Consolidated financial statements - CIBC ?· Consolidated financial statements Financial reporting responsibility…

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<ul><li><p>Consolidated financial statements</p><p>Consolidated financial statements</p><p>93 Financial reporting responsibility</p><p>94 Independent auditors report of registered public accounting firm to shareholders</p><p>96 Consolidated balance sheet</p><p>97 Consolidated statement of income</p><p>98 Consolidated statement of comprehensive income</p><p>99 Consolidated statement of changes in equity</p><p>100 Consolidated statement of cash flows</p><p>101 Notes to the consolidated financial statements</p><p>Details of the notes to the consolidated financial statements</p><p>101 Note 1 Basis of preparation and summary of significantaccounting policies</p><p>110 Note 2 Fair value measurement119 Note 3 Significant acquisitions and dispositions120 Note 4 Securities121 Note 5 Loans124 Note 6 Structured entities and derecognition of</p><p>financial assets127 Note 7 Land, buildings and equipment128 Note 8 Goodwill, software and other intangible assets130 Note 9 Other assets130 Note 10 Deposits130 Note 11 Other liabilities131 Note 12 Derivative instruments135 Note 13 Designated accounting hedges136 Note 14 Subordinated indebtedness137 Note 15 Common and preferred share capital140 Note 16 Capital Trust securities</p><p>141 Note 17 Interest rate sensitivity142 Note 18 Share-based payments144 Note 19 Post-employment benefits149 Note 20 Income taxes151 Note 21 Earnings per share151 Note 22 Commitments, guarantees and pledged assets153 Note 23 Contingent liabilities and provision157 Note 24 Concentration of credit risk158 Note 25 Related-party transactions159 Note 26 Investments in equity-accounted associates and</p><p>joint ventures160 Note 27 Significant subsidiaries161 Note 28 Segmented and geographic information163 Note 29 Financial instruments disclosures164 Note 30 Offsetting financial assets and liabilities165 Note 31 Interest income and expense166 Note 32 Future accounting policy changes166 Note 33 Subsequent event</p><p>92 CIBC 2016 ANNUAL REPORT</p></li><li><p>Consolidated financial statements</p><p>Financial reporting responsibilityThe management of Canadian Imperial Bank of Commerce (CIBC) is responsible for the preparation, presentation, accuracy and reliability of the AnnualReport, which includes the consolidated financial statements and managements discussion and analysis (MD&amp;A). The consolidated financial statementshave been prepared in accordance with Section 308(4) of the Bank Act (Canada), which requires that the financial statements be prepared in accordancewith International Financial Reporting Standards as issued by the International Accounting Standards Board. The MD&amp;A has been prepared in accordancewith the requirements of applicable securities laws.</p><p>The consolidated financial statements and MD&amp;A, contain items that reflect the best estimates and judgments of the expected effects of currentevents and transactions with appropriate consideration to materiality. Financial information appearing throughout the Annual Report is consistent with theconsolidated financial statements.</p><p>Management has developed and maintains effective systems, controls and procedures to ensure that information used internally and disclosedexternally is reliable and timely. During the past year, we have continued to improve, document and test the design and operating effectiveness of internalcontrol over financial reporting. The results of our work have been subjected to audit by the shareholders auditors. Management has assessed theeffectiveness of CIBCs internal control over financial reporting as at year end using the Internal Control Integrated Framework issued by the Committeeof Sponsoring Organizations of the Treadway Commission (2013 framework). Based upon this assessment, we have determined that internal control overfinancial reporting is effective in all material respects and CIBC is in compliance with the requirements set by the U.S. Securities and Exchange Commission(SEC) under the U.S. Sarbanes-Oxley Act (SOX).</p><p>CIBCs Chief Executive Officer and Chief Financial Officer have certified CIBCs annual filings with the SEC under SOX and with the CanadianSecurities Administrators under Canadian securities laws.</p><p>The Internal Audit department reviews and reports on the effectiveness of CIBCs internal control, risk management and governance systems andprocesses, including accounting and financial controls, in accordance with the audit plan approved by the Audit Committee. Our Chief Auditor hasunrestricted access to the Audit Committee.</p><p>The Board of Directors oversees managements responsibilities for financial reporting through the Audit Committee, which is composed ofindependent directors. The Audit Committee reviews CIBCs interim and annual consolidated financial statements and MD&amp;A and recommends them forapproval by the Board of Directors. Other key responsibilities of the Audit Committee include monitoring CIBCs system of internal control, and reviewingthe qualifications, independence and performance of the shareholders auditors and internal auditors.</p><p>Ernst &amp; Young LLP, the external auditors, obtain an understanding of CIBCs internal controls and procedures for financial reporting to plan andconduct such tests and other audit procedures as they consider necessary in the circumstances to express their opinions in the reports that follow. Ernst &amp;Young LLP has unrestricted access to the Audit Committee to discuss their audit and related matters.</p><p>The Office of the Superintendent of Financial Institutions (OSFI) Canada is mandated to protect the rights and interest of depositors and creditors ofCIBC. Accordingly, OSFI examines and enquires into the business and affairs of CIBC, as deemed necessary, to ensure that the provisions of the Bank Act(Canada) are being complied with and that CIBC is in sound financial condition.