Credit Union Audit Improvement Act of 1997

Summary: Credit Union Audit Improvement Act of 1997 - Amends the Federal Credit Union Act to mandate that:  (1) each insured credit union prepare an annual financial statement in conformity with generally accepted accounting principles (GAAP); (2) each credit union supervisory committee have an annual independent audit of such statement performed in accordance with GAAP standards by an independent certified or licensed public accountant; (3) each credit union prepare annually a written assertion regarding the efficacy of internal controls over financial reporting; (4) each credit union supervisory committee obtain annually an attestation report on an examination of management's written assertion prepared in accordance with GAAP by an independent certified or licensed public accountant; and (5) each credit union prepare annually a written report on the extent to which it is in compliance with the safety and soundness regulations designated by National Credit Union Administration Board. 
Exempts certain small-sized insured credit unions (with assets under $10 million) from the purview of this Act. 
Requires a credit union supervisory committee to:  (1) identify annually any risk areas of credit union activities; (2) assess the extent to which internal and external audit coverage is necessary for credit union activities which the committee determines to have a high risk; (3) perform or supervise internal audits; (4) restrict the selection of outside auditors to certified or licensed public accountants; and (5) submit audit reports to the board of directors, the National Credit Union Administration, and its membership. 
Requires an insured State credit union to include in its insurance application an agreement to maintain a supervisory committee which complies with the management oversight requirements applicable to its Federal credit union counterparts.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Credit Union Audit Improvement Act 
of 1997''.

SEC. 2. FINANCIAL STATEMENT AND AUDIT REQUIREMENTS.

    Paragraph (6) of section 202(a) of the Federal Credit Union Act (12 
U.S.C. 1782(a)(6)) is amended to read as follows:
            ``(6) Financial statement and audit requirements.--
                    ``(A) Financial statement.--
                            ``(i) In general.--Each insured credit 
                        union shall prepare annual financial statements 
                        in conformity with generally accepted 
                        accounting principles.
                            ``(ii) Audit requirement.--The supervisory 
                        committee of each insured credit union shall 
                        have an annual independent audit of the 
                        financial statement of the credit union 
                        performed in accordance with generally accepted 
                        auditing standards by an independent certified 
                        public accountant or public accountant licensed 
                        by the appropriate State or jurisdiction to 
                        perform such services.
                    ``(B) Effectiveness of internal controls.--
                            ``(i) In general.--Each insured credit 
                        union shall prepare a written assertion 
                        annually about the effectiveness of the 
                        internal controls over financial reporting.
                            ``(ii) Examination of written assertion.--
                        The supervisory committee of each insured 
                        credit union shall obtain annually an 
                        attestation report on an examination of 
                        management's written assertion under clause (i) 
                        which shall be prepared in accordance with 
                        generally accepted standards for attestation 
                        engagements by an independent certified public 
                        accountant or public accountant licensed by the 
                        appropriate State or jurisdiction to perform 
                        such services.
                    ``(C) Compliance with laws and regulations.--Each 
                insured credit union shall prepare a written report 
                annually on the extent to which the credit union is in 
                compliance with laws and regulations relating to safety 
                and soundness which have been designated by the Board.
                    ``(D) De minimus exception.--This paragraph shall 
                not apply with respect to any fiscal year of any 
                insured credit union the total assets of which, as of 
                the beginning of such fiscal year, are less than 
                $10,000,000.''.

SEC. 3. REQUIREMENTS FOR SUPERVISORY COMMITTEES.

    (a) Federal Credit Unions.--Section 115 of the Federal Credit Union 
Act (12 U.S.C. 1761d) is amended--
            (1) by striking ``The supervisory committee shall make or 
        cause to be made'' and all that follows through ``submit 
        reports of the supplementary audits to the board of directors; 
        may by a unanimous vote'' and inserting ``(a) In General.--The 
        supervisory committee may, by a unanimous vote,''; and
            (2) by adding at the end the following new subsection:
    ``(b) Management Oversight.--
            ``(1) Risk areas.--The supervisory committee shall--
                    ``(A) identify annually risk areas of the 
                activities of the credit union; and
                    ``(B) assess the extent to which internal and 
                external audit coverage is necessary for those 
                activities of the credit union which the committee 
                determines have a high risk.
            ``(2) Internal audits.--The supervisory committee shall 
        perform or supervise any internal audits of the credit union.
            ``(3) Outside auditors.--In the case of any outside audit 
        of the credit union, the supervisory committee shall engage 
        only an independent certified public accountant or public 
        accountant licensed by the appropriate State or jurisdiction to 
        perform such services.
            ``(4) Audit reports to board of directors and members.--The 
        supervisory committee shall--
                    ``(A) promptly submit the audit report of any 
                internal or outside audit to the board of directors and 
                the Administration; and
                    ``(B) submit the audit report of any outside audit 
                and submit a summary of the audit report of any 
                internal audit to the members at the annual meeting 
                following the completion of any such report.''.
    (b) Insured State Credit Unions.--Section 201(b) of the Federal 
Credit Union Act (12 U.S.C. 1781(b)) is amended--
            (1) by redesignating paragraphs (8) and (9) as paragraphs 
        (9) and (10), respectively; and
            (2) by inserting after paragraph (7) the following new 
        paragraph:
            ``(8) to maintain a supervisory committee which complies 
        with the requirements applicable under section 115(b) to a 
        supervisory committee of a Federal credit union;''.

SEC. 4. EFFECTIVE DATE.

    The amendments made by this Act shall apply with respect to fiscal 
years (of insured credit unions) ending on or after December 15, 1997.