New rules for certifying annual filings to take effect on Dec. 15

Company chief executives and chief financial executives will not only have to certify their own company’s financial statements as of Dec. 15, 2008, but they will have to vouch for their internal and disclosure controls over reporting as well.
New rules on certification of annual and interim filings will come into effect on Dec. 15, an Ogilvy Renault bulletin notes. The new rules expand the certification and disclosure requirements related to internal controls over financial reporting (ICFR).
The new rules apply to all reporting issuers across Canada (other than investment funds). Venture issuers — i.e. junior companies not listed on senior stock exchanges such as TSX, Nasdaq or NYSE — will be subject to reduced requirements.
As Ogilvy Renault notes, currently CEOs and CFOs must certify that:
•    their annual and interim filings do not contain any misrepresentations;
•    the financial statements fairly represent the results, operations and cash flow of the issuer;
•    the issuer has designed disclosure controls and procedures (DC&P) and ICFR, or caused them to be designed;
•    they have reported any changes of financial status in its annual management discussion and analysis (MD&A) report; and
•    they have annually evaluated and reported on the effectiveness of the DC&P.
Issuers affected by the new regulations must now establish and maintain DC&P and ICFR, as well as use a control framework to design their ICFR.
Under the new regulations, company CEOs and CFOs must certify:
•    the control framework used to design the issuer’s ICFR;
•    that they are responsible for establishing and maintaining DC&P and ICFR;
•    that the issuer has disclosed in its MD&A any “material weakness” related to the DC&P and ICFR, and include a description of the weakness; and
•    disclose on an annual basis to external auditors, board of directors or audit committees any fraud involving management or employees who have a significant role in the ICFR.