Cooperative Credit Associations Act (S.C. 1991, c. 48)

Auditor

Marginal note:Definitions

297 For the purposes of this section and sections 298 to 317,

firm of accountants

firm of accountants means a partnership, the members of which are accountants engaged in the practice of accounting, or a body corporate that is incorporated by or under an Act of the legislature of a province and engaged in the practice of accounting; (cabinet de comptables)

member

member, in relation to a firm of accountants, means

• (a) an accountant who is a partner in a partnership, the members of which are accountants engaged in the practice of accounting, or

• (b) an accountant who is an employee of a firm of accountants. (membre)

Marginal note:Appointment of auditor

• 298 (1) The members of an association shall, by ordinary resolution at the first meeting of members and at each succeeding annual meeting, appoint an auditor to hold office until the close of the next annual meeting.

• Marginal note:Remuneration of auditor

  (2) The remuneration of an auditor may be fixed by ordinary resolution of the members but, if not so fixed, shall be fixed by the directors.

Marginal note:Qualification of auditor

• 299 (1) A natural person or firm of accountants is qualified to be an auditor of an association if

  • (a) in the case of a natural person, the person is an accountant who

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

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

    • (iii) is ordinarily resident in Canada, and

    • (iv) is independent of the association; and

  • (b) in the case of a firm of accountants, the member of the firm jointly designated by the firm and the association to conduct the audit of the association 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 person is deemed not to be independent of an association if that person, a business partner of that person or a firm of accountants of which that person is a member

    • (i) is a business partner, director, officer or employee of the association, of an affiliate of the association or of a central cooperative credit society that is a member of the association,

    • (i.1) is a business partner of a director, officer or employee of the association, of an affiliate of the association or of a central cooperative credit society that is a member of the association,

    • (ii) beneficially owns or controls, directly or indirectly, a material interest in the shares of the association or of any subsidiary of the association or central cooperative credit society that is a member of the association, or

    • (iii) has been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any member that is a central cooperative credit society or of any subsidiary of the association within the two years immediately preceding the person’s proposed appointment as auditor of the association, other than a subsidiary of the association acquired pursuant to section 394 or through a realization of security pursuant to section 395.

• Marginal note:Business partners

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

  • (a) in the case of the appointment of a natural person as the auditor of an association, a business partner of the person includes a shareholder of the business partner; and

  • (b) in the case of the appointment of a firm of accountants as the auditor of an association, a business partner of a member of the firm includes another member of the firm and a shareholder of the firm or of a business partner of the member.

• Marginal note:Notice of designation

  (3) Within fifteen days after the appointment of a firm of accountants as auditor of the association, the association and the firm of accountants shall jointly designate a member of the firm who meets the qualifications described in subsection (1) to conduct the audit of the association on behalf of the firm and the association 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 association, the association and the firm of accountants may jointly designate another member of the same firm of accountants who meets the qualifications described in subsection (1) to conduct the audit of the association and the association 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 association, there shall be deemed to be a vacancy in the office of auditor of the association.

Marginal note:Duty to resign

• 300 (1) An auditor who ceases to be qualified under section 299 shall resign forthwith after the auditor, where the auditor is a natural person, or any member of the firm of accountants, where the auditor is a firm of accountants, becomes aware that the auditor or 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 an association has ceased to be qualified under section 299 and declaring the office of auditor to be vacant.

Marginal note:Revocation of appointment

• 301 (1) The members of an association 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 298(1) or section 303 by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the association addressed to the usual place of business of the auditor and the association.

• 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 303.

Marginal note:Ceasing to hold office

• 302 (1) An auditor of an association ceases to hold office when

  • (a) the auditor resigns;

  • (b) the auditor, where the auditor is a natural person, dies; or

  • (c) the appointment of the auditor is revoked by the members or the Superintendent.

• Marginal note:Effective date of resignation

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

Marginal note:Filling vacancy

• 303 (1) Subject to subsection 301(3), where a vacancy occurs in the office of auditor of an association, 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 association on behalf of the firm.

Marginal note:Right to attend meetings

• 304 (1) The auditor of an association is entitled to receive notice of every meeting of members or shareholders and, at the expense of the association, to attend and be heard thereat on matters relating to the duties of the auditor.

• Marginal note:Duty to attend meeting

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

• Marginal note:Notice to association

  (3) A member, director or shareholder who gives notice under subsection (2) shall send concurrently a copy of the notice to the association and the association shall forthwith send a copy thereof 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

• 305 (1) An auditor of an association who

  • (a) resigns,

  • (b) receives a notice or otherwise learns 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 members at which another person is to be appointed in the auditor’s 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 association 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 association 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 association shall send a copy of the statements referred to in subsections (1) and (1.1) without delay to every member and to the Superintendent.

Marginal note:Duty of replacement auditor

• 306 (1) Where an auditor of an association has resigned or the appointment of an auditor has been revoked, no person or firm shall accept an appointment as auditor of the association or consent to be the auditor of the association until the person or firm 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 person or firm may accept an appointment or consent to be appointed as auditor of an association 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 an association is void if subsection (1) has not been complied with.

Marginal note:Auditor’s examination

• 307 (1) The auditor of an association shall make such examination as the auditor considers necessary to enable the auditor to report on the annual statement and on other financial statements required by this Act to be placed before the members, except such annual statements or parts thereof as relate to the period referred to in subparagraph 292(1)(a)(ii).

• Marginal note:Auditing standards

  (2) The auditor’s examination 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

• 308 (1) On the request of the auditor of an association, the present or former directors, officers, employees or agents of the association 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 association or any entity in which the association has a substantial investment, and

  • (b) provide such information and explanations

  as are, in the opinion of the auditor, necessary to enable the auditor to perform the duties of auditor of the association.

• Marginal note:Directors to provide information

  (2) On the request of the auditor of an association, the directors of the association 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 association 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, necessary to enable the auditor to perform the duties of auditor of the association; and

  • (b) provide the auditor 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:Auditor’s report and extended examination

• 309 (1) The Superintendent may, in writing, require that the auditor of an association report to the Superintendent on the extent of the auditor’s procedures in the examination of the annual statement and may, in writing, require that the auditor enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor 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 of an association make a particular examination relating to the adequacy of the procedures adopted by the association for the safety of its creditors, members and shareholders, or any other examination as, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent thereon.

• Marginal note:Idem

  (3) The Superintendent may direct that a special audit of an association be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose an accountant or a firm of accountants qualified pursuant to subsection 299(1) to be an auditor of the association.

• Marginal note:Expenses payable by association

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