Canadian Securities Regulators Abandon Proposal to Implement Separate Internal Control Certification Rule
Expanded internal control certification requirements to be added to existing Multilateral Instrument 52-109
The Canadian Securities Administrators (the CSA) recently announced that, after a protracted comment and review period, they will not continue with plans to implement proposed Multilateral Instrument 52-111 - Reporting on Internal Control over Financial Reporting, the Canadian equivalent of s. 404 of the U.S. Sarbanes Oxley Act. Instead, the CSA are proposing to expand existing Multilateral Instrument 52-109 - Certification of Disclosure in Issuers' Annual and Interim Filings (MI 52-109 or the Existing Certification Rule). This represents an important departure from the CSA's previously stated intentions and includes, among other significant changes, the decision to abandon mandated auditor attestation of an issuer's internal controls over financial reporting.
The Canadian Securities Administrators (the CSA) recently announced that, after a protracted comment and review period, they will not continue with plans to implement proposed Multilateral Instrument 52-111 - Reporting on Internal Control over Financial Reporting, the Canadian equivalent of s. 404 of the U.S. Sarbanes Oxley Act. Instead, the CSA are proposing to expand existing Multilateral Instrument 52-109 - Certification of Disclosure in Issuers' Annual and Interim Filings (MI 52-109 or the Existing Certification Rule). This represents an important departure from the CSA's previously stated intentions and includes, among other significant changes, the decision to abandon mandated auditor attestation of an issuer's internal controls over financial reporting.
Pursuant to CSA Notice 52-313, the CSA intend to expand the Existing Certification Rule by requiring the CEO and CFO of a reporting issuer, or persons performing similar functions, to certify in their annual certificates that, as of the end of the financial year, they have:
-
evaluated the effectiveness of the issuer's internal control over financial reporting; and
-
caused the issuer to disclose in its annual MD&A their conclusions about the effectiveness of internal control over financial reporting.
