Section 73.08. Compensated auditor.

 

(1)   Unrelated to officials. A compensated auditor who performs an audit on behalf of a credit union shall not be related by blood or marriage to any management employee or loan officer, or any member of the board of directors, audit committee, supervisory committee or credit committee of that credit union.

(2)   Engagement letter. The engagement of a compensated auditor to perform all or a portion of the scope of an annual audit requirement shall be evidenced by an engagement letter. The engagement letter shall be signed by the compensated auditor and acknowledged by the audit committee, supervisory committee or board prior to commencement of the engagement.

(3)  The engagement letter shall do all of the following:

(a) Specify the terms, condition, and objectives of the engagement.

(b) Identify the basis of accounting to be used.

(c) Set forth the procedures to be performed.

(d) Specify the rate of or total compensation to be paid for the audit.

(e) Provide that the compensated auditor shall, upon completion of the engagement, deliver a written report of the audit and provide notice in writing, either within the report or communicated separately, of any internal control reportable conditions, irregularities and illegal acts which come to the compensated auditor's attention during the normal course of the audit. Notice is not required if there are no reportable conditions, irregularities or illegal acts.

(f) Specify a target date for delivery of the written reports, such target date not to exceed 120 days from the date of the calendar or fiscal year-end audit, or period covered, unless the credit union obtains a waiver from the director.

(g) Certify that the director or NCUA staff, or both, or their designated representatives, shall be provided unconditional access to the complete set of original working papers, either at the offices of the credit union or at a mutually agreed upon location, for purposes of inspection.

(h) Acknowledge that working papers shall be retained for a minimum of three years from the date of the written audit report.

(4)  If the engagement is to perform a supervisory committee guide audit, as set forth in s. DFI-CU 73.06 (1) (c) , the engagement letter shall certify that the audit shall address the complete scope of that engagement unless otherwise noted.

(5)  If the engagement is to perform a supervisory committee guide audit, as set forth in s. DFI-CU 73.06 (1) (c) , which will exclude any item required by the applicable section of the guide, the engagement letter shall do all of the following:

(a) Identify the excluded items.

(b) State that because of any exclusions, the resulting audit alone will not fulfill the scope of a supervisory committee audit.

(c) State that the credit union shall remain responsible for fulfilling the scope of a supervisory committee audit with respect to the excluded items.

History: CR 02-133 : cr. Register February 2004 No. 578 , eff. 3-1-04.