To view the PDF version of the 2013 Annual Financial Statements and Notes,
please click on the link below:
http://www.rns-pdf.londonstockexchange.com/rns/9787U_-2013-12-7.pdf
REPORTS AND CONSOLIDATED FINANCIAL STATEMENTS
99 Reports
100 Management's
responsibility
for financial
reporting
100 Report of
Independent
Registered
Chartered
Accountants
101 Management's
Report on
Internal
Control over
Financial
Reporting
102 Report of
Independent
Registered
Chartered
Accountants
103 Consolidated
Financial
Statements
103 Consolidated
Balance Sheets
104 Consolidated
Statements of
Income
105 Consolidated
Statements of
Comprehensive
Income
106 Consolidated
Statements of
Changes in
Equity
107 Consolidated
Statements of
Cash Flows
108 Notes to
Consolidated
Financial
Statements
108 Note 1 General Information
108 Note 2 Summary of significant accounting
policies, estimates and judgments
121 Note 3 Fair value of financial
instruments
129 Note 4 Securities
132 Note 5 Loans
135 Note 6 Derecognition of financial assets
136 Note 7 Special purpose entities
139 Note 8 Derivative financial instruments
and hedging activities
145 Note 9 Premises and equipment
146 Note 10 Goodwill and other intangible
assets
148 Note 11 Significant acquisitions and
dispositions
149 Note 12 Joint ventures and associated
companies
150 Note 13 Other assets
150 Note 14 Deposits
151 Note 15 Insurance
153 Note 16 Segregated funds
154 Note 17 Pension and other post-employment
benefits
158 Note 18 Other liabilities
158 Note 19 Subordinated debentures
159 Note 20 Trust capital securities
160 Note 21 Equity
162 Note 22 Share-based compensation
164 Note 23 Income and expenses from selected
financial instruments
165 Note 24 Income taxes
167 Note 25 Earnings per share
167 Note 26 Guarantees, commitments, pledged
assets and contingencies
171 Note 27 Contractual repricing and
maturity schedule
172 Note 28 Related party transactions
173 Note 29 Results by business segment
176 Note 30 Nature and extent of risks
arising from financial
instruments
177 Note 31 Capital management
178 Note 32 Recovery and settlement of on
-balance sheet assets and
liabilities
179 Note 33 Parent company information
180 Note 34 Subsequent events
Management's responsibility for financial reporting
The accompanying consolidated financial statements of Royal Bank of Canada were
prepared by management, which is responsible for the integrity and fairness of
the information presented, including the many amounts that must of necessity be
based on estimates and judgments. These consolidated financial statements were
prepared in accordance with the Bank Act (Canada) and International Financial
Reporting Standards as issued by the International Accounting Standards Board.
Financial information appearing throughout our Management's Discussion and
Analysis is consistent with these consolidated financial statements.
Our internal controls are designed to provide reasonable assurance that
transactions are authorized, assets are safeguarded and proper records are
maintained. These controls include quality standards in hiring and training of
employees, policies and procedures manuals, a corporate code of conduct and
accountability for performance within appropriate and well-defined areas of
responsibility.
The system of internal controls is further supported by a compliance function,
which is designed to ensure that we and our employees comply with securities
legislation and conflict of interest rules, and by an internal audit staff,
which conducts periodic audits of all aspects of our operations.
The Board of Directors oversees management's responsibilities for financial
reporting through an Audit Committee, which is composed entirely of independent
directors. This Committee reviews our consolidated financial statements and
recommends them to the Board for approval. Other key responsibilities of the
Audit Committee include reviewing our existing internal control procedures and
planned revisions to those procedures, and advising the directors on auditing
matters and financial reporting issues. Our Chief Compliance Officer and Chief
Internal Auditor have full and unrestricted access to the Audit Committee.
The Office of the Superintendent of Financial Institutions Canada (OSFI)
examines and inquires into our business and affairs as deemed necessary to
determine whether the provisions of the Bank Act are being complied with, and
that we are in sound financial condition. In carrying out its mandate, OSFI
strives to protect the rights and interests of our depositors and creditors.
Deloitte LLP, Independent Registered Chartered Accountants appointed by our
shareholders upon the recommendation of the Audit Committee and Board, have
performed an independent audit of the consolidated financial statements and
their report follows. The auditors have full and unrestricted access to the
Audit Committee to discuss their audit and related findings.
