Minnesota Legislature
HF 2325
as introduced - 93rd Legislature (2023 - 2024) Posted on 03/13/2023 04:00pm
Bill Text Versions
| Engrossments | ||
|---|---|---|
| Introduction | Posted on 02/28/2023 |
Current Version - as introduced
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A bill for an act
relating to financial institutions; modifying provisions governing emergency
closures; eliminating certain examination requirements; amending Minnesota
Statutes 2022, section 47.0153, subdivision 1; repealing Minnesota Statutes 2022,
section 48.10; Minnesota Rules, parts 2675.2610, subparts 1, 3, 4; 2675.2620,
subparts 1, 2, 3, 4, 5; 2675.2630, subpart 3.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2022, section 47.0153, subdivision 1, is amended to read:
Subdivision 1.
Emergency closings.
When the officers of a financial institution are of
the opinion that an emergency exists, or is impending, which affects, or may affect, a
financial institution's offices, they shall have the authority, in the reasonable exercise of
their discretion, to determine not to open any of its offices on any business day or, if having
opened, to close an office during the continuation of the emergency, even if the commissioner
does not issue a proclamation of emergency. The office closed shall remain closed until the
time that the officers determine the emergency has ended, and for the further time reasonably
necessary to reopen. No financial institution office shall remain closed for more than 48
consecutive hoursnew text begin in a Monday through Friday periodnew text end , excluding other legal holidays,
without the prior approval of the commissioner.
Sec. 2. new text begin REPEALER.
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(a)
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Minnesota Statutes 2022, section 48.10,
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is repealed.
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(b)
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Minnesota Rules, parts 2675.2610, subparts 1, 3, and 4; 2675.2620, subparts 1, 2, 3,
4, and 5; and 2675.2630, subpart 3,
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are repealed.
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APPENDIX
Repealed Minnesota Statutes: 23-02990
48.10 ANNUAL AUDIT; REPORT.
The board of directors of a bank, bank and trust, or trust company shall annually examine its books, either in person, or by appointing an examining committee, or an auditor, who may be an independent auditor or accountant. The examining committee or auditor shall be solely responsible to the directors. A report shall be made to the directors as to the scope of the examination or audit, and also to show those assets, excluding marketable securities and fixed assets, which are carried on the books for more than actual value. This report shall be retained as a permanent record or incorporated in the minutes of the meeting.
Repealed Minnesota Rule: 23-02990
2675.2610 ANNUAL EXAMINATION REPORT.
Subpart 1.
Contents.
An annual examination report made under the direction of the board of directors pursuant to Minnesota Statutes, section 48.10, must at a minimum:
A.
determine that an internal control system is in place as required by part 2675.2600 and that control procedures are being followed (describe process and findings);
D.
confirm loans and deposits through a sample positive or negative verification (define and describe process);
E.
determine if the board has reviewed fixed assets, other real estate, and equity accounts since the last examination;
F.
examine income, expense, and related accrual accounts since the last examination (describe process and findings);
G.
determine that general ledger supporting accounts are promptly reconciled and appropriateness of reconciling items, and account makeup (describe process and findings);
H.
determine that the board is reviewing delinquent loans and collection action taking place (show frequency of review);
I.
determine when the board last reviewed the allowance for loan loss account and the basis on which the funding determination was made;
J.
determine that the board has approved charge off loans, that charge off notes and files are secure, and that IRS Forms 1099C have been prepared where appropriate;
K.
sample loan files for documentation and approvals required by loan policy (describe sample methodology and findings);
L.
determine that an internal audit function exists regarding the electronic data processing system or computer applications and that procedures are in place for authorizing input data and master file changes and consider the effect of a service organization on the bank's internal control system and, if applicable, obtain an auditor's report on the policies and procedures in operation at the service organization;
M.
examine significant activity in employee and officer accounts (depository and loan) for propriety and compliance with bank policies and regulations (describe process and findings); and
N.
determine that off-balance sheet items have been authorized and detail items that may have a material impact on the condition of the financial institution.
