I've never experienced this before in my career -- the Audit Committee reviews the list of qualified Real Estate Appraisers and adds new appraisers to the list on an annual basis.

Does anyone else think that approval of new appraisers and review of compliance with policies may impact the Audit Committee's independence?

We have an independent of loan operations "Appraisal Review Group" to order appraisals and annually review appraisers. The list is also reviewed annually by the Board of Directors.

The "Appraisal Review Group" reports to the head of Credit Administration. The Audit Committee wants to change the reporting to either the Internal Audit or Risk Management departments. I can understand changing to Risk Management, but not Internal Audit. Again, IA and the Audit Committee needs to remain independent from these functions.

How is this process handled at your Bank?

The appraisal group should not report to audit as it is a group that needs to be audited. Appraisal areas often report to credit admin IF credit admin has no loan approval function. Risk Management would be a good choice if credit is out.

I don't like the audit committee approving appraisers-they should be independent of this type of management process. Generally this is either approved by the board or a committee of the board like Exec. Committee. The approvals can also be delegated to management with strict criteria for approval and periodically reported to the board.

Thanks!

I am new here and was shocked when I found this out. The Audit Committee is adamant about them reviewing the appraisers. To me, it is not an Audit Committee function and I told them so.

They can certainly look at the list and speak up if are aware of anything that the bank needs to know, but they should not be "approving".

Maybe the A/C does not review to approve, but to disapprove, such as to eliminate appraisers with a possible connection to the bank or any known members of bank staff.