13 Apr OSFI-Launched Consultation on Enhanced Assurance Expectations
April 13, 2021 – The consultation explores the impact on Federally Regulated Insurers (FRIs) and Deposit-Taking Institutions (DTIs). The discussion paper focuses on enhancing and aligning assurance expectations given the increasing complexity arising from the evolving regulatory reporting framework, particularly changes from IFRS 17 insurance contracts and Basel III reforms.
OSFI has a range of assurance expectations for capital, leverage, and liquidity returns; financial statement note disclosures on capital, leverage audited by external auditors. Senior management, internal audit perform control, oversight roles over the capital, leverage, liquidity returns; OSFI reviews regulatory returns in the supervisory process. For insurers, external auditors provide assurance on summary of insurance capital returns; authorized official provides a signature on capital returns for verification. For DTIs using the internal ratings-based approach for credit risk, senior management submits annual attestation with min regulatory requirements for regulatory capital models. Also, an internal audit opinion is submitted for approved regulatory capital models. For DTIs using a standardized approach for credit risk, the internal audit function performs a periodic review of Basel Capital Adequacy Return (BCAR) and submits it to lead supervisors.
OSFI applies a risk-based and principles-based approach to regulation and supervision. Looking at ways to further improve the consistency, accuracy, and timeliness of risk assessments in federally regulated insurers and deposit-taking institutions. The initiative explores ways to enhance assurance over capital, leverage, and liquidity returns. The discussion paper describes areas OSFI seeks to enhance and align existing assurance expectations, promote greater transparency, early engagement from stakeholders. OSFI invites feedback from interested stakeholders to guide the development of enhanced assurance expectations in a subsequent draft guideline.
Comments on the discussion paper and responses to discussion questions due by June 18, 2021.
For more information, visit www.osfi-bsif.gc.ca.