California § 14556 - The board of directors may, by resolution, establish an audit committee in lieu o

§ 14556. The board of directors may, by resolution, establish an audit committee in lieu o

(a) The board of directors may, by resolution, establish an audit committee in lieu of a supervisory committee. An audit committee that meets all the requirements of this section shall be deemed to satisfy the requirements for a supervisory committee set forth in Sections 14550 to 14555, inclusive, or in any applicable bylaw provision. (b) The vote of the board of directors to establish an audit committee in lieu of a supervisory committee shall be affirmed by a majority vote of members voting. A membership vote may occur at any regular or special meeting of the members, or by written ballot subject to Section 7513 of the Corporations Code. Following the affirmative vote of the membership, the supervisory committee shall be deemed dissolved upon the appointment of an audit committee and the adoption of appropriate amendments to the credit union bylaws, consistent with subdivision (e) of Section 14103, by the board of directors. (c) The audit committee shall consist of at least three persons, provided that it is an odd number, each of whom shall be a member of the credit union and appointed by a majority of the board of directors. (1) Notwithstanding the limitations of subdivision (b) of Section 7212 of the Corporations Code, the audit committee may be composed of directors, or both directors and nondirectors, provided that no less than a majority of the members of the audit committee at any given time shall be composed of directors. (2) A member of the audit committee shall not serve as a member of the credit committee, as the credit manager, as the board chairman, or as an employee of the credit union. (3) An audit committee member may be appointed or removed by a majority vote of the board of directors and shall serve at the pleasure of the board. The removal of an audit committee member who is also a director of the credit union, for any reason, shall not impact their status as a director. (4) The commissioner, after investigation and finding that the audit committee is not performing in conformance with this article, may direct the board to replace any or all audit committee members. (d) The audit committee shall carry out the responsibilities set forth in subdivisions (a) to (c), inclusive, of Section 14551 and Sections 14551.5, 14552, and 14553 and shall: (1) Ensure that the credit union complies with Section 14252. (2) Ensure that the credit union maintains an effective internal audit program, including a system of internal controls and individuals with sufficient training and experience to adequately and timely review all key areas of a credit union’s operations. (e) The board of directors may, by subsequent resolution, reestablish a supervisory committee in lieu of an audit committee, which shall be affirmed by membership vote. The audit committee shall be deemed dissolved upon the election of a supervisory committee by the membership.