Bank Act (S.C. 1991, c. 46)

Marginal note:Qualification of auditors

• 315 (1) A firm of accountants is qualified to be an auditor of a bank if

  • (a) two or more members thereof are accountants who

    • (i) are members in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,

    • (ii) each have at least five years experience at a senior level in performing audits of a financial institution,

    • (iii) are ordinarily resident in Canada, and

    • (iv) are independent of the bank; and

  • (b) the member of the firm jointly designated by the firm and the bank to conduct the audit of the bank on behalf of the firm is qualified in accordance with paragraph (a).

• Marginal note:Independence

  (2) For the purposes of subsection (1),

  • (a) independence is a question of fact; and

  • (b) a member of a firm of accountants is deemed not to be independent of a bank if that member, a business partner of that member or the firm of accountants

    • (i) is a business partner, director, officer or employee of the bank or of any affiliate of the bank or is a business partner of any director, officer or employee of the bank or of any affiliate of the bank,

    • (ii) beneficially owns or controls, directly or indirectly, a material interest in the shares or membership shares of the bank or of any affiliate of the bank, or

    • (iii) has been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any affiliate of the bank within the two years immediately preceding the firm’s proposed appointment as auditor of the bank, other than an affiliate that is a subsidiary of the bank acquired pursuant to section 472 or through a realization of security pursuant to section 473.

• Marginal note:Business partners

  (2.1) For the purposes of subsection (2), a business partner of a member of a firm of accountants includes

  • (a) another member of the firm; and

  • (b) a shareholder of the firm or of a business partner of the member.

• Marginal note:Notice of designation

  (3) Within fifteen days after appointing a firm of accountants as auditor of a bank, the bank and the firm of accountants shall jointly designate a member of the firm who has the qualifications described in subsection (1) to conduct the audit of the bank on behalf of the firm and the bank shall forthwith notify the Superintendent in writing of the designation.

• Marginal note:New designation

  (4) Where for any reason a member of a firm of accountants designated pursuant to subsection (3) ceases to conduct the audit of the bank, the bank and the firm of accountants may jointly designate another member of the same firm of accountants who has the qualifications described in subsection (1) to conduct the audit of the bank and the bank shall forthwith notify the Superintendent in writing of the designation.

• Marginal note:Deemed vacancy

  (5) In any case where subsection (4) applies and a designation is not made pursuant to that subsection within thirty days after the designated member ceases to conduct the audit of the bank, there shall be deemed to be a vacancy in the office of auditor of the bank.

Marginal note:Duty to resign

• 316 (1) An auditor that ceases to be qualified under section 315 shall resign forthwith after any member of the firm becomes aware that the firm has ceased to be so qualified.

• Marginal note:Disqualification order

  (2) Any interested person may apply to a court for an order declaring that an auditor of a bank has ceased to be qualified under section 315 and declaring the office of auditor to be vacant.

Marginal note:Revocation of appointment

• 317 (1) The shareholders of a bank or the members of a federal credit union may, by ordinary resolution at a special meeting, revoke the appointment of an auditor.

• Marginal note:Idem

  (2) The Superintendent may at any time revoke the appointment of an auditor made under subsection (3) or 314(1) or section 319 by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the bank addressed to the usual place of business of the auditor and the bank.

• Marginal note:Filling vacancy

  (3) A vacancy created by the revocation of the appointment of an auditor under subsection (1) may be filled at the meeting at which the appointment was revoked and, if not so filled, shall be filled by the directors under section 319.

Marginal note:Ceasing to hold office

• 318 (1) An auditor of a bank ceases to hold office when

  • (a) the auditor resigns; or

  • (b) the appointment of the auditor is revoked by the Superintendent or by the shareholders or, if the bank is a federal credit union, by the members.

• Marginal note:Effective date of resignation

  (2) The resignation of an auditor becomes effective at the time a written resignation is sent to the bank or at the time specified in the resignation, whichever is later.

Marginal note:Filling vacancy

• 319 (1) Subject to subsection 317(3), where a vacancy occurs in the office of auditor of a bank, the directors shall forthwith fill the vacancy, and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.

• Marginal note:Where Superintendent may fill vacancy

  (2) Where the directors fail to fill a vacancy in accordance with subsection (1), the Superintendent may fill the vacancy and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.

• Marginal note:Designation of member of firm

  (3) Where the Superintendent has, pursuant to subsection (2), appointed a firm of accountants to fill a vacancy, the Superintendent shall designate the member of the firm who is to conduct the audit of the bank on behalf of the firm.

Marginal note:Right to attend meetings

• 320 (1) The auditor or auditors of a bank are entitled to receive notice of every meeting of shareholders and, if the bank is a federal credit union, every meeting of its members and, at the expense of the bank, to attend and be heard at the meeting on matters relating to the duties of the auditor or auditors.

• Marginal note:Duty to attend meeting

  (2) If a director, shareholder or member of a bank, whether or not that person is entitled to vote at the meeting, gives written notice, not less than 10 days before the meeting, to an auditor or former auditor of the bank that the director, member or shareholder wishes the auditor’s attendance at the meeting, the auditor or former auditor must attend the meeting, at the expense of the bank, and answer questions relating to the auditor’s or former auditor’s duties as auditor.

• Marginal note:Notice to bank

  (3) The person who gives notice under subsection (2) must send concurrently a copy of the notice to the bank and the bank must, without delay, send a copy of it to the Superintendent.

• Marginal note:Superintendent may attend

  (4) The Superintendent may attend and be heard at any meeting referred to in subsection (2).

