On July 18, 2013, the Canadian Securities Administrators (the “CSA”) published Staff Notice 51-339 (the “Staff Notice”) detailing the results of its review of continuous disclosure documents filed by selected reporting issuers for the fiscal year ended March 31, 2013. The Staff Notice discusses a number of common deficiencies identified in financial statements and MD&A, as well as provides guidance concerning certain other key disclosure topics.

Common Deficiencies

  1. Financial Statements

Judgments – Under paragraph 122 of IAS 1 Presentation of Financial Statements, reporting issuers are required to disclose certain judgments that management has made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognized in the financial statements. The CSA found that the disclosure in this area is generally deficient and boilerplate.

Impairment of Goodwill – Under paragraph 134 of IAS 36 Impairment of Assets, reporting issuers are required to disclose certain information relating to the goodwill and intangible assets of cash-generating units. The CSA determined that certain reporting issuers did not disclose all of the information required by IAS 36.

Going Concern – The Staff Notice discusses certain common problems with going concern disclosure. These problems include inconsistent information provided in the reporting issuer’s disclosure documents, such as the failure to provide explicit going concern disclosure in the financial statements despite such language being present in the auditor’s report.

  1. MD&A

Liquidity – Under section 1.6 of Form 51-102F1, reporting issuers are required to provide detailed disclosure regarding liquidity. The CSA found that MD&A disclosure under this heading often reproduces information from the financial statements, which may not fully comply with all of the MD&A form requirements.

Discussion of Operations – The CSA found that reporting issuers often reproduce information from the statement of profit or loss and other comprehensive income in MD&A, without providing an explanation for changes compared to previous periods. To comply with section 1.4 of Form 51-102F1, MD&A should include entity-specific disclosure regarding the factors which contributed to changes in the reporting issuer’s operations.

Related Party Transactions – Under section 1.9 of Form 51-102F1, reporting issuers are required to disclose certain prescribed information regarding related party transactions. The CSA notes that MD&A disclosure often repeats the related party disclosure from the notes to the financial statements, which may not fully comply with all of the MD&A form requirements.

  1. Other Deficiencies

Mineral Disclosure – Common mineral disclosure deficiencies listed in the Staff Notice include incomplete or inadequate disclosure of preliminary economic assessments, mineral resources and mineral reserves and non-compliant certificates and consents of qualified persons for technical reports.

Oil and Gas Disclosure – Common oil and gas disclosure deficiencies identified by the CSA include the failure to adapt to current form requirements for technical disclosure and non-compliance with certain sections of NI 51-101 regarding disclosure of resources other than reserves, classification to the most specific category of resources, summation across resource categories and disclosure of high case estimates.

DC&P and ICFR – Venture issuers using Forms 52- 109FV1 or 52-109FV2, known as the Venture Issuer Basic Certificates, are reminded that MD&A should not include any conclusions on the effectiveness of DC&P or ICFR. Where appropriate, the prescribed cautionary language set out in the Companion Policy to NI 52-109 should be included in MD&A.