Under its CD review program, the CSA conducts both "full
reviews" and "issue-oriented reviews." This year,
the number of full reviews conducted increased by 13 per cent from
fiscal 2009, and the number of issue-oriented reviews increased by
31 per cent. The increase in the latter is largely a result of
International Financial Reporting Standards (IFRS) transition
disclosure reviews and compliance reviews. (See our related
article,CSA Staff Conduct IFRS Transition Disclosure
Review.") There are approximately 4200 reporting
issuers in Canada. For fiscal 2010, 527 full reviews and 824
issue-oriented reviews were conducted. (See our article for last year's review and our presentation material from last year's CD review,
the latter of which includes information on what to do if you
receive a CD review letter.)
Pursuant to its full review, the CSA have listed examples of the
more common deficiencies found in, inter alia, financial
statements and management's discussion and analysis
In financial statements: failure to measure financial
instruments correctly in accordance with appropriate standards;
lack of clarity in explaining revenue recognition policy;
inadequate disclosure of the methodology used to conduct goodwill
impairment testing; and inadequate disclosure on the objectives,
policies and processes for managing capital.
In MD&A: lack of meaningful analysis and discussion of
operating results, financial condition and liquidity; insufficient
analysis of the ability to generate sufficient cash flow to allow
investors to determine if adequate financial resources are
available to meet operating needs; the business purpose of related
party transactions; and the methodology and assumptions used in
determining critical accounting estimates.
This year's issue-oriented reviews were conducted in the
following areas: certification (see CSA Staff Notice 52-325), IFRS
transition disclosure (see OSC Staff Notice 52-718), executive
compensation (see CSA Staff Notice 51-331), mining
technical disclosure, oil and gas technical disclosure, going
concern, asset impairment, forward-looking information, press
releases, defined benefit pension plans, and complaints.
This CSA review is a useful reminder to reporting issuers of
common deficiencies in continuous disclosure documents, and will
assist issuers in avoiding such pitfalls. Several areas of focus
for issuer-oriented reviews in fiscal 2011 are also noted and
should be kept in mind by issuers. These include IFRS transition
disclosure, material contracts, corporate governance, and follow-up
review of certification requirements as required by National
Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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