</p><p>Victor G. Dodig Kevin GlassPresident and Chief Executive Officer Chief Financial Officer November 30, 2016</p><p>CIBC 2016 ANNUAL REPORT 93</p></li><li><p>Consolidated financial statements</p><p>Independent auditors report of registered public accounting firm toshareholdersReport on the consolidated financial statementsWe have audited the accompanying consolidated financial statements of Canadian Imperial Bank of Commerce (CIBC), which comprise the consolidatedbalance sheet as at October 31, 2016 and 2015 and the consolidated statements of income, comprehensive income, changes in equity and cash flows foreach of the years in the three-year period ended October 31, 2016, and a summary of significant accounting policies and other explanatory information.</p><p>Managements responsibility for the consolidated financial statementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International FinancialReporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary toenable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.</p><p>Auditors responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance withCanadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financialstatements are free from material misstatement.</p><p>An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. Theprocedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financialstatements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entitys preparation andfair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit alsoincludes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overallpresentation of the consolidated financial statements.</p><p>We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.</p><p>OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of CIBC as at October 31, 2016 and 2015,and its financial performance and its cash flows for each of the years in the three-year period ended October 31, 2016, in accordance with InternationalFinancial Reporting Standards as issued by the International Accounting Standards Board.</p><p>Other matterWe have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), CIBCs internal control overfinancial reporting as of October 31, 2016, based on the criteria established in Internal Control Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 30, 2016 expressed an unqualified opinion onCIBCs internal control over financial reporting.</p><p>Ernst &amp; Young LLPChartered Professional AccountantsLicensed Public AccountantsToronto, CanadaNovember 30, 2016</p><p>94 CIBC 2016 ANNUAL REPORT</p></li><li><p>Consolidated financial statements</p><p>Independent auditors report of registered public accounting firm toshareholdersReport on Internal Controls under Standards of the Public Company Accounting Oversight Board(United States)We have audited Canadian Imperial Bank of Commerces (CIBC) internal control over financial reporting as of October 31, 2016, based on criteriaestablished in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013framework) (the COSO criteria). CIBCs management is responsible for maintaining effective internal control over financial reporting and for its assessmentof the effectiveness of internal control over financial reporting included in the accompanying managements annual report on internal control overfinancial reporting contained in the accompanying managements discussion and analysis. Our responsibility is to express an opinion on CIBCs internalcontrol over financial reporting based on our audit.</p><p>We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting wasmaintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that amaterial weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing suchother procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.</p><p>A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards (IFRS) as issuedby the International Accounting Standards Board (IASB). A companys internal control over financial reporting includes those policies and procedures that(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withIFRS as issued by the IASB, and that receipts and expenditures of the company are being made only in accordance with authorizations of management anddirectors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition ofthe companys assets that could have a material effect on the financial statements.</p><p>Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may deteriorate.</p><p>In our opinion, CIBC maintained, in all material respects, effective internal control over financial reporting as of October 31, 2016, based on theCOSO criteria.</p><p>We have also audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company AccountingOversight Board (United States), the consolidated balance sheet of CIBC as at October 31, 2016 and 2015, and the consolidated statements of income,comprehensive income, changes in equity and cash flows for each of the years in the three-year period ended October 31, 2016 of CIBC and our reportdated November 30, 2016 expressed an unqualified opinion thereon.</p><p>Ernst &amp; Young LLPChartered Professional AccountantsLicensed Public AccountantsToronto, CanadaNovember 30, 2016</p><p>CIBC 2016 ANNUAL REPORT 95</p></li><li><p>Consolidated financial statements</p><p>Consolidated balance sheet</p><p>$ millions, as at October 31 2016 2015</p><p>ASSETSCash and non-interest-bearing deposits with banks $ 3,500 $ 3,053</p><p>Interest-bearing deposits with banks 10,665 15,584</p><p>Securities (Note 4)Trading 49,915 46,181Available-for-sale (AFS) 37,253 28,534Designated at fair value (FVO) 255 267</p><p>87,423 74,982</p><p>Cash collateral on securities borrowed 5,433 3,245</p><p>Securities purchased under resale agreements 28,377 30,089</p><p>Loans (Note 5)Residential mortgages 187,298 169,258Personal 38,041 36,517Credit card 12,332 11,804Business and government 71,437 65,276Allowance for credit losses (1,691) (1,670)</p><p>307,417 281,185</p><p>OtherDerivative instruments (Note 12) 27,762 26,342Customers liability under acceptances 12,364 9,796Land, buildings and equipment (Note 7) 1,898 1,897Goodwill (Note 8) 1,539 1,526Software and other intangible assets (Note 8) 1,410 1,197Investments in equity-accounted associates and joint ventures (Note 26) 766 1,847Deferred tax assets (Note 20) 771 507Other assets (Note 9) 12,032 12,059</p><p>58,542 55,171</p><p>$ 501,357 $ 463,309</p><p>LIABILITIES AND EQUITYDeposits (Note 10)Personal $ 148,081 $ 137,378Business and government 190,240 178,850Bank 17,842 10,785Secured borrowings 39,484 39,644</p><p>395,647 366,657</p><p>Obligations related to securities sold short 10,338 9,806</p><p>Cash collateral on securities lent 2,518 1,429</p><p>Obligations...</p></li></ul>

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