Directors Source News - January 2009

• 20 Questions Directors Should Ask
  about Management's Discussion and Analysis, Second Edition
• Director Alert (October 2008): The
  Global Financial Meltdown – questions
  for directors to ask

• Proposed Rule: Roadmap for the
  Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers
• CPR Alert: Evaluating the Operational Effectiveness of ICFR

• Post Your Directorship Opportunity
  Here
  

• CICA Webinar: Communications About
  IFRS Changeover
• Introduction to IFRS – Implications for Canadian Businesses

• Corporate Ethics and Corporate Governance

• The Audit Committee Journey 2008: Charting Gains, Gaps and Oversight Priorities

Management’s Discussion & Analysis (MD&A) is a core element of financial reporting and therefore warrants the careful attention of directors. This revised edition of the publication 20 Questions Directors Should Ask about Management’s Discussion and Analysis has been updated to reflect changes in the legal and regulatory disclosure environment and related changes in disclosure oversight practices that have occurred since the first publication in 2003. It also includes relevant excerpts from Management’s Discussion & Analysis: Guidance on Preparation and Disclosure, issued by the Canadian Performance Reporting Board of the CICA.

1. What has been management's approach to determining materiality in preparing the MD&A?

Management’s determination of materiality applies not only to financial results but also to all of the qualitative and quantitative information disclosed in the MD&A.

The CSA instructions for the MD&A and the CICA guidance both advocate a test based on significance to investor decision making when considering the materiality of quantitative or qualitative matters to be disclosed in the MD&A. The impact on market prices, it is argued, follows investor decision making based upon what is disclosed to them.

2. What feedback, if any, has been received from regulators about the adequacy of the company's MD&A and/or other disclosures such as press releases and financial statements? What action has management taken in response to any such feedback?

Securities regulators monitor companies’ financial statements and the other filings they make under the continuous disclosure system, including how those filings compare with press releases, webcasts, etc. Sometimes, companies receive communications from regulators regarding a concern about a particular filing, which, on occasion, may include a call for the financial statements and/or MD&A to be revised and re-filed.

Management should be required to inform directors about any such communications received from regulatory bodies, including the action taken or proposed in response, and where the matter currently stands. Audit committees may wish to review the letters received from the regulators about disclosure concerns and deficiencies, as well as management’s written responses.

What are directors to do in these volatile times? To avoid the pitfalls and understand the possibilities, directors are encouraged to ask questions to understand what is happening and to ensure management is preparing and positioning corporations for what lies ahead.

This Director Alert, while discussing both short- and long-term issues, focuses more on the long-term – the forward-looking and strategic fallout that will confront companies and their management in the months and years ahead. The Alert presents a series of questions as a catalyst for useful dialogue. Not all of the questions will be relevant to all companies. Many of the questions are intended for directors to consider asking management, others are questions for directors to discuss among themselves. They fall into four categories: 1) Uncertainty, Risk and Business Strategy; 2) Financial Condition and Liquidity; 3) Reporting and Disclosure; 4) Leadership and Corporate Governance.

Questions covered in the Alert include: What are the implications on the company's financing strategies if equity markets continue to be volatile and borrowing becomes difficult or more expensive? Is the company able to meet its pension obligations? Should the appropriateness of insurance and hedging strategies be reconsidered? Does the MD&A effectively communicate strategies for dealing with volatile credit and consumer markets? Does the executive compensation structure need to be evaluated in light of new business conditions and performance expectations? What can we learn from this to better predict and respond to imminent market and financial crises in the future?

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CICA Webinar: Communications About IFRS Changeover

Date: January 14, 2009
Time: 12:30 ET
Receive a one hour CPD credit for attending this webinar

This webinar will bring suggestions for what companies should be disclosing in their MD&A about the conversion to IFRS in the period leading up to the 2011 changeover. It will address both disclosures about the changeover plan and the impact of the conversion on an entity's financial reporting, including considerations in determining the timing for various disclosures.

Online registration is free and after the presentation a recording of the session is also available via the registration link.

This webinar is sponsored by PTC: www.ptcifrs.com.

Introduction to IFRS – Implications for Canadian Businesses

The CICA eLearning Portal is dedicated to helping financial reporting professionals across Canada manage the transition to International Financial Reporting Standards. Introduction to IFRS – Implications for Canadian Businesses is the introductory course; one that provides a high-level overview of IFRS and its implications for you and for your organization. From here you will be better positioned to select additional IFRS resources, events and training offerings sponsored by Chartered Accountants of Canada.

Corporate Ethics and Corporate Governance

Corporations are under fire. Hardly a day goes by that executive conduct doesn’t appear as a topic – or, more accurately, as a problem – in the media. This leads to increased public pressure on corporations, many of whom are reacting and publicly assuming their corporate responsibility.

This book represents an introduction to and overview of the diverse aspects of the ethical challenges confronting companies today. It introduces executives, students and interested observers to the complex trends and developments in business ethics. The book presents industry-specific topics in ethics, and a general, interdisciplinary survey of the ethical dimensions of management and business.

Click here for more information

KPMG conducts an annual survey of board audit committees (or their equivalent supervisory bodies) to identify key challenges and concerns driving audit committee agendas and activities around the globe.

Given the slowing economy, the “credit crunch” and other fallout from the subprime crisis, and general business volatility, survey results indicate that oversight of “risk” has become the number one agenda priority for audit. This increased focus on risk is in large measure a reflection of audit committee members' concerns about the current business environment and concerns about the quality of their companies' risk intelligence.