Strategic Differences Tier 1 and Tier 2

For Tier 1 and 2 issuers, it is mandatory to file all balance sheets and other similar financial statements for the past two fiscal years (or from their time of existence if shorter). Financial statements that are audited according to the standards of American Institute of Certified Public Accountants, AICPA or those of Public Company Accounting Oversight Board, PCAOB can be used to file a Tier 2 offering.

Both Tier 1 and 2 issuers are supposed to include their financial statements in Form 1-A. These statements should not be more than nine months old before the non-public submission, filing or qualification date. The most recent annual balance sheet should also not surpass the period mentioned above. Any other required interim financial statements should cover a minimum period of six months.

U.S. domiciled issuers are expected to prepare their financial statements in accordance to the GAAP standards. It is not compulsory for Tier 1 financial statements to be audited and with that being the case, issuers of such offerings should always label their statements as unaudited.

In cases where the Tier 1 offering was audited for other reasons and that the audit was conducted in compliance with U.S. GAAS or PCAOB standards and that the auditor did so in accordance with independence standards of AIPCA or Rule 2-01 of Regulation S-X, the audited statements must be filed. It is not a must that the auditor is a registered member of PCAOB. Requirements

1. The issuer must comply explicitly without and reservations and state the same in the financial statement notes. If the statements were audited, then they should be accompanied by an auditor’s report indicating if the statements comply with IFRS as issued by IASB.

2. The issuer has the freedom to delay compliance with any new or revised accounting standards till the date that a non-issuing company is required to adhere to the new standards as defined in section 2(a) of the Sarbanes-Oxley Act of 2002( 15 U.S.C.7201 (a) ) . Any issuer applying such an extension must give full disclosure while filing their offering. For issuers who do not use this accommodation, it is expected that they will not make use of it in any of their future filings.

Tier 1 Financial Statement Offerings
(a) These financial statements do not necessarily comply with Regulation S-X
(b) These statements are not subject to audits and should, therefore, be labeled as “unaudited.”
(c) If the financial statements were audited for other purposes and audit was done as per U.S auditing standards by an independent or AIPCA auditor, the statements should be filed and be accompanied by an audit opinion that complies with Rule 2-02 of Regulation S-X.

3. Consolidated Balance Sheets This in reference to the age of balance sheets during filing and qualification
(a) When the filing is done, or there is a qualification of the offering statement, the documents can be more than three months old but should not surpass nine months of the most recent fiscal year end.
(b) In case it is more than nine months when filing and qualification takes place then a balance sheet indicating the two most recent fiscal year ends must be included. There should also be an interim balance sheet that is no more than six months old after the most recent concluded fiscal year end.