OSFI issues new guideline for assurance on capital, leverage and liquidity returns

News release - Ottawa -

Capital, liquidity and leverage returns are key contributors to the assessment of safety and soundness of federally regulated financial institutions (FRFIs). This guideline provides principles-based and risk-based guidance to external auditors and institutions on assurance over regulatory returns in an effort to enhance and align these expectations across all FRFIs.

OSFI’s expectations for these key regulatory returns are guided by the following principles:

  • Assurance expectations should contribute to public confidence in the Canadian financial system.
  • Assurance expectations should be risk-based and principles-based.
  • Assurance expectations should consider OSFI’s reliance on external auditors and the use of the work of others, including a FRFI’s oversight function.
  • Assurance expectations should reflect a FRFI’s size, nature, complexity, and business activities.

To help inform the development of this new guidance, OSFI published a discussion paper in April 2021 followed by a draft guideline for consultation in March 2022. Feedback was provided by FRFIs, audit firms, industry, and professional associations. OSFI considered the range of feedback received during the consultation process and, as deemed appropriate, made adjustments to the draft guideline.

“This new guideline clearly lays out OSFI’s expectations for capital, leverage and liquidity returns. The senior management at federally regulated financial institutions, their internal and external auditors and other stakeholders now have a blueprint to follow when assuring these important regulatory returns have been prepared properly and predictably.”

- Tolga Yalkin, Assistant Superintendent, Policy Innovation and Stakeholder Affairs, OSFI​

Quick facts

  • This new guideline is in response to the increasing complexity arising from an evolving regulatory reporting framework for FRFIs, particularly changes resulting from International Financial Reporting Standards 17 Insurance Contracts (IFRS 17) and the Basel III reforms.
  • This guideline lays out OSFI’s three-step approach to enhancing and aligning assurance expectations over capital, leverage and liquidity returns, including an external audit opinion on the numerator and denominator of key regulatory ratios, senior management attestation on regulatory returns, and an internal audit opinion on the processes and controls followed in preparing these returns.


OSFI – Media Relations