Services: Investigations, Forensics, & Risks
Delta Consulting Group Canada’s forensic accountants and litigation support experts were retained on behalf of shareholders in a nation-wide securities class action pursuant to Part XXIII.1 of the Ontario Securities Act against a high-profile publicly traded producer and distributor of medical and recreational cannabis. Whistle-blower complaints gave rise to allegations of improprieties and unauthorized conduct allegedly acquiesced by the entity’s senior management and former Board of Directors to artificially inflate reported revenue, assets, earnings and the entity’s corresponding share trading price over a one-year timeframe. Delta was retained by counsel for shareholders to investigate and analyze: (1) whether the entity’s annual and quarterly financial statements were materially misstated or alternatively fairly presented in compliance with International Financial Reporting Standards (IFRS); and (2) whether there existed undisclosed material weaknesses in the entity’s Internal Controls over Financial Reporting (ICFR) and Disclosure Controls and Procedures (DC&P).
Delta analyzed publicly available information in order to assess the entity’s reported results and internal control disclosures during the class period for compliance with: (1) IFRS as published by Chartered Professional Accountants (CPA) Canada; and (2) ICFR and DC&P standards as established in National Instrument 52-109 (Certification of Disclosure in Issuers’ Annual and Interim Filings), Companion Policy 52-109CP and the Internal Control Framework published by the Committee of Sponsoring Organizations of the Treadway Commission. This work involved extensive financial and internal control investigation and evaluation, a deep understanding of applicable professional accounting and internal control standards and significant exercise of professional judgement.
Delta swore an affidavit and prepared a 100+ page expert report for class certification purposes, which detailed Delta’s findings that the publicly traded cannabis company had materially misstated its financial reports and its internal control disclosures during the class period. Delta’s findings were used to obtain a multi-million-dollar settlement on behalf of class shareholders and will be used by counsel for shareholders in related litigation against the entity’s financial statement auditor.