TORONTO, April 5 /CNW/ - Recognizing the particular needs of smaller
reporting issuers, Canada's Chartered Accountants have created new guidelines
to help CEOs meet their obligation to certify the quality of their company's
The CEOs of all publicly-traded Canadian companies are required to
certify the design of their internal controls over financial reporting (ICFR).
Next year, they will be asked to evaluate how well their internal controls are
working. Some smaller companies lack the personnel and financial resources to
implement and certify internal controls. For those companies, the Canadian
Institute of Chartered Accountants (CICA) has developed clear, practical
guidance to help CEOs and CFOs certify the design of their internal control
system and to make the necessary MD&A disclosures. The new guidance is called
Internal Control: The Next Wave of Certification - Helping Smaller Public
Companies with Certification and Disclosure about Internal Control over
"The new guidance provides a top-down, risk-based approach that
recognizes the circumstances and lack of resources of smaller companies trying
to implement ICFR on the scale expected in larger companies," said Jim
Goodfellow, FCA, who with Alan Willis co-authored the CICA's guidance.
"The document provides valuable solutions for smaller companies that find
they have ICFR design weaknesses, yet have to certify on ICFR design and need
to decide what MD&A disclosures are necessary in such circumstances," said
Goodfellow. "It is directed at helping smaller issuers on the TSX or TSX
Venture listings, but the disclosure framework and excellent situational
examples provided may be helpful to larger issuers too."
Internal Control - Helping Smaller Public Companies builds on the two
Internal Control publications released by CICA in September 2006. The
suggested framework not only helps companies to meet 2006 and 2007
certification deadlines, it helps prepare them for the final wave of CEO/CFO
internal control certification requirements, now expected to become effective
in 2008 under CSA proposals released on March 30, 2007.
The Canadian Securities Administrators' Multilateral Instrument 52-109
set out the requirement for companies to certify, but left them to determine
the right approach for their business and market.
"This CICA guidance fills a critical gap. It helps leaders develop a
solution customized to their business based on the principles of sound
corporate governance and solid business management that can add long-term
value to businesses," said Kevin Dancey, FCA, CICA President and CEO. "It also
supports the Canadian solution to restoring investor confidence in capital
markets, by reinforcing accountability and transparency in corporate
stewardship without the cost and complexity of SOX 404 requirements."
Furthermore, the guidance represents global best practice, as it presents
a principles-based approach centred on good governance, tone at the top,
integrity, strengthening internal business processes and protection of company
reputation. These qualities align with the International Federation of
Accountants' findings on current developments in internal control and with
trends in recent SEC and PCAOB proposals regarding ICFR.
This guidance will also help audit committees and directors to undertake
appropriate due diligence toward ensuring accurate and complete disclosures in
secondary markets in three provinces where civil liability laws are now
effective (Ontario, Manitoba, Alberta).
"Internal Control - Helping Smaller Public Companies demonstrates the CA
profession's ongoing leadership in the development of valuable financial
reporting processes and controls that help business leaders enhance the
competitiveness of their corporations. This, the CICA's fourth internal
control publication since 2004, highlights the value CAs bring to CEOs, CFOs,
audit committees and boards through our critical thinking and business,
regulatory and corporate governance insights," said Dancey.
Copies of Internal Control: The Next Wave of Certification - Helping
Smaller Public Companies with Certification and Disclosure about Internal
Control over Financial Reporting can be downloaded free-of-charge from the
CICA website at http://www.rmgb.ca/3/3/5/0/5/index1.shtml
The Canadian Institute of Chartered Accountants (CICA), together with the
CA institutes/ordre, represents approximately 71,000 CAs and 9,500 students in
Canada and Bermuda. The CICA conducts research into current business issues
and supports the setting of accounting 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.
For further information:
For further information: or to arrange an interview, contact Angela
Kooij, Manager, Media Relations, at (416) 204-3450, or at