Bank of Montreal 2013 Annual Report Download - page 63

MANAGEMENT’S DISCUSSION AND ANALYSIS
Management’s Annual Report on Disclosure Controls and Procedures and
Internal Control over Financial Reporting
MD&A
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable
assurance that all relevant information is gathered and reported to
senior management, including the Chief Executive Officer (CEO) and the
Chief Financial Officer (CFO), on a timely basis so that appropriate deci-
sions can be made regarding public disclosure.
An evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures was conducted as at
October 31, 2013, by Bank of Montreal’s management under the super-
vision of the CEO and the CFO. Based on this evaluation, the CEO and the
CFO have concluded that, as at October 31, 2013, our disclosure controls
and procedures, as defined in Canada by National Instrument 52-109,
Certification of Disclosure in Issuers’ Annual and Interim Filings, and in
the United States by Rule 13a-15(e) under the Securities Exchange Act of
1934 (the Exchange Act), are effective.
Internal Control over Financial Reporting
Internal control over financial reporting is designed to provide reason-
able assurance regarding the reliability of financial reporting and the
preparation of financial statements in accordance with IFRS and the
requirements of the Securities and Exchange Commission (SEC) in the
United States, as applicable. Management is responsible for establishing
and maintaining adequate internal control over financial reporting for
Bank of Montreal.
Bank of Montreal’s internal control over financial reporting
includes policies and procedures designed to provide reasonable assur-
ance that: records are maintained in reasonable detail to accurately and
fairly reflect the transactions and dispositions of the assets of Bank of
Montreal; transactions are recorded as necessary to permit preparation
of the financial statements in accordance with IFRS and the require-
ments of the SEC in the United States, as applicable; receipts and
expenditures of Bank of Montreal are being made only in accordance
with authorizations by management and directors of Bank of Montreal;
and unauthorized acquisition, use or disposition of Bank of Montreal’s
assets that could have a material effect on the financial statements are
prevented or detected in a timely manner.
Because of its inherent limitations, internal control over financial
reporting can provide only reasonable assurance and may not prevent
or detect misstatements. Furthermore, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
Bank of Montreal’s management, under the supervision of the CEO
and the CFO, has evaluated the effectiveness of internal control
over financial reporting using the framework and criteria established in
Internal Control – Integrated Framework (1992), issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, management has concluded that internal
control over financial reporting was effective as at October 31, 2013.
The Committee of Sponsoring Organizations of the Treadway
Commission recently released its updated Internal Control – Integrated
Framework (2013 Framework). Bank of Montreal’s management must
apply the 2013 Framework to evaluate the effectiveness of the internal
control over financial reporting in fiscal 2015. Management will evaluate
the transition to the 2013 Framework in fiscal 2014.
Bank of Montreal’s auditors, KPMG LLP (Shareholders’ Auditors), an
independent registered public accounting firm, has issued an audit
report on our internal control over financial reporting. This audit report
appears on page 123.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting in
fiscal 2013 that have materially affected, or are reasonably likely to
materially affect, the adequacy and effectiveness of our internal control
over financial reporting.
Shareholders’ Auditors’ Services and Fees
Pre-Approval Policies and Procedures
As part of BMO Financial Group’s corporate governance practices, the
Board of Directors oversees the strict application of BMO’s corporate
policy limiting the services provided by the Shareholders’ Auditors that
are not related to their role as auditors. All services provided by the
Shareholders’ Auditors are pre-approved by the Audit and Conduct
Review Committee as they arise, or through an annual pre-approval of
amounts for specific types of services. All services comply with our
Auditor Independence Policy, as well as professional standards and
securities regulations governing auditor independence.
Shareholders’ Auditors’ Fees
Aggregate fees paid to the Shareholders’ Auditors during the fiscal years
ended October 31, 2013 and 2012 were as follows:
Fees ($ millions) (1) 2013 2012
Audit fees 14.9 15.8
Audit-related fees (2) 1.5 1.7
Tax fees – –
All other fees (3) 1.0 1.2
Total 17.4 18.7
(1) The classification of fees is based on applicable Canadian securities laws and U.S. Securities
and Exchange Commission definitions.
(2) Audit-related fees for 2013 and 2012 relate to fees paid for accounting advice, specified
procedures on our Proxy Circular and other specified procedures.
(3) All other fees for 2013 and 2012 relate primarily to fees paid for reviews of compliance with
regulatory requirements for financial information and reports on internal controls over
services provided by various BMO Financial Group businesses. They also include costs of
translation services.
74 BMO Financial Group 196th Annual Report 2013