CSA Review of CEO and CFO Certifications

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.

Findings

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.