AECON GROUP INC 21 NEW ACCOUNTING STANDARDS Note 5 to the 2012 consolidated fnancial statements includes new CICA Handbook sections which became effective on or after January 1 2013 for Aecon SUPPLEMENTAL DISCLOSURES DISCLOSURE CONTROLS AND PROCEDURES The Chief Executive Offcer CEO and Chief Financial Offcer CFO together with management evaluated the design and operating effectiveness of the Companys disclosure controls and procedures as at the fnancial year ended December 31 2012 Based on that evaluation the CEO and the CFO concluded that the design and operation of these disclosure controls and procedures were effective as at December 31 2012 to provide reasonable assurance that material information relating to the Company including its consolidated subsidiaries would be made known to them by others within those entities and that information required to be disclosed by the Company in its annual and interim flings and other reports submitted under securities legislation was recorded processed summarized and reported within the periods specifed in securities legislation INTERNAL CONTROLS OVER FINANCIAL REPORTING The CEO and CFO together with management evaluated the design and operating effectiveness of the Companys internal controls over fnancial reporting as at the fnancial year ended December 31 2012 Based on that evaluation the CEO and the CFO concluded that the design and operation of internal controls over fnancial reporting were effective as at December 31 2012 to provide reasonable assurance regarding the reliability of fnancial reporting and the preparation of fnancial statements for external purposes in accordance with Canadian GAAP In designing and implementing such controls it should be recognized that any system of internal control over fnancial reporting no matter how well designed and operated has inherent limitations Therefore even those systems determined to be effective can provide only reasonable assurance with respect to fnancial statement preparation and presentation and may not prevent or detect all misstatements due to error or fraud See also the section on Internal and Disclosure Controls in the Risk Factors section of this MDA CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING There have been no changes in the Companys internal controls over fnancial reporting during the year ended December 31 2012 that have materially affected or are reasonably likely to materially affect the Companys internal controls over fnancial reporting CONTRACTUAL OBLIGATIONS Aecon has commitments for equipment and premises under operating leases and has principal repayment obligations under longterm debt as follows Non Operating recourse Other lease project longterm C o n v e r t i b l e millions payments debt debt d e b e n t u r e s 1 2013 109 230 707 20142019 226 1099 1558 2645 Beyond 78 939 14 413 2268 2279 2645 1 Assumes all convertible debentures are redeemed at maturity for cash At December 31 2012 Aecon had contractual obligations to complete construction contracts that were in progress The revenue value of these contracts was 2428 million OFFBALANCE SHEET ARRANGEMENTS In connection with its joint venture operations in Quito Aecon has provided various fnancial and performance guarantees and letters of credit which are described in Note 23 to the Companys 2012 consolidated fnancial statements Aecons defned beneft pension plans the Pension Plans had a combined defcit of 76 million at December 31 2012 2011 85 million Details relating to Aecons defned beneft plans are set out in Note 22 to the 2012 consolidated fnancial statements The latest actuarial valuation of the Pension Plans for statutory and contribution purposes was completed as at December 31 2010 Under current pension benefts regulations the next actuarial valuation of the Pension Plans must be performed with a valuation date of no later than December 31 2013 Accordingly no change in contributions will be required before 2014 and any change thereafter will refect December 31 2013 market conditions The defned beneft obligations and beneft cost levels will change as a result of future changes in the actuarial methods and assumptions the membership data the plan provisions and the legislative rules or as a result of future experience gains or losses none of which have been anticipated at this time Emerging experience differing from the assumptions will result in gains or losses that will be revealed in future accounting valuations Consequently the accounting for pension plans involves a number of assumptions including those that are disclosed in Note 22 to the consolidated fnancial statements As a result of the uncertainty associated with these estimates there is no assurance that the plans will be able to earn the assumed rate of return on plan assets and furthermore market driven changes may result in changes to discount rates and other variables which would result in Aecon being required to make contributions to the plans in the future that may differ signifcantly from estimates As a result there is a signifcant amount of measurement uncertainty involved in the