Current economic conditions create year-end corporate reporting challenges

This year, companies approach their year ends in highly challenging economic conditions. Boards and audit committees are universally focused on how the current economy and the global liquidity squeeze are affecting their companies. They will also be scrutinizing the company’s annual financial statements and accompanying MD&A as the company reports its financial condition and results.

Of course, these economic challenges affect companies around the world. We therefore draw your attention to several publications that we believe may be helpful to Canadian directors and audit committees who are working to understand each company’s specific circumstances.

The Financial Reporting Council is the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance. In late November, it released two publications:

• Challenges for Audit Committees arising from Current Economic Conditions
• An Update for Directors of Listed Companies: Going Concern and Liquidity Risk

Both these publications are designed to help audit committee members and other directors focus on key questions that they may want to consider when preparing for the year end and in meeting their responsibilities for public disclosure. While legal requirements differ for UK and Canadian directors, these publications provide excellent insights into challenges that affect many companies.

In early November, the CICA’s Risk Management and Governance Board also released a new publication, highlighting key topics for directors to consider in understanding their companies’ exposure and their own obligations:

• Director Alert: The Global Financial Meltdown – Questions for Directors to Ask

We believe that these resources should prove helpful to many boards and audit committees in the coming months.

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