Subp. 3.
Preparation.
A written report of the annual examination must be prepared and must include the scope of the examination including the size of the samplings taken. The report must summarize the findings and make recommendations for improving conditions, where appropriate.
Subp. 4.
Transmittal.
The written report shall be transmitted to the board of directors within 30 days of completion of the annual examination.
2675.2620 QUALIFICATIONS OF EXAMINING AUTHORITY.
Subpart 1.
Board to specify examining authority.
The board shall have the discretion to determine the method of examination used to meet the requirements of this part provided the examination is accomplished through one of the methods in subparts 2 to 5.
Subp. 2.
Examining committee.
If the requirements of this part are to be accomplished in whole or in part by an examining committee appointed by the board, the annual examination must be completed by qualified directors or their appointees who are in fact reasonably independent. A director or appointee serving as a member of the examining committee will not be considered independent if:
B.
the person has outstanding loans with the bank subject to criticism by state or federal supervisory agencies; or
C.
the person has other unusual relationships or affiliations with the bank that raise the question of independence.
Subp. 3.
Internal auditor.
If the requirements of this part are to be accomplished in whole or in part by an internal auditor, the examination must be completed by a qualified internal auditor who is in fact reasonably independent. An internal auditor will not be considered independent if:
A.
the person is employed or accountable to anyone other than the board of directors, and salary and annual bonus are not set by the board, unless the person is employed by the institution's holding company;
C.
the person has any proprietary interest in any partnership, firm, or corporation which controls the bank, directly or indirectly;
D.
the person has outstanding loans subject to criticism by state or federal supervisory agencies;
E.
the person is a member of the immediate family of an officer, director, attorney, or employee for the bank; or
F.
the person has other unusual relationships or affiliations with the bank that raise the question of independence.
In banks of less than $50,000,000 in total assets as of the immediately preceding calendar year end, where duties of the internal auditor cannot be confined entirely to bank auditing, the internal auditor will be considered reasonably independent only if someone else audits the areas for which the internal auditor has operational responsibilities. The board is responsible for determining that this degree of internal audit dependence is maintained.
Subp. 4.
Certified public accountants or licensed public accountants.
If the requirements of this part are to be accomplished in whole or in part by a certified public accountant or licensed public accountant, the examination must be completed by a qualified certified public accountant or a qualified licensed public accountant who is in fact independent. A certified public accountant or licensed public accountant will not be considered independent if:
A.
The certified public accountant, licensed public accountant, or any member of a firm performing the examination is connected with the bank as an officer, director, attorney, or employee or is a member of the immediate family of an officer, director, bank attorney, or employee.
B.
He or she is the beneficial owner, directly or indirectly, of any of the shares of stock of the bank.
C.
He or she has any proprietary interest in any partnership, firm, or corporation which controls the banks, directly or indirectly.
D.
The bank under examination has outstanding loans to the certified public accountant, licensed public accountant, partners, principals of the firm, or employees of such a firm who are directly involved in the examination, unless the loans are adequately disclosed in the examination report to the board of directors of the bank. Adequate disclosure includes the name of the borrower, the amount of the loan, the security pledged, and the appraisal or market value of the security at the time of the engagement.
E.
He or she makes entries or postings on the books of account or performs any other operating functions for the bank, except functions for which prior approval was requested and obtained in writing from the commissioner of commerce.
F.
He or she has other unusual relationships or affiliations with the bank that raise the question of independence.
In circumstances where directors, appointees, or the internal auditor are considered not independent or qualified to perform the annual examination, the board should engage a certified public accountant or licensed public accountant.
2675.2630 OPINION AUDIT.
Subp. 3.
Satisfaction of annual examination report requirement.
An unqualified opinion audit on the financial statement of the institution or a consolidated opinion audit on the institution taken as a whole will satisfy the annual examination report requirements of part 2675.2610, subpart 1. However, documentation of internal audit procedures performed in testing the internal control system, part 2675.2600, must be maintained by the bank for inspection by the supervisory examiners and external auditors.