CSA calls for improved disclosure of non-GAAP measures

Issuers need to improve how they disclose non-GAAP financial measures, says the CSA’s latest continuous disclosure review report. The regulator published Staff Notice 51-355 Continuous Disclosure Review Program Activities for the fiscal years ended March 31, 2018 and March 31, 2017 on Thursday. The biennial report summarizes CSA’s review of reporting issuers’ continuous disclosure and […]

By Staff | July 19, 2018 | Last updated on July 19, 2018

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Issuers need to improve how they disclose non-GAAP financial measures, says the CSA’s latest continuous disclosure review report.

The regulator published Staff Notice 51-355 Continuous Disclosure Review Program Activities for the fiscal years ended March 31, 2018 and March 31, 2017 on Thursday. The biennial report summarizes CSA’s review of reporting issuers’ continuous disclosure and emphasizes common deficiencies and best practices.

Read: Misconduct cases increase year over year: CSA report

“Among other issues, we continue to see deficiencies in issuers’ use of non-GAAP financial measures, and this remains an area of focus for the CSA,” said Louis Morisset, chair of the CSA, in a release. “We strongly encourage issuers to use this report as a guide to make improvements, as disclosure requirements are at the core of our investor protection regime.”

CSA says other areas where issuers can improve their disclosure include:

fair value measurements and disclosures;
forward-looking information;
discussions of issuers’ results of operations and significant projects in development;
climate change disclosures; and
mineral project disclosure.

In 2018, the most common issue-oriented reviews focused on gender diversity, technical issues related to mining, oil and gas, and emerging industries (including cryptocurrencies and cannabis), the report says. In 2017, the most common reviews were of cybersecurity, issues including gender diversity and corporate governance, and technical issues related to mining, oil and gas.

In 2018, 51% of the review outcomes (compared to 43% in 2017) required issuers to take action to improve and/or amend their disclosure, or the issuer was referred to enforcement, cease traded or was put on the default list, the release says.

The report can be read here.

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