We involved credit risk and economics professionals with specialized skills and knowledge who assisted in:
• Assessing the models for the PD, EAD and LGD inputs by evaluating the methodology for compliance with relevant accounting standards • Assessing the methodology for identifying whether there has been a significant increase in credit risk for compliance with relevant accounting standards • Checking the accuracy of a selection of ECL model-generated results • Assessing the Entity’s qualitative adjustments based on expert credit judgment by applying our knowledge of the industry and credit judgment to assess management’s judgments • Assessing the Enti ty’s forward -looking information incorporated into ECL models by comparing to external macroeconomic data • Assessing the Entity’s model performance monitoring methodology and output
For a selection of loans, we developed an independent estimate of the risk rating using the Entity’s internal risk ratings scale and compared that to the Entity’s assigned internal risk rating.
For a selection of loans, we tested the Entity’s assessment of whether there has been a significant increase in credit risk.
For a selection of Stage 3 loans, we developed an independent estimate of the realizable amount of future cash flows by inspecting documentation of security underlying the loan, current market prices for comparable security, and reports prepared by the Entity’s extern al valuation experts.
OTHER INFORMATION
Management is responsible for the other information. Other information comprises:
• the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions. • the informat ion, other than the financial statements and the auditors’ report thereon, included in a document likely to be entitled “202 2 Annual Report”.
Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated. We obtained the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Comm issions and the “ 2022 Annual Report ” as at the date of this auditors ’ report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditors’ report.
We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Entity’s ability to continue as a going co ncern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.
Those charged with governanc e are responsible for overseeing the Entity‘s financial reporting process.
64 | CWB Financial Group 2022 Annual Report
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