Marginal note:Statement of auditor

• 321 (1) An auditor of a bank that

  • (a) resigns,

  • (b) receives a notice or otherwise learns of a meeting of shareholders, or, if the bank is a federal credit union, of a meeting of members, called for the purpose of revoking the appointment of the auditor, or

  • (c) receives a notice or otherwise learns of a meeting of directors or shareholders, or, if the bank is a federal credit union, of a meeting of members, at which another firm of accountants is to be appointed in its stead, whether because of the auditor’s resignation or revocation of appointment or because the auditor’s term of office has expired or is about to expire,

  shall submit to the bank and the Superintendent a written statement giving the reasons for the resignation or the reasons why the auditor opposes any proposed action.

• Marginal note:Other statements

  (1.1) In the case of a proposed replacement of an auditor whether because of removal or the expiry of their term, the bank shall make a statement of the reasons for the proposed replacement and the proposed replacement auditor may make a statement in which they comment on those reasons.

• Marginal note:Statements to be sent

  (2) The bank must send a copy of the statements referred to in subsections (1) and (1.1) without delay to every shareholder, or, if the bank is a federal credit union, to every member, entitled to vote at the annual meeting of shareholders or of members and to the Superintendent.

Marginal note:Duty of replacement auditor

• 322 (1) Where an auditor of a bank has resigned or the appointment of an auditor has been revoked, no firm of accountants shall accept an appointment as auditor of the bank or consent to be an auditor of the bank until the firm of accountants has requested and received from the other auditor a written statement of the circumstances and reasons why the other auditor resigned or why, in the other auditor’s opinion, the other auditor’s appointment was revoked.

• Marginal note:Exception

  (2) Notwithstanding subsection (1), a firm of accountants may accept an appointment or consent to be appointed as auditor of a bank if, within fifteen days after a request under that subsection is made, no reply from the other auditor is received.

• Marginal note:Effect of non-compliance

  (3) Unless subsection (2) applies, an appointment as auditor of a bank is void if subsection (1) has not been complied with.

Marginal note:Auditors’ examination

• 323 (1) The auditor or auditors of a bank must make any examination that the auditor or auditors consider necessary to enable the auditor or auditors to report on the annual statement and on other financial statements required by this Act to be placed before the shareholders or, if the bank is a federal credit union, the members, except any annual statements or parts of those statements that relate to the period referred to in subparagraph 308(1)(a)(ii).

• Marginal note:Auditing standards

  (2) The examination of the auditor or auditors referred to in subsection (1) shall, except as otherwise specified by the Superintendent, be conducted in accordance with generally accepted auditing standards, the primary source of which is the Handbook of the Chartered Professional Accountants of Canada.

Marginal note:Right to information

• 324 (1) On the request of the auditor or auditors of a bank, the present or former directors, officers, employees or agents of the bank shall, to the extent that such persons are reasonably able to do so,

  • (a) permit access to such records, assets and security held by the bank or any entity in which the bank has a substantial investment, and

  • (b) provide such information and explanations

  as are, in the opinion of the auditor or auditors, necessary to enable the auditor or auditors to perform the duties of the auditor or auditors of the bank.

• Marginal note:Directors to provide information

  (2) On the request of the auditor or auditors of a bank, the directors of the bank shall, to the extent that they are reasonably able to do so,

  • (a) obtain from the present or former directors, officers, employees and agents of any entity in which the bank has a substantial investment the information and explanations that such persons are reasonably able to provide and that are, in the opinion of the auditor or auditors, necessary to enable them to perform the duties of the auditor or auditors of the bank; and

  • (b) provide the auditor or auditors with the information and explanations so obtained.

• Marginal note:No civil liability

  (3) A person who in good faith makes an oral or written communication under subsection (1) or (2) shall not be liable in any civil action arising from having made the communication.

Marginal note:Auditors’ report and extended examination

• 325 (1) The Superintendent may, in writing, require that the auditor or auditors of a bank report to the Superintendent on the extent of the procedures of the auditor or auditors in the examination of the annual statement and may, in writing, require that the auditor or auditors enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor or auditors shall comply with any such requirement of the Superintendent and report to the Superintendent thereon.

• Marginal note:Special examination

  (2) The Superintendent may, in writing, require that the auditor or auditors of a bank make a particular examination relating to the adequacy of the procedures adopted by the bank for the safety of its creditors and shareholders and, if the bank is a federal credit union, for the safety of its members, or any other examination as, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent.

• Marginal note:Idem

  (3) The Superintendent may direct that a special audit of a bank be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose a firm of accountants qualified pursuant to subsection 315(1) to be an auditor of the bank.

• Marginal note:Expenses payable by bank

  (4) The expenses entailed by any examination or audit referred to in any of subsections (1) to (3) are payable by the bank on being approved in writing by the Superintendent.

Marginal note:Auditors’ report

• 326 (1) The auditor or auditors must, not less than 21 days before the date of the annual meeting of the shareholders of the bank or, if the bank is a federal credit union, of the annual meeting of the members, make a report in writing to the shareholders or members, as the case may be, on the annual statement referred to in subsection 308(1).

• Marginal note:Audit for shareholders

  (2) In each report required under subsection (1), the auditor or auditors shall state whether, in the opinion of the auditor or auditors, the annual statement presents fairly, in accordance with the accounting principles referred to in subsection 308(4), the financial position of the bank as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the bank for that financial year.

• Marginal note:Auditors’ remarks

  (3) In each report referred to in subsection (2), the auditor or auditors shall include such remarks as the auditor or auditors consider necessary when

  • (a) the examination has not been made in accordance with the auditing standards referred to in subsection 323(2);

  • (b) the annual statement has not been prepared on a basis consistent with that of the preceding financial year; or

  • (c) the annual statement does not present fairly, in accordance with the accounting principles referred to in subsection 308(4), the financial position of the bank as at the end of the financial year to which it relates or the results of the operations or changes in the financial position of the bank for that financial year.