Sec. 36a-86. (Formerly Sec. 36-128). Audit by accountants; governing board liability. Subsidiaries of holding companies; consolidated reports. - Connecticut Statutes

      Sec. 36a-86. (Formerly Sec. 36-128). Audit by accountants; governing board liability. Subsidiaries of holding companies; consolidated reports. (a) The governing board of each Connecticut bank shall annually procure an audit or examination by certified public accountants or holders of certificates of authority as public accountants selected by vote of the governing board or a duly authorized committee thereof, and such accountants shall agree to provide related working papers, policies and procedures to the commissioner, if requested. The accountants shall thoroughly examine the books, records, accounts and affairs of such bank and submit a signed report of the audit or examination showing the condition of the bank to the governing board of such bank within a reasonable period of time following the conclusion of the audit or examination. The signed report shall be kept on file in such bank and a copy shall be filed with the commissioner. Members of the governing board of such Connecticut bank shall not be personally liable for any loss suffered by such bank through the wrongdoing or negligence of any officer or employee, which wrongdoing or negligence should have been discovered by the accountants in the performance of their duties, provided such members shall have exercised due care to procure thorough and substantial audits by the accountants.

      (b) Notwithstanding the provisions of subsection (a) of this section, the governing board of a Connecticut bank that is a subsidiary of a holding company may procure and file annually with the commissioner a signed consolidated report of the audit or examination of the holding company in lieu of that of the Connecticut bank, provided (1) prior to the engagement of an accountant, the governing board of such Connecticut bank has voted to allow and accept as adequate, a consolidated report of the audit or examination of the holding company; the accountants selected to provide such consolidated report have agreed to provide related working papers, policies and procedures to the commissioner, if requested; and the commissioner has approved, conditionally or unconditionally, the substitution of such consolidated report; (2) the accountants shall thoroughly examine the books, records, accounts and affairs of the Connecticut bank and shall submit a signed consolidated report to the governing board of such Connecticut bank within a reasonable period of time following the conclusion of the audit or examination; and (3) the signed consolidated report shall be kept on file in such Connecticut bank and a copy shall be filed with the commissioner.

      (1949 Rev., S. 5842; February, 1965, P.A. 64; P.A. 78-121, S. 79, 113; P.A. 94-122, S. 45, 340; P.A. 01-183, S. 3, 11.)

      History: 1965 act required audits in all cases by public accountants where previously audits by "not fewer than two competent, experienced and trustworthy persons who are not officers, directors, trustees or employees" of the bank was an option, rewording provisions accordingly; P.A. 78-121 substituted "members of the governing board" for "directors or trustees"; P.A. 94-122 extended annual audit requirements and liability protections previously applicable to savings banks to state bank and trust companies, effective January 1, 1995; Sec. 36-128 transferred to Sec. 36a-86 in 1995; P.A. 01-183 designated existing provisions as Subsec. (a) and amended same by adding references to related working papers, policies and procedures, replacing 90 days with a reasonable period of time, replacing directors with members of the governing board and making technical changes, and added Subsec. (b) re filing of consolidated reports by subsidiaries of holding companies, effective July 1, 2001.

      Annotation to former section 36-128:

      Effect of this provision in action against directors for negligence in failing to discover fraud of cashier. 89 C. 470.