Once your bank reaches $500 million in total assets, it is required to have an independent Audit Committee. The board of directors of each institution should determine whether each existing or potential Audit Committee member meets the requirements of Part 363. To do so, the board of directors should maintain an approved set of written criteria for determining whether a director who is to serve on the Audit Committee is an outside director and is independent of management. At least annually, the board of each institution should determine whether each existing or potential Audit Committee member is an outside director. The minutes of the board of directors should contain the results of and the basis for its determinations with respect to each existing and potential Audit Committee member. The Audit Committee should perform all duties determined by the institution’s board of directors and it should maintain minutes and other relevant records of its meetings and decisions. The duties of the Audit Committee should be appropriate to the size of the institution and the complexity of its operations, and, at a minimum, should include the appointment, compensation and oversight of the independent public accountant, reviewing with management and the independent public accountant the basis for their respective reports issued under Part 363. Additional responsibilities include: • Reviewing with management and the independent public accountant the scope of services required by the audit, significant accounting policies, and audit conclusions regarding significant accounting estimates; • Reviewing with management and the accountant their assessments of the effectiveness of internal control over financial reporting, and the resolution of identified material weaknesses and significant deficiencies in internal control over financial reporting, including the prevention or detection of management override or compromise of the internal control system; • Reviewing with management the institution’s compliance with the designated laws and regulations. • Discussing with management and the independent public accountant any significant disagreements between management and the independent public accountant; and • Overseeing the internal audit function. The institution’s board and Audit Committee should exercise their own judgment in evaluating management’s FDICIA competence. Management needs to have the ability to make the assessments included in management’s report, including an understanding of the entity and its control environment and sufficient oversight over the operations of the institution. Additional members of management may be needed to supplement the knowledge and experience of existing members of management, particularly with respect to internal controls and risk assessment. Brendan M. Whalen, CPA, is responsible for all aspects of audit engagements, from planning and performing fieldwork to analyzing high-risk areas. With comprehensive experience in all elements of accounting and business management, Brendan has valuable insight into the industries he serves, with a primary focus on financial institutions, employee benefit plans, and nonprofits. He has extensive SEC experience with public reporting companies, which includes assisting clients with filings under the 1933 and 1934 Acts, reporting requirements for Sarbanes-Oxley, and COSO Internal Control — Integrated Framework (2013) compliance. Brendan has become proficient in preparing and coordinating the financial statement audit, as well as working with clients to help them thoroughly understand and work through various difficult accounting issues. He remains informed of the ever-changing rules and regulations affecting the banking industry and employee benefit plan industry to assist his clients in dealing with accounting and financial matters that impact their business. 23 WEST VIRGINIA BANKER
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