The Audit Committee, consisting of Board Members only, shall review all reports of external and internal auditors. FCA, Price Waterhouse, and the Association’s Internal Review of Credit and Operations shall report to this committee.
The Audit Committee shall report findings of examinations to the Board. As dictated by the findings of audits, the committee shall direct management to establish action plans addressing the findings of the audit. The Audit Committee shall be responsible for the review and follow up on management’s plans to address the examinations.
Selection of Auditor(s)
The Audit Committee shall be responsible for interviewing and recommending the Auditors to the Board of Directors for use by the Association.
Scope of Review
The Audit Committee can, based on circumstances and conditions, request special studies or change the scope of examination.
Goals and Objectives (A/B July 22, 1993)
The primary goal of the Committee will be to assist the Board of Directors in fulfilling its fiduciary responsibilities relating to internal and external controls, both credit and accounting, and reporting practices of the Association. In addition, the Committee will:
- Oversee and appraise the quality of the audit effort of the Association’s internal audit function and those of its independent accountants’
- Maintain, by scheduling regular meetings, open lines of communications among the board, its internal audit function, and its independent accountants to exchange views and information as well as confirm their respective authority and responsibilities;
- Serve as an independent and objective party to review the financial information presented by management to shareholders, regulators, and the general public; and
- Determine the adequacy of the Association’s administrative, operations, and internal accounting controls and evaluate adherence.
The Board shall annually, at its organizational meeting, confirm the membership of the Committee, which will be comprised of four directors, one of which shall be the appointed director. Each committee member shall be free from any relationship, which might in the opinion of the Board be construed as a conflict of interest. At its first meeting after board confirmation, the committee shall elect a chairman.
Duties and Responsibilities
- The Committee will hold at least four regular meetings per year, and such additional meetings as the chairperson of the Committee shall require to meet the following principal duties
- Appointment of the independent accountant for the coming year
- Ensure that an audit is conducted in compliance with statutory requirements
- Review and approve the audit plan of the independent accountants
- Review and approve the audit plan of the internal auditors
- Evaluate the effectiveness of both the internal and external audit effort through regular meetings with each respective group
- Determine that no management restrictions are being placed upon either the internal or external auditors
- Evaluate the adequacy and effectiveness of the company’s administrative, operating, and accounting policies through active communications with operating management, internal audit, and the independent accountant
- Evaluate the adequacy of the company’s internal accounting control system by review of written reports from the internal and external auditors and monitor management’s response and actions to correct any noted deficiencies
- Review quarterly accounting and financial reports to be made to the public prior to their release, as practical
- Review all regulatory reports submitted to the company and monitor management’s response to them
- Require periodic reports from management, the independent accountants, and internal auditors on any significant proposed regulatory, accounting, or reporting issue to assess the potential impact upon the company’s financial reporting process
- Review and approve all significant accounting changes
- Review and approve the annual financial statements with operating management and the independent accountants
- Identify and direct any special projects or investigations deemed necessary
- Prepare a report to the full board summarizing the work performed by the Committee to fully discharge its duties during the year
The Committee shall have the right to engage independent counsel and other advisers as the Committee deems necessary to carry out its duties, with funding to be provided by the Association, as determined by the Committee, for (a) compensating any accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services at the Association, (b) compensating independent counsel and other advisers engaged by the Committee, and (c) paying ordinary administrative expenses the Committee incurs in carrying out its duties.
This Policy/Charter may be amended from time to time by action of the Association board of directors.