[Code of Federal Regulations] [Title 12, Volume 6] [Revised as of January 1, 2006] From the U.S. Government Printing Office via GPO Access [CITE: 12CFR630.6] [Page 292-293] TITLE 12--BANKS AND BANKING CHAPTER VI--FARM CREDIT ADMINISTRATION PART 630_DISCLOSURE TO INVESTORS IN SYSTEMWIDE AND CONSOLIDATED BANK DEBT OBLIGATIONS OF THE FARM CREDIT SYSTEM--Table of Contents Subpart A_General Sec. 630.6 Farm Credit System audit committee and bank audit committees. (a) Farm Credit System audit committee. (1) The board of the Funding Corporation shall establish and maintain a System Audit Committee and adopt a written charter describing the committee's composition, authorities, and responsibilities. (2) The System Audit Committee shall consist of no fewer than three members. Members shall be independent of management of any disclosure entity and association and free from any relationship that, in the opinion of the board of directors of the Funding Corporation, would interfere with the exercise of independent judgment as a committee member. Members shall be knowledgeable in public and corporate finance, and financial reporting and disclosure. (3) The System Audit Committee shall report to the board of the Funding Corporation and shall be given adequate resources and authorities to discharge its responsibilities, including [[Page 293]] the ability to consult the Funding Corporation's legal counsel. (4) Responsibilities. At a minimum, the System Audit Committee shall: (i) Make recommendations to the board of the Funding Corporation regarding the selection of an independent auditor of the Systemwide combined financial statements; (ii) Oversee the Funding Corporation management's preparation of the report to investors; (iii) Review the impact of any significant accounting and auditing developments, and review accounting policy changes relating to preparation of the Systemwide combined financial statements; (iv) Review the System's annual and quarterly reports to investors prior to their release; and (v) Oversee the Funding Corporation's system of internal controls relating to preparation of the report, including controls relating to the System's compliance with applicable laws and regulations. (b) Farm Credit System bank audit committees. (1) Each System bank shall establish and maintain a bank audit committee that shall report to the board of the bank. (2) The bank audit committee shall consist of no fewer than three members. Members shall be independent of management and free from any relationship that, in the opinion of the board of directors of the bank, would interfere with the exercise of independent judgment as a committee member. Members shall be knowledgeable in public and corporate finance, and financial reporting and disclosure. (3) Responsibilities. At a minimum, the bank audit committee shall: (i) Review the bank's financial statements and significant accounting policies; (ii) Oversee the bank's financial reporting regarding its disclosure to shareholders and to the Funding Corporation for disclosure to investors; (iii) Oversee the audit activities of the external auditor; and (iv) Monitor internal controls, including those relating to compliance with laws and regulations.