Results of continuous disclosure reviews ‘mostly satisfactory’: AMF

The AMF indicates that, during the latest fiscal year, 68 companies underwent a full CD review, and 49 underwent an issue-oriented review. “Following these reviews, approximately 3% of the documents reviewed had to be refiled,” it reports. “In addition, in order to improve the presentation of their continuous disclosure information, the majority of companies targeted by these reviews will have to make changes in their next filings.”

“The requests for improvements made to companies pertained to the first IFRS-compliant annual financial statements, the MD&A and other documents,” it says. “Numerous requests involved the presentation of the financial statements, particularly disclosures about accounting policies and management’s judgments in the process of applying those policies. Several requests dealt with the MD&A, more specifically the discussion of operations and the factors that contributed to material variations during the fiscal year.”

Looking ahead, it says that the full reviews planned for the 2013-2014 fiscal year will examine financial statement compliance with IFRS; and, compliance with a particular emphasis on certain subjects, such as financial instruments and impairment of assets, discussion of operations and liquidity in the MD&A, and statements of executive compensation in information circulars.

It is also planning certain issue-oriented reviews, including: a review of non-GAAP measures and additional GAAP measures; and, a review of the measures implemented to allow certification of disclosure in issuers’ annual and interim filings.

On the investment fund side, the report says that 312 funds faced one or more full, or issue-oriented reviews. In these case, less than 1% of the documents had to be refiled. But, again, the AMF says that it “issued numerous observations requiring improvements in funds’ next filings of continuous disclosure documents. Improvements were also required with respect to certain policies and procedures as well as information posted on websites.”

“The requests for improvements made to funds pertained mainly to the management report of fund performance, particularly the section dealing with results of operations. Several changes were also requested in order to harmonize the information presented in the various continuous disclosure documents,” it says.

In the year ahead, the AMF said it expects to conduct an issue-oriented review of the calculation of the net asset value of money market mutual funds, primarily to assess how policies and procedures for valuing the portfolio securities held by money market funds are established, maintained and applied. It also intends to review the reconciliation between fund portfolio assets and the assets held by the custodian, as well as compliance with investment objectives, strategies and restrictions.