This Newsletter contains the Alberta Securities Commission's 2009 report on its Continuous Disclosure Review Program.
| ASC continuous disclosure review |
The Alberta Securities Commission (ASC) has issued its report detailing findings from continuous disclosure reviews completed during the 12 month period ended November 30, 2009. This report details the ASC's findings and expectations with respect to a number of items. In addition, the report includes a number of disclosure examples, practice tips, and reminders that will be useful for reporting issuers. The following newsletter summarizes the main items discussed by the ASC in their report. |
| MD&A disclosure |
A number of recurring areas were identified where reporting issuers failed to provide meaningful analysis:
- discussion of liquidity needs, commitments, and obligations and possible sources of funds
- boilerplate discussion of the current economic conditions
- lack of meaningful discussion of how a reporting issuer would raise sufficient cash to meet operating and capital needs
- little discussion of assumptions used in asset impairments
- lack of insightful analysis of material financing agreements
- unbalanced disclosure that failed to give sufficient prominence to the severity of the challenges facing the business
- a more current discussion of the business in corporate website presentations and news releases than in the MD&A
- new information provided in investor calls held the day after the interim financial statements and MD&A were filed
- use of non-GAAP financial measures where the reporting issuer did not discuss the closest GAAP financial measure with equal or greater prominence, or explain why the measure provided useful information.
The ASC's expectations for year end MD&A disclosure include:
- sufficient discussion of how the economic environment continues to impact specific areas of the business. Particular attention should be paid to compliance with material debt agreements and the ability to fund capital expenditures and other commitments
- disclosure should be balanced, not overly optimistic
- to the extent future outlook and prospects are discussed, the disclosure may be forward-looking and subject to certain disclosure requirements
- known trends or uncertainties that could materially affect liquidity and cash inflows and outflows should be discussed
- sufficient discussion of critical accounting policies (note that the MD&A requires more disclosure than GAAP with respect to these)
- information disclosed in the MD&A should be up to date
- presentation of non-GAAP financial measures should be in compliance with CSA Staff Notice 52-306
- disclosure of related party transactions should include the business purpose of the transaction.
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| Financial statement presentation |
Recurring deficiencies were identified in the following areas:
- going concern
- capital disclosures
- terms of debt including any defaults
- impairment of goodwill and other assets
- disclosure of risks arising from financial instruments.
The ASC has identified the following areas of focus for year end financial reporting:
- generic and boilerplate disclosure
- capital disclosures under Section 1535
- impairment of goodwill and other assets
- disclosure of risk areas and areas of measurement uncertainty.
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| Other reporting requirements |
The ASC has also included a discussion of expectations and findings with respect to a number of other reporting requirements:
- IFRS - readiness disclosures; securities legislation and policies
- NI 52-109 certification requirements
- executive compensation
- reviews of mining issuers
- forward looking information
- conversion of income trusts to corporate entities
- recurring errors and deficiencies in commonly filed securities documents.
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| Full report |
A copy of the full report can be obtained from the ASC website: ASC Continuous Disclosure Review Program 2009 Report |
