AgriBank Board Of Directors Audit Committee Charter

​Audit Committee Purposes:

The Audit Committee (“Committee”) is appointed by the AgriBank Board of Directors (“Board”) to assist the Board in fulfilling its oversight responsibilities for:

  • Financial reporting;
  • System of internal control;ystem of internal control;
  • Audit processes and procedures; and
  • Processes and procedures for monitoring compliance with laws, regulations and the standards of conduct.

Audit Committee Authorities:

As delegated by the Board, the Committee has the authority:

  • For the appointment, compensation, retention and oversight of the work of their independent auditor, including resolution of disagreements between management and the independent auditor regarding financial reporting, for the purpose of preparing or issuing an audit report or related work;
  • To call for special and/or investigative audits;
  • For unrestricted access to records, procedures, activities and personnel relevant and necessary to the fulfillment of its responsibilities;
  • To access and utilize a range of resources related to directing research and analysis, reviewing audit-related programs and/or practices, and to gaining access to other information needed to perform its duties, including appropriate and ongoing training; and
  • To engage independent counsel and other advisors as it deems necessary to carry out its duties.

Committee Structure:

The Committee shall be comprised of no less than three members, each of whom must be a current member of the Board. Each member must be free from any relationship that, in the opinion of the Board, would interfere with the exercise of the Committee member’s independent judgment. The Chairperson of the Board will annually appoint the Committee members as part of the reorganization of the Board. The Committee members shall select one member to serve as Chair and another member to serve as Vice Chair of the Committee. The Committee Chair will serve as the main point of contact between the Committee, the Board, and AgriBank’s senior management. The Committee reports only to the Board. A majority of Committee members shall constitute a quorum.

The AgriBank Chief Audit Executive (“CAE”) will functionally report to the Committee and the Board and administratively report to the AgriBank Chief Executive Officer (“CEO”), or to a sufficient level within AgriBank that allows the internal audit activity to fulfill its responsibilities. The independent auditor will report directly to the Committee and is ultimately accountable to the Committee and the Board.

Committee Member Qualifications:

All members of the Committee should be familiar with general business and/or basic accounting practices and at least one member should have accounting or financial management expertise.

Committee Meetings:

The Committee will:

  • Generally meet quarterly, or at any such time as determined necessary by the Committee Chairperson, or as directed by the Board;
  • Take minutes of its meetings (“Minutes”) which will also include:
    • Attendance; and
    • Any items requiring action by the Board (“Action Items”);
  • Make regular reports regarding its activities to the Board, including all Action Items;
  • Maintain records (“Committee Records”) which will include review of any financial policy, procedure, or report and the Committee’s agreement or disagreement on items reviewed;
  • Make Committee Records available for review by the Committee;
  • Provide the Board with copies of Committee Records; and
  • Provide the Board with copies of Minutes.

The Committee meetings may:

  • Be called by the Committee Chair;
  • Be conducted in person, by conference call, or by other electronic and/or digital means which allows each member to simultaneously interact with other members; and
  • As it deems necessary, meet in executive session.

Key Committee Duties:

Financial Statements Duties:

  • Review and determine the adequacy of AgriBank’s accounting policies and practices by conducting discussions with the Internal Audit, independent auditor, and AgriBank management;
  • Require periodic reporting on current regulatory, accounting, or reporting developments and any significant accounting changes from AgriBank management and the independent auditor.
  • Receive from the independent auditor, a report of AgriBank’s annual audited financial statements, which should include the following, but not limited to:
    • All critical accounting principles and practices used;
    • All material alternative accounting treatments of financial information, including significant and unusual transactions;
    • Other material written communications between the independent auditor and management, such as management letters, schedule of unadjusted differences, reports on observations and recommendations on internal controls;
    • Listing of adjustments and reclassifications; and
    • Independent auditor’s independence letter.
  • Review with AgriBank management and independent auditor the effect of off-balance sheet arrangements which could have current or future effect on financial conditions, revenues, expenses, results of operations, liquidity, capital expenditures, capital resources, earnings press releases, and other reports;
  • Review with AgriBank management or others required to make annual and/or quarterly certifications and/or reports to the Farm Credit Administration (“FCA”) relating to compliance with the Disclosure Program, including:
    • All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect AgriBank’s ability to record, process, summarize and report financial information; and
    • Any fraud, whether or not material that involves management or other employees who have a significant role in AgriBank’s internal controls.
  • Review AgriBank management’s certification of the effectiveness of controls related to financial reporting;
  • Review and approve AgriBank’s quarterly financial statements prior to issuance;
  • Require AgriBank financial management to discuss any significant changes to AgriBank’s accounting principles with the Committee, and when necessary, the Committee Chair may represent the entire Committee for purposes of such discussions; and
  • Review and approve, prior to issuance, both quarterly and annual press releases of financial results, and any interim press releases.

