The Canadian Securities Administrators says a proposed rule on internal control over financial reporting should be ready to be presented to securities regulators in late 2004.

If approved, the rule will then be published for public comment in late 2004 or early 2005. They will recommend that the earliest the rule should apply is for financial years ending on June 30, 2006.

The proposed rule would require issuers’ management to file a report on their assessment of their internal control over financial reporting.

Last January, the CSA issued a notice that the regulators were developing this rule, separate from one requiring management to certify their financials. They also indicated that they were evaluating the extent to which auditor attestation to that report should be required.

This latest notice aims to provide an update to market participants and to assist reporting issuers in planning their continuous disclosure. It says that CSA staff believe it is critical for the markets that all Canadian reporting issuers have sound internal control over financial reporting. Staff are continuing to develop the proposed rule, and are evaluating the extent to which it is appropriate for the proposed rule to parallel the U.S. Securities and Exchange Commission’s rules under the Sarbanes-Oxley Act.

In developing the rule, CSA staff are consulting with: reporting issuers in Canada (including issuers that are SEC registrants and subject to the SOX rules), audit firms and legal advisers to reporting issuers, internal control consultants, a control framework expert and investor groups.