2009-12-04 AMF Continuous Disclosure Review Program 2009 Report

This Newsletter contains the Autorité des marchés financiers’ 2008-2009 report on its Continuous Disclosure Review Program.

The Autorité des marchés financiers (AMF) has issued its report from its Continuous Disclosure Review Program covering the period from April 1, 2008 to March 31, 2009. The report describes areas of accounting or financial reporting deficiencies commonly identified by staff members and provides commentary on a range of other disclosure matters.

In response to the liquidity crisis, the AMF has focused its review on certain issuers, such as those in the banking and financial services sector and companies at risk of liquidity problems, emphasizing transparency and completeness of disclosures.

This year’s report has been divided into four sections. The main areas where accounting and disclosure deficiencies were identified include:

1. Companies

Financial statements of companies, as regards compliance with GAAP, notably:

• Financial instruments (disclosure)
• Stock-based compensation
• Cash flow statements (such as offsetting of certain transactions and non-monetary transactions)
• Segment disclosures
• Description of related party transactions

MD&A, notably:

• Quantification of factors having given rise to changes in net sales
• Analysis of gross profit incomplete or inaccurate
• Analysis of liquidity incomplete
• Incomplete disclosure of related party transactions (purpose and measurement basis)

2. Mining Companies

• Technical reports not filed for certain material properties disclosed in the annual information form
• Source and date of historical estimate not indicated
• Quantity and grade of deposit disclosed but not expressed as ranges
• Categories applicable to mineral resources and reserves not respected

3. Investment Funds

• Grouping of expenses that should have been disclosed under separate line items
• Disclosure of basis used for determining fair value and cost of portfolio assets
• Listed portfolio assets valued at closing price rather than last bid price

4. Changeover to International Financial Reporting Standards (IFRS)

In this new section for 2009, the AMF has summarized the disclosure requirements relevant to issuers pending changeover to IFRS. It also highlights the implementation of a monitoring procedure to enable it to quickly identify disclosure deficiencies and to intervene, as needed, with issuers concerned.