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OREGON PACIFIC BANK AUDIT COMMITTEE CHARTER

Mission and Structure:

The committee assists the Board of Directors (Board) in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing, internal control, financial reporting, and regulatory compliance practices of the bank. It may also have such other duties as may from time to time be assigned to it by the Board.

One member of the committee shall be appointed as chair. The chair shall be responsible for leadership of the committee, including scheduling and presiding over meetings, preparing agendas, and making regular reports to the Board. The chair will also maintain regular liaison with the CEO, CFO, and the lead independent audit partner.

Membership:

The audit committee will be composed of not less than three members of the Board. They will be selected by the Chairman of the Board, taking into account prior experience in matters to be considered by the committee, probable availability at times required for consideration of these matters, and their individual independence and objectivity. The committee membership will meet the requirements of the audit committee rules of the Nasdaq stock exchange. Accordingly, none of the members will be an officer or employee of the bank or its subsidiaries or any other individual having a relationship which, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment. Each member will be financially literate, and at least one member of the audit committee will have accounting or financial management expertise. Members cannot accept consulting, advisory, or other compensatory fees from the bank, or be an affiliated person of the bank or any subsidiary, except for Board or committee services.

General Responsibilities:

  • The audit committee will be directly responsible for the appointment, compensation, and oversight of the work of any registered public accounting firm employed by the bank.
  • The audit committee will ensure that the independent auditors submit annually a formal written statement delineating all relationships between the independent auditors and the bank consistent with Independence Standards Board Standard Number 1. They also will consider, with a view to auditor independence, the fees paid to the auditors for audit services, information technology services, and all other services and consider whether the performance of any non-audit services is compatible with their independence. The committee is responsible for engaging in a dialogue with the auditors with respect to such disclosed relationships that may impact the objectivity and independence of the external auditor and recommending that the Board of Directors take appropriate action to satisfy itself of the auditors’ independence.
  • The audit committee will discuss with management and the independent auditors the adequacy and effectiveness of the bank’s accounting and financial records and system for monitoring and managing business risk and legal compliance programs.
  • The audit committee must report committee actions to the full Board of Directors and may make appropriate recommendations.
  • The audit committee has the power to conduct or authorize investigations into matters within the committee’s scope of responsibilities. The committee is authorized to retain independent counsel, accountants or others it needs to assist in an investigation.
  • The audit committee will maintain procedures for the receipt, retention, and treatment of complaints about accounting, internal controls, or auditing matters, as well as confidential, anonymous submission by employees regarding accounting or auditing matters.
  • The committee will meet at least four times each year, more frequently if circumstances make that preferable. The audit committee chairman has the power to call a committee meeting whenever he or she thinks there is a need. An audit committee member should not vote on any matter in which he or she is not independent. The committee may ask members of management or others to attend the meeting and is authorized to receive all pertinent information from management.
  • The committee will do whatever else the law, the company’s charter or bylaws or the Board of Directors require.
  • The committee will have direct oversight of the Internal Audit Department including review and approval of the annual plan and scope of the work performed by the department, and review of the audit reports. The committee will also ensure proper consideration of Internal Audit results by the relevant department or branch.

Specific Responsibilities:

  • The activities of the committee may result in the following types of actions:
  • Those in which the committee will inform the Board that action has been taken in the Board’s interest and does not require prior board approval.
  • Review and approval of the scope of the annual audit for the bank recommended jointly by the independent auditors and management.
  • Provide the Board with a copy of the Audit Committee Responsibilities checklist at least annually.
  • Select, evaluate and, where appropriate, replace the independent auditors.
  • Pre-approve any non-audit services provided by the independent auditor (not to exceed 5% of the total amount of payment made by the bank to its auditor). The chair has authority to approve such services with later disclosure to the full committee.
  • Establish procedures for: (1) the treatment of complaints received regarding accounting, internal accounting controls or auditing matters; and (2) the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
  • Those in which the committee will review and study and then recommend action by the Board.
  • Review major accounting policy changes before implementation.
  • Review financial reports and the content of proposed published reports for adequate disclosure.
  • Those in which the committee will review and study and provide summary information to the Board when appropriate.
  • Review trends in accounting policy changes proposed or adopted by the bank such as the Financial Accounting Standards Board, the SEC, and the American Institute of Certified Public Accountants or by comparable bodies outside the United States.
  • Interview independent CPA’s for review and analysis of strengths and weaknesses of the company’s financial staff, systems, adequacy of controls, and other factors which might be pertinent to the integrity of published financial reports.
  • Review at least annually a summary of the status of bank certifications.
  • Review reports of each examination made by bank supervising authorities and report to the board within 60 days after the receipt of the report relative to the criticisms and suggestions contained in the report. The report to the Board shall be recorded in the minute book of the Bank. A certified copy shall be transmitted to the Director of the Department of Consumer and Business Services within five days.

Other Procedures of the Committee:

The committee will keep minutes and other relevant records of all its meetings. The committee will review its charter with the board on an annual basis.

 

For questions or comments, please email us at contact@opbc.com or call us at (800) 997-7121.