The Canadian Securities Administrators have issued a notice (43-304, 62-302, and 81-308) to provide guidance to former clients of Arthur Andersen LLP concerning the inclusion of financials audited by Andersen in their prospectuses, take-over bid circulars and issuer bid circulars.

On June 3, Andersen Canada ceased practising accounting. As a result, Andersen Canada will no longer consent to the use of previously issued auditors’ reports for purposes of securities filings, including prospectuses and circulars. Securities rules require it however.

The CSA says that their staffs believe that the inability of issuers formerly audited by Andersen Canada to obtain a consent letter is an exceptional situation that is outside the control of the issuer. “In staff’s view, the efficient functioning of capital markets is best served by permitting these issuers to continue to access the capital markets on a timely basis provided that investors receive appropriate disclosure of the effects on their legal rights resulting from the lack of consent,” says the CSA.

The regulators note that, “This approach allows the affected issuers to make their own decisions about the cost effectiveness of proceeding on a timely basis without a consent as opposed to retaining a new auditor to re-audit prior years and complying with the consent requirements. Where issuers proceed without a consent, investors will be provided with the disclosure required to make appropriate investment decisions and will not lose investment opportunities that might otherwise be postponed or perhaps lost altogether.”

The guidance in the notice applies to consents required from Andersen Canada only. The CSA says that applications for relief from the requirement for consent in situations involving Arthur Andersen firms other than Andersen Canada will be dealt with on a case by case basis.

http://www.osc.gov.on.ca/en/Regulation/Rulemaking/Notices/csanotices/2002/csan_43-304_62-302_81-308_20020628_andersen.htm