Louisiana Administrative Code › Title 10 - FINANCIAL INSTITUTIONS, CONSUMER CREDIT, INVESTMENT SECURITIES AND UCC › Part III - Banking › Chapter 7 - Directors' Examination Requirements › Section III-702 - Definitions

Current through Register Vol. 50, No. 6, June 20, 2024
Agreed-Upon Procedures/State Required Examination
				  Report
- the fourth type of annual external audit program allowable
				  under the Federal Regulatory Agencies' Interagency Policy Statement on External
				  Auditing Programs of Banks and Savings Associations. If an audit committee
				  chooses this type of annual external audit program, the audit program must be
				  performed in compliance with a policy statement issued by the
				  commissioner.
Annual Directors' Examination
- an annual
				  examination of an institution's books, records, and accounts that must
				  be:
1. the responsibility of and performed under the direction of
				  the audit committee of the board of directors;
2. one of the types of audit programs permitted in this
				  rule;
3. performed by individuals that meet the requirements stated
				  in this rule;
4. summarized in a written report that is presented to the
				  board of directors; and
5. submitted to the Commissioner of the Office of Financial
				  Institutions and the FDIC, along with copies of management letters and
				  management's response, within the time frames established in this rule.
Federal Regulatory Agencies
- the Board of
				  Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance
				  Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and
				  the Office of Thrift Supervision (OTS). These agencies cooperatively issue
				  interagency policy statements.
Immediate Family Members
- an individual's
				  spouse, minor children and any children, including adult children, residing in
				  the individual's home.
Independent Internal Auditor
- a qualified
				  internal auditor that is, in fact, independent as defined in the Standards for
				  the Professional Practice of Internal Auditing by the Institute of Internal
				  Auditors and/or the Statements of Principle and Standards for Internal Auditing
				  in the Banking Industry by the Bank Administration Institute.
1. An internal auditor will not be considered independent if,
				  for example:
a. he/she is employed by or accountable to anyone other than
				  the board of directors of the institution or holding company, if
				  applicable;
b. his/her performance is evaluated by, and salary and annual
				  bonus are set by anyone other than the board of directors of the institution,
				  or holding company if applicable;
c. his/her duties consist of non-audit responsibilities
				  within the institution or holding company;
d. he/she has any proprietary interest in any partnership,
				  firm or corporation which controls the institution, directly or indirectly,
				  except that he or she may own and/or have a beneficial interest (including any
				  shares of a retirement and/or incentive plan) of up to a maximum of 1 percent
				  of the total outstanding shares of the institution or holding company which
				  employs the internal auditor;
e. he/she has any loan (including any overdrafts, cash items,
				  unposted items, drawing against uncollected funds, or any other such items) to
				  or from the institution or holding company or any officer, director, or
				  principal stockholder thereof. This latter prescription does not apply to the
				  following loans from a financial institution, if they are free from
				  classification by bank regulatory authorities, and made under normal lending
				  procedures, terms and requirements:
i. automobile loans and leases collateralized by the
				  automobile;
ii. loans secured by the surrender value of an insurance
				  policy;
iii. loans fully collateralized by cash deposits at the same
				  institution;
iv. credit cards and cash advances on checking accounts with
				  an aggregate unpaid balance of $5,000 or less, provided that these are obtained
				  from a financial institution under its normal lending procedures, terms, and
				  requirements and are at all times kept current as to all terms;
f. he/she is a member of the immediate family of an officer,
				  director, attorney, or employee of the institution or holding company.
2. The aforementioned examples are not to be construed as
				  all-inclusive criteria in judging the independence of an internal auditor, as
				  other conditions may also contribute to the lack of independence. It is the
				  responsibility of the board of directors to determine if there are any unusual
				  relationships or affiliations, which the internal auditor may have with the
				  institution and to have any questions as to his or her independence resolved
				  before he or she proceeds with the examination. Any unusual relationships shall
				  be disclosed to the Commissioner of the Office of Financial Institutions.
Independent Public Accountant
- an accountant
				  who is independent of the institution and registered or licensed to practice,
				  and holds himself or herself out as a public accountant, and who is in good
				  standing under the laws of the state or political subdivision of the United
				  States in which the home office of the institution is located. The independent
				  public accountant must comply with the American Institute of Certified Public
				  Accountants' (AICPA) Code of Professional Conduct and any related guidance
				  adopted by the Independence Standards Board and the agencies. No certified
				  public accountant or public accountant will be recognized as independent if
				  he/she is not independent both in fact and in appearance.
Outside Director
- members of an
				  institution's board of directors who:
1. are not officers, employees, or principal stockholders (as
				  defined below) of the institution, its subsidiaries, or its affiliates;
				  or
2. are not immediate family members of officers, employees,
				  principal stockholders of the institution, its subsidiaries, or its affiliates;
				  or
3. do not have any material business dealings with the
				  institution, its subsidiaries, or its affiliates.
Policy Statement
-t he Interagency Policy
				  Statement on External Auditing Programs of Banks and Savings Associations
				  issued by the Federal Regulatory Agencies.
Principal Stockholder
-a ny person that,
				  directly or indirectly or acting through or in concert with one or more
				  persons, owns, controls, or has the authority to vote more than 20 percent of
				  any class of voting securities of the financial institution or its parent
				  company. Voting securities owned or controlled by a member of a person's
				  immediate family are considered held by that person.
Qualified Independent
Internal
				  Auditor
-an internal auditor that meets the
independent
				  internal auditor
definition in this Subsection who is a duly
				  registered certified public accountant in good standing under the laws of this
				  state, a certified internal auditor, a chartered bank auditor, or an individual
				  that has functioned as an internal auditor in financial institutions for a
				  minimum period of two years that recognizes and adheres to the rules of conduct
				  and personal standards established for the professional designation(s) he or
				  she holds. Any certified public accountant functioning as an internal auditor
				  must adhere to the rules of conduct and standards applicable to the CPA in
				  practice.
AUTHORITY NOTE:
				  Promulgated in accordance with
				  R.S.
				  6:290,
				  6:793
				  and
				  6:1310.