Note: Management recommended that shareholders vote FOR this proposal.
It is hereby proposed that the bank divulge, in its annual report, the fees paid to the accountant firm which performs its audit, as well as all fees paid to this firm’s subsidiaries or all other enterprises in which the accounting firm or firms hold a substantial interest.
Mr. Claude Lamoureux, President and Chief Executive Officer of the Board of Directors of the Ontario Teachers Pension Plan (OTPP) stated on April 28, 1999 in Montreal that “several auditors receive the larger part of their fees not from the audit but from other consulting services carried out for the client. It is difficult for an auditor to be impartial when we consider that the major portion of his fees depend on the good will of management. I would suggest that all companies be required to divulge, in their annual reports, the amounts paid as consulting fees to the auditing firm. Obviously the best solution would be to prohibit companies from awarding consulting contracts to their auditors.” The OTPP is one of the largest institutional investors in Canada (with its $60 billion portfolio) along with the Caisse de dépôt du Québec.
The aforementioned proposal will contribute to the elimination of complacent annual reports and will reinforce the independence of the auditing firm with regards to their responsibilities to shareholders who vote on their nomination and remuneration in accordance with section 314 of the Bank Act.