The Canadian Securities Administrators (CSA) released the results of their review of issuers' compliance with the CEO and CFO certification rules found in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (the Instrument). The review, which involved over 250 companies, aimed to determine, among other things, whether: (i) certifying officers and issuers were using the correct form of certificate; (ii) the prescribed wording was being used in the certificates without amendment; (iii) certificates were being dated and filed on the correct date; and (iv) the information in an issuer's certificate corresponded with the information reported in their MD&A.
Of the companies reviewed, the CSA found that 38% substantively complied with the requirements of the Instrument. The remaining 62%, however, had some level of non-compliance; 30% of which were required to refile their annual MD&A and/or certificates while 32% were required to make prospective changes for future filings.
Common deficiencies included:
Refiling of MD&A and Certificates
- failing to fully disclose conclusions about the effectiveness of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR) in MD&A;
- qualifying conclusions about the effectiveness of DC&P and/or ICFR; and
- limiting the scope of design of DC&P and ICFR but failing to disclose that limitation in MD&A summary financial information.
Refiling of Certificates
- making significant amendments to the wording of the form by omitting paragraphs or adding text;
- refiling financial statements, MD&A and Annual Information Forms (AIF) without filing a separate certificate; and
- not refiling certificates when filing an AIF subsequent to filing financial statements.
Prospective Changes to the Certificates and/or the MD&A
- improperly amending the wording prescribed by the required form;
- failing to date the certificates the same date that the certificates were filed; and
- failing to file certificates concurrently with the filing of the AIF or financial statements and MD&A.
Companies, their CEOs and CFOs should be alert to the noted deficiencies and implement the necessary changes within the company to ensure compliance with the Instrument.