(1) Fair presentation not limited to issuer’s GAAP – The forms included in the Instrument require each certifying officer to certify that an issuer’s financial statements (including prior period comparative financial information) and other financial information included in the annual or interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date and for the periods presented. This certification is not qualified by the phrase “in accordance with generally accepted accounting principles” which is typically included in audit reports accompanying annual financial statements. The forms specifically exclude this qualification to prevent certifying officers from relying entirely on compliance with the issuer`s GAAP in this representation, particularly as the issuer’s GAAP financial statements might not fully reflect the financial condition of the issuer. Certification is intended to provide assurance that the financial information disclosed in the annual filings or interim filings, viewed in its entirety, provides a materially accurate and complete picture that may be broader than financial reporting under the issuer’s GAAP. As a result, certifying officers cannot limit the fair presentation representation by referring to the issuer’s GAAP. Although the concept of fair presentation as used in the annual and interim certificates is not limited to compliance with the issuer’s GAAP, this does not permit an issuer to depart from the issuer’s GAAP in preparing its financial statements. If a certifying officer believes that the issuer’s financial statements do not fairly present the issuer’s financial condition, the certifying officer should ensure that the issuer’s MD&A includes any necessary additional disclosure. (2) Quantitative and qualitative factors – The concept of fair presentation encompasses a number of quantitative and qualitative factors, including: (a) selection of appropriate accounting policies; (b) proper application of appropriate accounting policies; (c) disclosure of financial information that is informative and reasonably reflects the underlying transactions; and (d) additional disclosure necessary to provide investors with a materially accurate and complete picture of financial condition, financial performance and cash flows.
The Instrument does not formally define financial condition. However, the term “financial condition” in the annual certificates and interim certificates reflects the overall financial health of the issuer and includes the issuer’s financial position (as shown on the statement of financial position) and other factors that may affect the issuer’s liquidity, capital resources and solvency.
The definition of ICFR refers to the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. In order to have reliable financial reporting and financial statements to be prepared in accordance with the issuer’s GAAP, the amounts and disclosures in the financial statements must not contain any material misstatement.