The Office of the Superintendent of Financial Institutions has published the results of a review of its Financial Institutions Group – Deposit Taking Institutions, finding that the group needs to improve in a number of ways.

The review was approved by the audit committee and the superintendent for inclusion in 2006-2007 internal audit plan. The objectives of the review were to assess whether the supervision of the institutions in this group was risk focused and whether the resulting assessments were reasonable and well supported.

It found that consistent implementation of OSFI’s supervisory methodology has been a challenge for the FIG-DTI group. “This challenge has been made more difficult by the staff turnover and organizational changes experienced by the group, particularly in Toronto,” it said.

“During our review, we noted that FIG-DTI staff demonstrated a sound understanding of the business activities of their institutions and rated inherent risks in those activities. In some cases, teams had developed tools and implementation approaches that could be useful to other FIG-DTI teams,” it noted. “However, as also identified in a recent self-assessment conducted by the FIG group, the review indicated that implementation of the methodology requires considerable improvement in a number of areas.”

It found that it was not possible, in many cases, to “follow the facts, analyses and judgments through to the conclusions and concur with the assessments and ratings made” except for inherent risk.

“In view of the nature of our observations, it is important that the FIG-DTI group make a concerted effort to consistently implement the methodology,” the review said, adding that this will require:

  • senior management understanding and support of the implementation of the methodology;
  • consistent application of the methodology based on approved practices and guidance;
  • effective use of supervisory assignments of gradually increasing complexity for developmental purposes with appropriate coaching / monitoring;
  • effective quality assurance process by management to coach staff at all levels; and
  • training by the Practices Group based on needs identified by each office, including the “rollout” of recently issued guidance.



The report noted that FIG-DTI management is in agreement with the report, and “believes that the adoption of the recommendations set out in this report will improve an already effective risk management process and may lead to some efficiency in key areas.”

“Improvements in the areas noted will allow the team to redirect resources towards higher risk activities and continue its efforts towards improving processes and the overall quality of its outputs,” it said, adding that action plans to address these issues are in the process of being implemented.