Thursday, December 20, 2007

Canadian regulators say reviewing ABCP disclosure

(Reuters) - Canadian securities regulators said on Thursday they are reviewing accounting and disclosure documents filed by companies and investment funds in the wake of the asset-backed commercial paper crisis this summer.

The market for about C$35 billion ($35 billion) in nonbank-sponsored ABCP -- short-term paper issued by financial players other than the country's big banks -- remains frozen, and a complicated restructuring attempt continues. Buyers disappeared in mid-August as concern grew about the underlying bundles of loans and receivables backing the investments.

Canadian Securities Administrators, an umbrella group of Canada's provincial securities watchdogs, said on Thursday that they have started "targeted reviews" of the disclosure made by Canadian companies that own nonbank asset-backed commercial paper.

Fewer than 100 public companies hold "significant amounts" of the paper, the CSA said.
Among the areas being looked at is how companies are accounting for their ABCP investments, and whether or not they have written down the value of their ABCP holdings when required.

Many public companies have cut the estimated value of their ABCP investments but the magnitude of those writedowns has varied widely, from zero to as much as 40 percent.

Company managements have provided "equally disparate" discussions of their ABCP holdings, forensic accountant Al Rosen of Accountability Research noted in a recent newspaper article. "Some have written a few sentences, while others have allocated many pages," he wrote.

Announced writedowns of ABCP holdings to date total roughly C$1.26 billion, according to Accountability Research.
If disclosure filings are deficient or fail to meet accounting requirements, then companies will be expected to restate and refile the documents, the CSA said.

Regulators are also reviewing the ABCP disclosure that investment funds made in their financial statements and in management reports of fund performance, the CSA said. ($1=$1.00 Canadian) (Reporting by Lynne Olver; Editing by Peter Galloway)

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