Gordon M. Nixon
President and Chief Executive Officer
Janice R. Fukakusa
Chief Administrative Officer and Chief Financial Officer
Toronto, December 4, 2013
Report of Independent Registered Chartered Accountants
To the Shareholders of Royal Bank of Canada
We have audited the accompanying consolidated financial statements of Royal Bank
of Canada and subsidiaries (the "Bank"), which comprise the consolidated balance
sheets as at October 31, 2013 and October 31, 2012, and the consolidated
statements of income, statements of comprehensive income, statements of changes
in equity, and statements of cash flows for each of the years in the three-year
period ended October 31, 2013, and a summary of significant accounting policies
and other explanatory information.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these
consolidated financial statements in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board,
and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits. We conducted our audits in accordance with
Canadian generally accepted auditing standards and the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the consolidated financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks
of material misstatement of the consolidated financial statements, whether due
to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity's preparation and fair presentation of
the consolidated financial statements in order to design audit procedures that
are appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all
material respects, the balance sheets of Royal Bank of Canada and subsidiaries
as at October 31, 2013 and October 31, 2012, and their financial performance and
cash flows for each of the years in the three-year period ended October 31, 2013
in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
Other Matter
We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the Bank's internal control over
financial reporting as of October 31, 2013 based on the criteria established in
Internal Control-Integrated Framework (1992) issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated
December 4, 2013 expressed an unqualified opinion on the Bank's internal control
over financial reporting.
Deloitte LLP
Independent Registered Chartered Accountants
Licensed Public Accountants
Toronto, Canada
December 4, 2013
Management's Report on Internal Control over Financial Reporting
Management of Royal Bank of Canada is responsible for establishing and
maintaining adequate internal control over financial reporting. Internal control
over financial reporting is a process designed by, or under the supervision of,
the President and Chief Executive Officer and the Chief Administrative Officer
and Chief Financial Officer and effected by the Board of Directors, management
and other personnel to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. It
includes those policies and procedures that:
• Pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions related to and dispositions of
our assets
• Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles, and our receipts and expenditures are made only
in accordance with authorizations of our management and directors
• Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of our assets that could have a
material effect on our financial statements.
Due to its inherent limitations, internal control over financial reporting may
not prevent or detect misstatements on a timely basis. Also, projections of any
evaluation of the effectiveness of internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management evaluated, under the supervision of and with the participation of the
President and Chief Executive Officer and the Chief Administrative Officer and
Chief Financial Officer, the effectiveness of our internal control over
financial reporting as of October 31, 2013, based on the criteria set forth in
Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on that evaluation, management
concluded that, as of October 31, 2013, internal control over financial
reporting was effective based on the criteria established in the Internal
Control - Integrated Framework. Also, based on the results of our evaluation,
management concluded that there were no material weaknesses that have been
identified in internal control over financial reporting as of October 31, 2013.
Our internal control over financial reporting as of October 31, 2013 has been
audited by Deloitte LLP, Independent Registered Chartered Accountants, who also
audited our Consolidated Financial Statements for the year ended October 31,
2013, as stated in the Report of Independent Registered Chartered Accountants,
which report expressed an unqualified opinion on the effectiveness of our
internal control over financial reporting.
Gordon M. Nixon
President and Chief Executive Officer
Janice R. Fukakusa
Chief Administrative Officer and Chief Financial Officer
Toronto, December 4, 2013
Report of Independent Registered Chartered Accountants
To the Shareholders of Royal Bank of Canada
We have audited the internal control over financial reporting of Royal Bank of
Canada and subsidiaries (the "Bank") as of October 31, 2013, based on the
criteria established in Internal Control - Integrated Framework (1992) issued by
the Committee of Sponsoring Organizations of the Treadway Commission. The Bank's
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Management's
Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Bank's internal control over financial reporting based
on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
A company's internal control over financial reporting is a process designed by,
or under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's 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 the company;
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
In our opinion, the Bank maintained, in all material respects, effective
internal control over financial reporting as of October 31, 2013, based on the
criteria established in Internal Control - Integrated Framework (1992) issued by
the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with Canadian generally accepted auditing
standards and the standards of the Public Company Accounting Oversight Board
(United States), the consolidated financial statements as of and for the year
ended October 31, 2013 of the Bank and our report dated December 4, 2013
expressed an unqualified opinion on those consolidated financial statements.
Deloitte LLP
Independent Registered Chartered Accountants
Licensed Public Accountants
Toronto, Canada
December 4, 2013
2013 Annual Financial Statements and Notes
| Source: Royal Bank of Canada
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