ICAAP Expectations and BCAR Audit Requirements - osfi-bsif ...

OSFI will not require a formal ICAAP submission in 2021; and · OSFI will require Standardized DTIs to file an internal audit of their BCAR return ... Skiptomaincontent Skiptosecondarymenu ICAAPExpectationsandBCARAuditRequirements PageContent​DocumentProperties TypeofPublication:Letter Date:April12,2021 To:DTIsusingtheBaselStandardizedApproachtoCreditRiskOSFIlastwrotetoallStandardizedDeposit-TakingInstitutionsFootnote1(DTIs)on October 23, 2018,communicatingourexpectationsforthe2019ICAAPsubmissionandinternalauditofBCAR.Thepurposeofthiscommunicationistoconfirmthat:OSFIwillnotrequireaformalICAAPsubmissionin2021;andOSFIwillrequireStandardizedDTIstofileaninternalauditoftheirBCARreturnbyFebruary28,2022.ICAAPExpectationsWhileStandardizedDTIsarenotrequiredtosubmitaformalICAAPfor2021,OSFIexpectsthatinstitutionswillcontinuetopracticeprudentcapitalmanagement.ThisincludesthecontinuedimplementationoftheirICAAPprogramtoidentify,quantifyandsubstantiatetotheirboardsthePillar2risksthatunderpintheirtargetcapitallevels.StandardizedDTIsshouldtreattheICAAPasanimportantinternalprocessratherthanasa“regulatory”exercise.OSFIrecognizesthatincreasedriskshaveemergedduetothepandemicandbelievesthatarobustICAAPenhancesaStandardizedDTI’sabilitytomanagethroughthecurrentenvironmentandallstagesofbusinesscycles.Therefore,OSFIexpectsStandardizedDTIstoupdatetheirICAAPaspartoftheirannualcapitalplanningprocess.Thisshouldincludereconfirmationofinternalcapitaltargets.LeadSupervisorsmayrequestICAAPdocumentationaspartofOSFI’songoingsupervisoryreviewprocess.OSFIguidelines E-19InternalCapitalAdequacyAssessmentProgramand E-23Enterprise-WideModelRiskManagementprovidefurtherdetailontherequirementtoinstituteanICAAPprocess,includingrobustmodelgovernanceforPillar2riskquantification.InternalAuditReviewofBCARThenextsetofinternalauditsofthe2021BCARreturnmustbesubmittedtoOSFIbyFebruary28,2022.Aswithpreviouspractice,OSFIexpectseachinstitution’sInternalAuditfunctiontoprovidetheirOSFILeadSupervisorwiththefollowingaudit:AreviewofthecompletenessandaccuracyofoneBCARsubmissionduringtheyearincluding,butnotlimitedto,areviewofthefollowing:AccuratecategorizationofRisk-WeightedAssets,CompletenessofOff-BalanceSheetamounts,andAccurateamountsforcreditriskmitigation(CRM).Shouldyouhaveanyquestionsorconcerns,pleasecontactyourOSFILeadSupervisor.Yourssincerely,JameyHubbs AssistantSuperintendent Deposit-TakingSupervisionSector Footnotes Footnote1Deposit-TakingInstitutionsusingthestandardizedapproachtoPillar1capitallevels Returntofootnote1​ ModifiedDate: 2021-04-12 Secondarymenu RegulationandGuidance ActsandRegulations Guidance TableofGuidelines TableofAdvisories ApprovalsandPrecedents ApplicationandApprovalGuides RegulatoryandLegislativeAdvisories LegislativeRulings CapitalRulings NameRequest RiskAssessmentandIntervention SupervisoryPractices GuidetoIntervention TrustAgreements RegulatoryData FilingCorporateReturns FilingFinancialReturns ViewingFinancialData Anti-moneyLaunderingandCompliance Anti-moneyLaundering Anti-terrorismFinancing Sanctions Messages IndustryNotices WebTools WhoWeRegulate