Independent Auditor Related Duties:

  • Review and oversee the performance of the independent auditor;
  • Exercise final approval on the appointment or discharge of the independent auditor;
  • Meet with the independent auditor to review and approve independent auditor annual audit plans and receive regular independent auditor reports based on their audit activity;
  • Review and periodically discuss with AgriBank management and the independent auditor their respective disclosure controls and procedures;
  • Review, monitor, and confirm that AgriBank management is not placing restrictions on the independent auditor;
  • Pre-approve, as appropriate, any allowable non-audit services to be provided to AgriBank by the independent auditor;
  • At least annually, receive a report from the independent auditor of any non-audit engagements with district associations and receive written certification on an annual basis that they are not providing any prohibited non-audit services to the Bank.
  • Review the independent auditor’s annual engagement letter with the Controller; and
  • At least on an annual basis, meet in executive session with the independent auditor.
  • AgriBank will not employ a partner, concurring partner, or lead member of the engagement team within one year after the conclusion of the audit engagement.

Internal Audit Duties:

  • Review, monitor, and confirm that AgriBank management and the Board are not placing restrictions on the Audit Department;
  • Obtain input from the CEO regarding performance objectives and the performance evaluation of the CAE;
  • Annually review and approve the performance objectives and the performance evaluation of the CAE;
  • Review and approve the CAE’s remuneration;
  • Review and approve the appointment, reassignment, replacement or dismissal of the CAE;
  • Review and approve the Internal Audit department budget;
  • Review and approve the audit plan developed and recommended by Internal Audit and approve any changes to the plan;
  • Receive a report on Internal Audit’s Quality Assurance and Improvement Program including an opinion on conformance to the mandatory guidance of The Institute of Internal Auditor’s International Professional Practices Framework;
  • At least annually, meet in executive session with the CAE; and
  • Review and approve the internal audit charter.

Internal Controls Duties:

  • Establish and maintain procedures for the receipt, retention and treatment of complaints regarding accounting, financial reporting, accounting controls or auditing matters;
  • Receive reports of complaints regarding accounting, financial reporting, internal controls or auditing matters.
  • Determine the adequacy of internal controls, including the control environment, through a review of all audit reports issued by Internal Audit or the independent auditor relating to AgriBank’s operations;
  • Review the testing results of management’s controls related to financial reporting;
  • Understand the scope of Internal Audit’s review of information technology area including security and controls.
  • Review all FCA examination reports of AgriBank and evaluate management’s response to the reports;
  • Review with the Chief Administrative Officer and General Counsel, the program for monitoring compliance with the Standards of Conduct Regulations and review at least annually with management and the independent and internal auditors, compliance with AgriBank’s Code of Ethics for officers and senior financial professionals;
  • Review management’s internal control report with the independent auditor and the internal auditor; and
  • Review and discuss with management, any significant findings by the independent auditor or Internal Audit together with management’s response to such findings.

Other Duties:

  • Annually review the Audit Committee Charter and recommend to the Board any appropriate amendments to the Charter;
  • Annually prepare a report to be included in AgriBank’s annual report, disclosing the committee reviewed and discussed the annual financial statements with management and reviewed and discussed matters with independent auditors as required;
  • At least on a bi-annual basis, perform a self-assessment of the effectiveness of the Committee activities;
  • Meet with representatives of FCA as deemed necessary;
  • Respond to any concerns identified by the System Audit Committee and conduct any audit committee activities that are necessary for the System Audit Committee to fulfill its chartered responsibilities; and
  • Perform any other activities related to this Charter as requested by the Board.

Resources:

AgriBank will provide appropriate funding as required by the Committee for payment of service fees to the independent auditor, independent counsel, or other advisors. A two-thirds majority vote of the full Board is required to override the Committee's decision to utilize such resources.

The Committee also has the authority to access and utilize a range of resources including, but not limited to:

  • Seeking any information, analysis, and recommendations as needed or requested from AgriBank’s Internal Audit staff;
  • Seeking any information it requires from AgriBank’s Chief Executive Officer and other members of AgriBank’s management, as requested;
  • Seeking any information it requires from AgriBank’s Chief Administrative Officer and General Counsel, who will provide information, analysis and recommendations as needed or requested; and
  • Retaining outside legal counsel and other professional consultants, external advisors, and other resources as necessary or appropriate to advise or assist in the performance of the Committee’s duties.

Document Retention:

The Committee will retain Minutes for at least seven fiscal years.


History

Last Revised: January 18, 2019

Approved: January 24, 2019