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#138809 - 12/11/03 06:14 PM SOX & Audit committee members
DeeQ Offline
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I just read This article and am a little confused. I was under the impression that a recently affiliated officer(who is a director) who retired (for example, the CEO) should not be on the Audit committee for 3 years after his retirement date. And so we have it. The article read that any director whose company did business with the bank, should not be on the audit committee.
Most of our directors own businesses and bank with us (it's a loyalty thing), now what?
Help, please...
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#138810 - 12/11/03 06:24 PM Re: SOX & Audit committee members
DeeQ Offline
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Let me clarify, we are non-public and all of the provisions of SOX don't apply (but FDICIA does), and our examiners were just here and didn't say anything negative about it.
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#138811 - 12/11/03 08:21 PM Re: SOX & Audit committee members
Anonymous
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Hmmm...good question. If that is the case, then we are in deep doo-doo here.

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#138812 - 12/11/03 08:22 PM Re: SOX & Audit committee members
Jokerman Offline
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You need an attorney for an interpretation, but an audit committee member can't have accepted directly or indirectly (as in through a business) any "consulting, advisory, or other compensatory fee" from your company. The impression I have from our attorneys is that they are prohibiting payments to audit committee members for accounting, consulting, legal (etc.) work.

We aren't asking our audit committee member who is the owner of an engineering firm that the bank has made payments to in the past three years to step down. We are a NASDAQ-listed bank.

(If anyone thinks this interpretation is wrong, please let me know.)

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#138813 - 12/11/03 10:56 PM Re: SOX & Audit committee members
Pale Rider Offline
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You have no problem Maria since you do not have class of securities registered with the SEC. But the FDIC has said that it wants its large banks to comply with the spirit of SOX. That is what we have done at my bank since we are privately held. Section 301 states that each member of the audit committee must be independent of the bank and cannot accept any consulting, advisory or compensatory fee from the bank (other than for serving as a board member).

Our audit and compliance committee is composed of only outside members but two of them have business relationships that are advisory or consutative in nature. We noted that but have done nothing more since we technically do not have to comply with SOX. We concluded that if we were publically held, we would have engaged legal counsel specializing in SEC matters to review the business relationships to determine if these board members could remain on the audit and compliance committee.

Section 407 was the difficult hurdle for us to get over. This section requires at least one member of the committee be a "audit committee financial expert" and then defines the position as one who is an auditor, controller, chief accounting officer, chief financial officer or a supervisor of one of these positions. Now we have some pretty powerful board members but none of them fit this definition precisely. I suspect this is the section that is most difficult to comply with. Don't sweat this stuff if you are privately held, and take comfort in the fact that if and when your bank goes public, it will have to have a compliance officer that does nothing but SEC compliance. Or they might just add that fuction to your job description since you are the devil with with blue dress.
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#138814 - 12/12/03 12:51 PM Re: SOX & Audit committee members
DeeQ Offline
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Don, thank you, what you described is us exactly. Also, we are lucky enough to have a CPA for a director and he is our Audit committee chairman.
I guess I got all worked up for nothing, eh? Now, back to sharpening my Trident for the weekend.
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Get your facts first, then you can distort them as you please. - Mark Twain

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