§ 714. Annual audit.

(a) Supervisory committee.--If the bylaws of the credit union provide for a supervisory committee, the duties of the supervisory committee shall be as follows:

(1) To make at least an annual audit of the affairs of the credit union. The committee shall submit a report to the board of directors and to the members at the next annual meeting of the credit union.

(2) By unanimous vote, if it deems such action to be necessary to the proper conduct of the affairs of the credit union, to suspend any officer, director or member of any committee other than the supervisory committee. In such event, the committee shall call the members of the credit union together, within ten days of the suspension, to act on such suspension. The members at the meeting called for this purpose may sustain such suspension or remove such person from office or may reinstate such person.

(3) By majority vote, the supervisory committee may call a special meeting of the members to consider any matter submitted to it by the committee. The committee shall fill vacancies in its own membership unless otherwise provided in the bylaws.

(b) Default by supervisory committee.--Whenever the supervisory committee fails to make the audits or reports as provided in subsection (a)(1), the board of directors shall remove from office the members of the supervisory committee and appoint a new committee to make such audits, or the board may employ the services of a public accountant to make such audits. The charges for the services of such public accountants shall be paid by the credit union. If the board of directors under such circumstances fails or refuses to act, the department may, in addition to its other powers, remove the members of the supervisory committee and issue an order on the board of directors requiring such audits to be made by a public accountant at the expense of the credit union.

(c) Audit by public accountant.--If the bylaws do not provide for a supervisory committee, the board shall employ the services of a public accountant to make audits under subsections (a) and (b). The charges for the services of the public accountant shall be paid by the credit union.

(d) Requirement for an outside audit.--

(1) A credit union shall obtain an outside, independent audit by a certified public accountant or other approved service for any fiscal year during which any one of the following conditions exist:

(i) the supervisory committee of the credit union has not conducted an annual supervisory committee audit;

(ii) the annual supervisory committee audit conducted did not meet the audit requirements required by the department; or

(iii) the credit union has experienced serious and persistent recordkeeping deficiencies as defined in subsection (e).

(2) In the case of an audit required pursuant to paragraph (1)(i) or (ii), the scope of the outside, independent audit shall fully encompass the requirements set forth in the department's audit guidelines. In the case of an audit required pursuant to paragraph (1)(iii), the outside, independent audit must be conducted by a certified public accountant and must be an opinion audit as that term is understood under generally accepted auditing standards.

(e) Definition.--As used in subsection (d)(1), "persistent recordkeeping deficiencies" means serious recordkeeping problems which continue to exist past a usual, expected or normal period of time. Persistent recordkeeping deficiencies shall be considered serious if the department has a reasonable doubt:

(1) That the financial condition of the credit union is accurately and fairly presented in the credit union's statement.

(2) That management practices and procedures of the credit union are sufficient to safeguard members' assets. (Dec. 9, 2002, P.L.1572, No.207, eff. 60 days)

2002 Amendment. Act 207 amended the section heading and subsecs. (a)(1), (b) and (c) and added subsecs. (d) and (e).