CIRO CFO cheat sheet

IFRS is principles-based and used in Canada for public companies; ASPE is a separate Canadian framework for private enterprises; US GAAP applies to SEC registrants.

Core IFRS statements: statement of financial position, statement of profit or loss and OCI, statement of changes in equity, statement of cash flows, and notes.

Accrual basis: revenue is recognized when performance obligations are satisfied, not when cash is received; expenses match the period the related revenue is recognized.

Fair value hierarchy: Level 1 quoted prices in active markets; Level 2 observable inputs other than quoted prices; Level 3 unobservable inputs.

IFRS 9 impairment uses an expected credit loss model: 12-month ECL at initial recognition, lifetime ECL when credit risk increases significantly.

Lease accounting under IFRS 16: lessee recognizes a right-of-use asset and a lease liability at present value of future lease payments; short-term and low-value leases are exempt.

Dealer Member financial statements must be prepared under IFRS and filed with the regulator within the prescribed deadline after fiscal period end.

Key ratios: current ratio = current assets / current liabilities; debt-to-equity = total liabilities / total equity; gross margin = (revenue - COGS) / revenue.

Risk-adjusted capital (RAC) ratio = adjusted capital / risk-weighted assets; the minimum threshold and early warning levels are set by the regulator.

Adjusted capital starts with book equity and adjusts for items such as goodwill, intangibles, and non-allowable assets.

Risk-weighted assets assign risk weights by exposure class: government securities low, corporate and equity exposures higher.

Operational risk capital is added to market and credit risk capital to determine total regulatory capital requirements.

Capital adequacy is monitored against minimum, early warning, and internal target levels; breaches trigger notification and remediation plans.

Subordinated debt may count as capital only if it meets term, subordination, and approval conditions set by the regulator.

Liquidity coverage is assessed separately from capital: capital absorbs losses, liquidity meets cash demands under stress.

Initial margin is the deposit required to open a position; maintenance margin is the minimum equity that must be maintained afterward.

Margin call occurs when account equity falls below maintenance margin; the client must deposit funds or the position is liquidated.

Excess margin = account equity - maintenance margin requirement; it represents funds available for withdrawal or new positions.

Margin requirement formulas differ by security type: government bonds, corporate bonds, and equities carry different loan values.

Client accounts must be segregated from dealer proprietary assets; client securities are held in segregation and not commingled.

Free credit balances are client cash not required for margin; they must be returned on demand unless the client has agreed otherwise.

Prohibited practices include unauthorized trading, churning, and discretionary trades without written authorization.

Dealer Members must be members of the applicable self-regulatory organization and comply with its rules and the securities acts of each jurisdiction.

Registration categories include dealing representative, investment representative, and chief compliance officer; each has defined permitted activities.

Know-your-client (KYC) and suitability obligations require collecting client information and ensuring recommendations fit the client's objectives and risk tolerance.

Trade confirmation must disclose price, commission, and other charges; client statements are provided at least quarterly.

Recordkeeping rules require retention of client records, order tickets, and communications for prescribed periods.

Complaint handling: complaints must be logged, investigated, and responded to within defined timelines; unresolved complaints may go to arbitration.

Supervision requires designated supervisors to review accounts, trades, and correspondence, with heightened review for new or high-risk accounts.

Market risk includes equity, interest rate, currency, and commodity risk; measured by VaR, stress testing, and sensitivity analysis.

Credit risk is the risk of counterparty default; mitigated by collateral, margin, netting agreements, and credit limits.

Liquidity risk is the inability to meet obligations when due; managed through liquid asset buffers and funding diversification.

Operational risk arises from failed processes, people, systems, or external events; managed through controls, incident reporting, and business continuity plans.

Concentration risk arises when exposures are clustered in one issuer, sector, or counterparty; monitored against limits.

Stress testing applies severe but plausible scenarios to assess capital and liquidity adequacy under adverse conditions.

Risk appetite statement defines the level of risk the firm is willing to accept and informs limits and escalation thresholds.

COSO framework components: control environment, risk assessment, control activities, information and communication, and monitoring activities.

Segregation of duties separates authorization, custody, and recordkeeping to reduce fraud and error risk.

Three lines of defense: business units own risk, compliance and risk functions oversee, and internal audit provides independent assurance.

Ethical standards require placing client interests first, avoiding conflicts of interest, and disclosing material conflicts.

Personal trading by employees is restricted: pre-clearance, blackout periods, and reporting of holdings and trades are common controls.

Whistleblowing programs allow confidential reporting of misconduct; retaliation against reporters is prohibited.

Anti-money laundering controls include client identification, beneficial ownership verification, transaction monitoring, and suspicious transaction reporting.