(a) The supervisory committee shall consist of not less than three members of the Connecticut credit union, none of whom shall simultaneously serve on the credit committee or as an officer of the Connecticut credit union or be otherwise regularly employed by such credit union, and only one of whom shall simultaneously serve as a director of the Connecticut credit union, and all of whom shall be annually appointed by the governing board and be members in good standing. The supervisory committee shall be responsible for ensuring that members of senior management and directors meet required financial reporting objectives and establish practices and procedures sufficient to safeguard members' assets. To meet its responsibilities, the supervisory committee shall determine whether internal controls are established and effectively maintained, accounting records and financial reports are promptly prepared and accurate, relevant plans, policies and procedures established by the governing board are properly administered, and the governing board's plans, policies, and control procedures are sufficient to safeguard against error, carelessness, conflict of interest, self-dealing and fraud.

(b) The supervisory committee shall have the sole authority to engage or terminate outside and internal auditors. Upon authorization of the expenses by the governing board, the supervisory committee may engage any assistance necessary for the performance of its duties, including having any audit, examination or verification required by law, regulation or bylaw. Any agreement between the supervisory committee and an outside auditor shall be documented by an engagement letter that specifies the terms, conditions and objectives of the engagement or statement of agreed upon procedures in accordance with this subsection. The supervisory committee shall make or cause to be made a comprehensive annual audit of the books and affairs of the Connecticut credit union, including its assets, liabilities, capital, income and expense accounts and the minutes of all governing board and board-appointed committee meetings. Such audit shall cover the period elapsed since the last audit. Any compensated outside auditors performing audits for the supervisory committee shall be independent of the credit union's employees, members of the governing board, member of any board-appointed committee, the credit manager and loan officers and members of the immediate families of any of the above. The annual audit shall meet the following minimum guidelines:

(1) A Connecticut credit union with total assets of three hundred million dollars or more shall have an opinion audit of the credit union's financial statement performed by an independent licensed public or certified public accountant; and

(2) A Connecticut credit union with total assets of less than three hundred million dollars shall have:

(A) An opinion audit of its financial statements performed by an independent licensed public or certified public accountant;

(B) An agreed upon procedures engagement performed by a person having adequate technical training and proficiency as an auditor commensurate with the level of sophistication and complexity of the credit union under audit, provided if such engagement is not comprehensive, the supervisory committee shall satisfy any remaining requirements of a comprehensive audit in accordance with this subsection; or

(C) A comprehensive audit performed by the supervisory committee or the credit union's internal auditors or the internal auditor of another financial institution.

(c) The supervisory committee shall perform or cause to be performed a verification of members' accounts at least once every two years through:

(1) Verification of share and loan accounts of all members;

(2) Statistical sampling of member share and loan accounts done in connection with an opinion audit of the financial statements performed by an independent licensed public or certified public accountant; or

(3) A statistical sampling method that results in a random selection that is representative of the membership.

(d) The supervisory committee shall make any additional audits and supplemental verifications and examinations of the affairs of the Connecticut credit union that it deems appropriate, or that the governing board or commissioner requires.

(e) Promptly following the completion of an audit or other verification or examination, the supervisory committee shall (1) file a written report at the main office of the Connecticut credit union; (2) present the report to the governing board at its next meeting, and a summary thereof to the members at the next annual meeting or if the audit was not performed by the supervisory committee, the outside auditor shall present the report or summary thereof; and (3) file a copy of the written report with the commissioner.

(f) The supervisory committee shall provide related working papers, policies and procedures concerning the annual audit, internal audit, examination and verification to the commissioner, upon the commissioner's request, and shall require any independent licensed or certified public accountant, internal auditor or any other auditor to provide such related working papers, policies and procedures concerning the annual audit, internal audit, examination and verification to the commissioner, upon the commissioner's request. The governing board shall require that the auditor submit to such board a signed report of the audit or examination showing the condition of the Connecticut credit union within a reasonable period of time from the effective date of the audit or examination.

(g) At any time that the supervisory committee discovers any operating practices of the Connecticut credit union that it deems unsafe which have not been corrected by the governing board, the supervisory committee shall give notice to all credit union members of a special meeting of members to be held for the purpose of receiving the report of the supervisory committee of such operating practices. The membership of the Connecticut credit union shall have, by majority vote, the authority to accept or reject the report of the supervisory committee. The supervisory committee shall take any action the members deem necessary.

(h) The supervisory committee shall meet as often as necessary and at least annually and shall keep complete minutes of all of its meetings, including the names of those members present.

(i) The supervisory committee shall have the power to suspend at any time, by a two-thirds vote of its members at a meeting called for that purpose, any director or employee of the Connecticut credit union or any member of a board-appointed committee for cause. The suspension shall take effect immediately and the commissioner shall be notified promptly of such suspension. Not later than seven business days after the effective date of the suspension, the supervisory committee shall cause notice to be given to all members of the Connecticut credit union of a special meeting of members to be held for the purpose of hearing the report of the supervisory committee regarding the suspension and voting on removal, provided such notice shall not be given if the director, employee or member of a board-appointed committee who is subject to suspension resigns. The special meeting shall be held no more than twenty-one business days after the date of suspension. The membership of the Connecticut credit union shall have, by majority vote, the authority to accept or reject the report of the supervisory committee. The supervisory committee shall take any action with respect thereto as the members deem necessary. If such action involves removal, the credit union shall promptly notify the commissioner of such removal.

(P.A. 02-73, S. 48; P.A. 03-84, S. 53.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003.