In an effort to explore methods to encourage development and reduce poverty in resource-rich countries—particularly in developing nations—the Canadian federal government assembled the Resource Revenue Transparency Working Group (RRTWG) in September 2012. Consisting of the Mining Association of Canada, the Prospectors and Developers Association of Canada, Publish What You Pay Canada and the Revenue Watch Institute, this group was formed as a means to provide guidelines to help ensure that the estimated $3 trillion in annual worldwide mineral and oil & gas exports are better applied to the benefit of affected communities. Ideally, this improved transparency of payments to governments will reduce bribery and mismanagement of funds while providing citizens and investors with better information upon which to advance their respective positions. If effective, these measures could help initiate change in many of the world’s poorest countries, improving the existence of millions of people in the developing world. The RRTWG published its recommendations on January 16. On March 27, Natural Resources Canada published a consultation paper based largely on the recommendations of the RRTWG. The reporting standards outlined in this paper, if adopted, would apply to all companies that are reporting issuers under Canadian securities legislation, as well as medium and large private companies operating or headquartered in Canada and involved in the commercial development or export of oil, natural gas and minerals. These companies would be required to annually disclose broadly-defined payments to domestic and foreign governments that meet or exceed a minimum reporting threshold, with penalties applied for non-compliance and no allowance for exemptions of any kind. The paper recommends the legislation be enacted on April 1, 2015, with a consultation process currently under way. For the 60 percent of mining companies globally that would be affected, complying with the recommendations will not come without significant effort and cost. The company’s management team’s first step should be to thoroughly familiarize itself with the recommendations, monitoring as they become requirements to ensure timely compliance. From here, management should assess its current processes and systems for adherence to the reporting requirements, modifying for any identified gaps to ensure that all required information is fully and accurately captured. Finally, management should implement an effective process incorporating appropriate internal controls to ensure accuracy and consistency of data production and reporting. This process should also include assembling a file to accommodate potential audits by regulators. Management must also be sure to include all subsidiaries, controlled (directly or indirectly) and jointly-controlled entities and entities subject to significant influence in its reporting process evaluation, as these types of companies are explicitly subject to the reporting framework. To eliminate redundancies, the recommendations also include recognition of equivalent reporting regimes, such as the U.S. Dodd-Frank Act and the E.U. Transparency and Accounting Directives, suggesting acceptance of equivalent reporting standards. Many express concern at the prospect of additional reporting regulations for public companies, which have increased exponentially in the past decade, particularly in the area of internal controls over financial reporting. Others have embraced the opportunity to demonstrate corporate responsibility to improve shareholder support and gain social license, both key factors in the success of mineral project developments. Regardless of the position reporting issuers take, endorsed by prestigious organizations such as those comprising the RRTWG, implementation of the recommendations will bring Canada in line with the U.S. and E.U., ensuring the continued perception of Canada as a leading country in the extractive industries. This guest post has been written by Bryndon Kydd, CPA, CA, Vancouver leader of BDO Canada’s Natural Resources Practice. For more information, he can be reached at


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