OSFI – Communicated ICAAP Expectations and BCAR Audit Requirements

April 12, 2021 – The relayed expectations are applicable to standardized depository-taking institutions (DTIs).

ICAAP Submissions
Agency issued a letter confirming it will not require a formal ICAAP submission in 2021. All institutions are still expected to continue to practice prudent capital management, including the continued implementation of their ICAAP program to identify, quantify and substantiate to their boards’ Pillar 2 risks that underpin their target capital levels. Recognized increased risks emerged due to pandemic, stated belief robust ICAAP enhances standardized DTI’s ability to manage the current environment, business cycles. Standardized DTI expected to update ICAAP as part of the annual capital planning process.

BCAR Audits
Communicated that C-OSFI will require standardized DTIs to file BCAR internal audit. Institution’s internal audit function required to provide an audit to C-OSFI lead supervisor. Required review of completeness, the accuracy of one BCAR submission during the year. Containing, not limited to, accurate categorization of risk-weighted assets, completeness of off-balance sheet amounts, and accurate amounts for credit risk mitigation (CRM).

Effectiveness
Next set of 2021 BCAR internal audits due to be submitted to OSFI by February 28, 2022.

For more information, visit www.osfi-bsif.gc.ca.

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