TORONTO, Jan. 21 /CNW/ - Canada's Chartered Accountants are advocating
full disclosure by companies to investors on the impacts of non-bank
Asset-Backed Commercial Paper (ABCP).
The Canadian Institute of Chartered Accountants (CICA) has issued a
special Alert aimed at helping companies supplement financial statements by
providing additional information pertaining to ABCP through Management
Discussion and Analysis (MD&A).
Non-bank ABCP was issued as a short-term investment, backed up by a
variety of assets including mortgages and various consumer loans. The U.S.
sub-prime credit crisis triggered events that led to a freezing of the
Canadian non-bank ABCP market. While considerable progress has been made in
restructuring the paper into longer term notes, final approval of the
restructuring process is not expected until March 2008.
"Companies holding non-bank ABCP have seen a high quality cash equivalent
become a long-term investment with unclear realization prospects," said Chris
Hicks, Principal with the Knowledge Development Group at the CICA. "Investors
want to understand how a company with non-bank ABCP holdings is being
impacted. We are urging companies to provide accurate, complete and
transparent information about these holdings."
The MD&A is a required filing that accompanies quarterly and annual
financial statements. A well done MD&A provides the context investors need to
better understand the company's performance and prospects.
"Information about non-bank ABCP investments and their impact on the
company's financial condition and future prospects are key questions that
should be answered for investors," said Hicks. "An effective MD&A can help
accomplish just that."
The Alert titled MD&A Disclosures About Non-Bank Asset-Backed Commercial
Paper can be found on the CICA web site (www.cica.ca).
The Canadian Institute of Chartered Accountants (CICA), together with the
provincial, territorial and Bermuda Institutes/Ordre of Chartered Accountants,
represents a membership of approximately 72,000 CAs and 10,000 students in
Canada and Bermuda. The CICA conducts research into current business issues
and supports the setting of accounting, auditing and assurance standards for
business, not-for-profit organizations and government. It issues guidance on
control and governance, publishes professional literature, develops continuing
education programs and represents the CA profession nationally and
internationally. CICA is a founding member of the International Federation of
Accountants (IFAC) and the Global Accounting Alliance (GAA).
For further information:
For further information: or to arrange an interview, contact: Tobin
Lambie, Manager, Media, CICA, (416) 204-3228, firstname.lastname@example.org