In its latest report on the quality of continuous disclosure, the Alberta Securities Commission says disclosure is acceptable, but adds there is room for improvement.

Companies could be doing a better job with their management discussion, reporting related party deals and stock-based compensation disclosure, the ASC said.

Last March new continuous disclosure obligations took effect, requiring all companies to file MD&A that should enable investors to view companies through the eyes of management, describe the results of operations, be balanced (both positive and negative) and be presented in plain language. The ASC says its staff noted that overall quality of MD&A could be improved and should address seasonality of a business, trends, working capital and sources of capital.

It also found deficiencies in reporting related party transactions; deficiencies including inadequate or no description of the actual related party transaction. It said some companies with option plans used the intrinsic value method to determine compensation expense rather than the fair value method.

“The Continuous Disclosure Review program measures company compliance, but also plays an important role in educating the industry on what they can do better,” says Fred Snell, chief accountant for the ASC, “By clarifying our expectations and pinpointing where industry falls short, it’s a learning exercise for other companies to improve their disclosure.”

He adds that the commission follows up with companies where problems were identified in previous years and has seen a high level of adoption of the ASC’s suggestions for improvement.