Issuers are not doing enough to disclose their plans for implementing new international accounting standards, suggests a review conducted by the Ontario Securities Commission.

The OSC, which reviewed a sample of issuers’ disclosure relating to their transition to International Financial Reporting Standards, released its report on Friday.

Of the 106 reporting issuers reviewed, 40% did not provide any IFRS transition disclosure.

Of the 60% that did provide some disclosure:

• approximately half simply provided a generic description of the plan without any direct application to their own circumstances;

• 80% failed to describe significant milestones and anticipated timelines associated with each of the key elements of the plan; and

• 48% failed to provide quarterly updates in 2009 interim MD&A on the progress related to their changeover plan.

“Overall, our findings suggest that reporting issuers are not adequately discussing, in MD&A, the key elements of their IFRS changeover plan or their progress towards achieving this plan,” it says.

The commission indicates that it has not asked deficient firms to refile this disclosure however, “because the focus of this particular review was to raise awareness about the IFRS changeover and to educate issuers on our disclosure expectations related to transition.”

Instead, issuers were asked to confirm that future MD&A filings would address the disclosure concerns identified by the regulator’s staff, and that they provide enhanced disclosure of their transition plan, along with related progress updates in those future filings.

“It is critical that investors are properly informed during the IFRS transition on whether reported changes in financial performance relate to the adoption of different accounting standards or relate to a change in the issuer’s business. Issuers that provide sufficient information about their conversion process and its effects prior to the changeover will reduce the level of investor uncertainty,” the review notes.

“Ultimately, this should lead to a more stable and less disruptive transition to IFRS, which will be beneficial to both issuers and their investors.”

As the changeover date approaches, issuers will need to provide more information about their transition plans, and the OSC says that it will conduct future targeted reviews of these transition disclosures.

“While the focus of our current review was education and awareness, we caution issuers that we may request re-filings of MD&A in the future if disclosure obligations are not met.”

IE