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I have been watching the television coverage of the Enron scandal in the United States. Is anything being done in Canada to address these issues?

In the United States, the Senate and the House of Representatives have been holding hearings on Enron for the past six months. In Canada, the Senate Committee on Banking, Trade and Commerce began investigating the same types of issues on May 8. These hearing will lead up to a preliminary list of proposals that will be announced this summer. Although these proposals will mainly focus on the accounting industry, the Senate Committee will by no means limit its scope to accounting issues and is expected to examine the relationship that analysts have with investment bankers, stock options, compensation and the corporate responsibility of lawyers.

The issue of executive compensation is also being addressed by the Canadian Securities Administrators, a national association of provincial and territorial commissions. The CSA has chosen 75 companies (headquartered in Canada and traded on the Toronto Stock Exchange) and will review how well they explain their executive compensation in their annual reports. The CSA will release their report later this year. The CSA intends to improve the quality of the information that companies disclose to investors. Existing provincial securities rules require specific and detailed disclosure of compensation methods. Despite detailed rules, some companies only provide a brief discussion in their proxy circular. The Ontario Securities Commission has recently completed studies of revenue recognition policies and quarterly reporting standards. These studies are all part of a tougher stance that regulators are taking on disclosure. Auditors in Canada are currently governed through the Canadian Institute of Chartered Accountants, a self-regulating organization.