CSA emphasizes disclosure obligations for current market conditions

As most readers are painfully aware, companies are dealing with their current year ends in highly challenging economic conditions. Management, boards, and audit committees are universally focused on how the current economy, financial market volatility, and 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.

In CSA Staff Notice 51-328, released on January 8, 2009, Canadian Securities Regulators (CSA) emphasize that it is critical for investors to receive information that enables them to understand an issuer’s current and prospective financial position, and its operating results. They expect an issuer to avoid boilerplate statements and provide clear and sufficiently detailed disclosure of the present and anticipated impacts of market conditions on its operations, financial condition, liquidity, and future prospects.

This notice highlights some specific areas for which clear disclosure will be important to help investors understand the risks and circumstances facing an issuer:

• MD&A, including:
• general considerations
• liquidity and capital resources
• distributed cash
• critical accounting estimates
• forward-looking information
• Going concern
• Impairment of goodwill, intangible assets, and long-lived assets
• Financial instruments
• Capital disclosures
• Defined benefit pension plans
• Non-GAAP financial measures
• Additional considerations for junior resource companies.

The notice discusses topics likely to affect many issuers, although it does not provide an exhaustive list of all requirements. Naturally, each reporting issuer will need to consider the accounting and disclosure issues specific to its circumstances in the current economic environment.

This notice will likely be a helpful resource for management, boards and audit committees as they work to meet their year-end responsibilities.

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