Allowance Continuity Report (C3)

Purpose

This report provides the Office of the Superintendent of Financial Institutions with detailed information relating to changes in the Allowance for Highlighted text*Expected Credit Losses* account.

Statutory

Sections 628 and 600 of the Bank Act and Section 495 of the Trust and Loan Companies Act.

Application

This return applies to all deposit-taking institutions.

Publication

Information from this return is not published.

Frequency

• Institutions with fiscal year-ends of October - Quarterly - January, April, July and October

• Institutions with fiscal year-ends of December - Quarterly - March, June, September and December

Contact person

Provide name and phone number of person to contact regarding any questions about this return.

Reporting dates

The return is to be completed as of the last day of each quarter and submitted within 45 days of the reporting date as follows:

• Institutions with fiscal year-ends of October - January, April, July and October

• Institutions with fiscal year-ends of December - March, June, September and December

Contact agency

OSFI.

General instructions

The Allowance for Highlighted text*Expected Credit Losses (ECL)* is used in the measurement of Highlighted text*ECL for* recognized and unrecognized credit related assets. Accounting practices with respect to Highlighted text*ECL* are described in detail in Highlighted text*IFRS 9, Financial Instruments, of* the CPA Canada Highlighted text*Handbook and Section 2 of OSFI's IFRS 9Financial Instruments and Disclosures* Guideline.

1. Beginning Balance

Show Highlighted text*for* each Highlighted text*category of financial instrument listed in* the Allowance Highlighted text*Continuity* Report the Highlighted text*individual (stage 3) and collective (stages 1 and 2) allowance* balances as at the end of the immediately prior period.

2. Write-Offs

Write-offs during the period should be charged to the Allowance for Highlighted text*Expected Credit Losses* account and recorded in the appropriate section of the account depending upon the type of allowances previously established in relation to the asset written off. Include in each section of the Allowance Highlighted text*Continuity* Report the total of all amounts written off and recorded during the period in accordance with these procedures.

3. Recoveries

All recoveries during the period, of amounts previously written off, should be credited to the Allowance for Highlighted text*Expected Credit Losses* account and recorded in the section of the account where the write-off was originally made. Include in each section of the Allowance for Highlighted text*Expected Credit Losses* account the total of all recoveries recorded during the period in accordance with these procedures.

4. Other

Include the total of any other credit-related adjustments recorded during the period in the applicable section of the Allowance for Highlighted text*Expected Credit Losses* account.

5. Charge for Impairment

The balance in the Allowance for Highlighted text*Expected Credit Losses* account at the end of the period should be the amount that management considers adequate to reduce the recorded investment in its portfolio of recognized and unrecognized items to its estimated realizable amount. The amount of the Charge for Impairment charged to the Statement of Income will be the amount that is required to establish this balance. The amount of the Charge for Impairment that will be recorded in each section of the Allowance Highlighted text*Continuity* Report will be determined as a result of management's credit assessments, the application of judgement and appropriate methodology and the level of allowances on claims against designated countries required by the Office of the Superintendent of Financial Institutions.

6. Ending Balance

Show in each section of the Allowance Highlighted text*Continuity* Report the balance in the Allowance for Highlighted text*Expected Credit Losses* account that is adequate to reduce the recorded investment in the portfolio to its estimated realizable amount at the end of the period.