Continuous Disclosure Review Program - AMF releases 2015-2016 Activity Report


Montréal - The Autorité des marchés financiers (AMF) today released the 14th edition of the Activity Report (pdf - 1 MB)This link will open in a new windowUpdated on September 8, 2016Rapport d’activité for the Continuous Disclosure Review Program. The report outlines the oversight measures applied during fiscal 2015-2016 and makes key recommendations for companies regarding the presentation of compliant continuous disclosures.

The report also highlights the findings of the review of financial measures that do not comply with generally accepted accounting principles (GAAP), which showed that many issuers are still not adhering to the guidance in CSA Staff Notice 52-306 (revised).

"We will be monitoring these issuers to ensure they comply with the guidance in this notice and, if necessary, will require amended and restated filings," said Gilles Leclerc, AMF Superintendent, Securities Markets. "We therefore ask all issuers to be more vigilant when preparing their next continuous disclosure materials."

In addition to the deficiencies in disclosures accompanying non-GAAP financial measures, the AMF noted, during the previous fiscal year, failures in some companies' processes for evaluating the effectiveness of internal control over financial reporting (ICFR) and disclosure controls and procedures (DC&P). The report also specifies the principal areas the AMF will focus on in its 2016-2017 reviews.

Increase in deficiencies related to non-GAAP financial measures

The AMF noted in particular a widening in the gap between non-GAAP financial measures and the most directly comparable measures presented in companies' financial statements. The main measures concerned are adjusted net income, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), and free cash flow. Companies should bear in mind that the presentation of these adjusted measures could lead to confusion and mislead investors in their assessment of the companies' financial performance.

Improvements needed in processes for evaluating ICFR and DC&P effectiveness

The AMF asked several companies to submit descriptions of their processes implemented for evaluating ICFR and DC&P effectiveness. The processes of some of these companies require improvement. Issuers are reminded that they must have established a process to maintain design of ICFR and DC&P to reflect the new risks they face.

Principal areas of focus for 2016-2017

Lastly, the AMF presents the areas which will be the focus of its reviews in 2016-2017. In addition to non-GAAP financial measures, the AMF will pay particular attention to disclosures by companies on the representation of women on boards and in senior management positions, impairment of assets, and disclosures related to mineral projects and cyber security measures.

The Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec's financial sector.

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