all of them share a common expectation: financial statements must be complete, current, and audit-ready.
Depending on your route to market, this can include:
- Two years of audited financial statements for CPC or RTO transactions
- Three years (plus interim) for TSX IPOs
- Pro forma statements showing post-transaction results
- Special-purpose audits for acquisitions or subsidiaries
- Financial disclosure consistent with NI 51-102 and NI 52-110
Exchange reviewers will not proceed with listing approvals if they detect audit scope issues, inconsistent policies, or missing statements.
Timing Is Everything
Even when a shell is secured, investors are lined up, and the listing strategy is sound—nothing moves until the financials are ready.
Many go-public timelines are derailed because:
- Audit firms have long queues, especially during peak periods
- The private company’s books aren’t properly closed
- Historical data is fragmented, incomplete, or on outdated systems
- A key subsidiary has never been audited
- Transaction structures require carve-outs or combined financials
The best time to start preparing your financials is months before legal or capital markets work begins. Building in buffer time for cleanup, reconciliations, and auditor review avoids crunch-time surprises.
Founders Often Overlook This
Here’s the trap: founders believe accounting can be “plugged in” later in the deal. But by then:
- You’ve already promised timelines to investors
- The shell’s trading halt may be approaching
- Legal fees are mounting
- The exchange reviewer is waiting
- Investor confidence is on the line
Once an RTO or IPO is in motion, delays due to audit issues can tank momentum. It also reflects poorly on management’s credibility. More than once, deals have fallen apart because of a missed deadline that could have been avoided with earlier accounting prep.
What Smart Teams Do
Teams with capital markets experience know that financial readiness is a core project pillar, not a side task. They:
- Engage their auditors early—sometimes before the shell is even selected
- Clean up historical bookkeeping, reconciliations, and cap tables
- Ensure accounting policies are consistent and well-documented
- Proactively identify whether any acquisition targets require separate audits
- Create audit folders and track schedules well in advance
- Coordinate timelines across accounting, legal, and investor materials
Well-prepared companies don’t just meet exchange expectations—they impress reviewers and gain leverage with investors.
Closing Thought
Going public is not just about raising money—it’s about entering a disclosure-driven environment. And the foundation of that disclosure is financial accuracy.
Accounting isn’t a back-office detail. It’s your credibility on paper.
For more insight on financial readiness and go-public planning, contact us.