Canadian securities administrators propose new internal control reporting.

On January 16, 2004, the members of the Canadian Securities Administrators, other than British Columbia (the participating CSA jurisdictions), published a notice in respect of Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (the Certification Instrument), explaining that the participating CSA jurisdictions were developing, as a separate CSA initiative, a proposed instrument mandating a report on management's assessment of an issuer's internal control over financial reporting (the Proposed Instrument). The participating CSA jurisdictions also planned to evaluate the extent to which auditor attestation to the report should be required.

Since then, the participating jurisdictions have issued an update to the market to assist reporting issuers with their continuous disclosures. They believe it is critical that all Canadian reporting issuers have sound internal control over financial reporting. They are continuing to develop the Proposed Instrument and, in doing so, are evaluating whether or not to create something similar to the U.S. Securities and Exchange Commission's rules in section 404 of the Sarbanes-Oxley Act of 2002 (the SOX 404 rules). Under the SOX 404 rules:

* Management must, on an annual basis, evaluate the issuer's internal control over financial reporting against a suitable control framework, report on its assessment of the effectiveness of internal control over financial reporting and disclose, among other things, all material weaknesses in internal control over financial reporting; and

* The issuer's auditors must express an opinion on management's assessment of internal control over financial reporting in accordance with the U.S. Public Company Accounting Oversight Board's audit standard for internal control audit engagements.

In developing the Proposed Instrument, the staff in participating jurisdictions are consulting with a wide range of groups, including: reporting issuers in Canada (including issuers that are SEC registrants and subject to the SOX 404 rules), audit firms and legal advisers to reporting issuers, internal control consultants, a control framework expert and investor groups. The Proposed Instrument was to be delivered to the securities regulatory authorities in late 2004 and published for comment in early 2005. For details, visit www.osc.gov.on.ca

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