2011 - 2012 LEGISLATURE
February 14, 2012 - Introduced by Senators Grothman and Schultz, cosponsored
by Representatives LeMahieu, Bies, Stroebel, Tranel, Ballweg, Zepnick and
Fields. Referred to Committee on Financial Institutions and Rural Issues.
1An Act to amend
214.37 (4) (a), 214.725 (2), 214.772 (5), 214.82 (1) (a), 214.82 2
(1) (j), 214.825 and 215.33 (4); and to repeal and recreate
214.76 and 215.25 3
of the statutes; relating to: audits and reports of state savings banks and state
4savings and loan associations.
Analysis by the Legislative Reference Bureau
Under current law, a savings bank or savings and loan association (S&L
association) may be organized under the laws of this state and, when so organized,
is subject to supervision and control of the Division of Banking (division) in the
Department of Financial Institutions.
Current law requires each savings bank to have its books, records, and accounts
annually audited by an independent certified public accountant (CPA) not connected
with the savings bank. The CPA must conduct the audit to produce a certified
financial statement and the division may require additional information to be
included in an audit report. The CPA must deliver an audit report to an independent
audit committee of the savings bank's board of directors, which committee must in
turn present the conclusions of the audit report at the next meeting of the board of
directors and, among other things, provide the audit report to all members of the
board of directors. Within 60 days after receiving the audit report, the savings bank
must file with the division a copy of the audit report and other information, including
financial statements, but this filing date may be extended for an additional 60 days.
The audit report filed with the division must be certified by the CPA conducting the
audit. If a savings bank fails to cause an audit to be made, the division must order
an audit to be made by an independent CPA at the savings bank's expense. A savings
bank must also file annually with the division a report of its activities containing
specified information, including a copy of a statement of its condition and operations
as of the end of the savings bank's most recent fiscal year.
Current law also requires each S&L association to be annually audited in a
manner satisfactory to, and in accordance with the policies established by, the
division. The S&L association's board of directors must designate the auditors,
which must be independent CPAs in this state. An S&L association must promptly
file with the division a copy of the audit report. However, in lieu of these
requirements, the S&L association's board of directors may request the division to
conduct an audit of the books and accounts to check the assets of the association and
to determine losses, although the division may refuse the request. The division may
also, at any time, make or cause to be made an audit of any S&L association, with
the cost to be paid by the association.
This bill repeals all of the foregoing audit and report requirements and replaces
them with new requirements applicable to both savings banks and S&L associations.
Under the bill, the board of directors of a savings bank or S&L association must do
one of the following: 1) hire a CPA or other qualified person to conduct a
comprehensive annual audit of the records, accounts, and affairs of the savings bank
or S&L association; or 2) appoint an auditing committee of one or more capable
persons to annually audit the records, accounts, and cash of the savings bank or S&L
association and to verify customer accounts, with verification procedures conducted
according to the savings bank's or association's auditing program or the rules of the
division. Audit reports must be submitted to the board of directors of the savings
bank or S&L association and retained as records of the savings bank or association.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB475, s. 1
214.37 (4) (a) of the statutes is amended to read:
(a) The preparation, examination, handling or maintenance of 3
financial records by any officer, employee or agent of a savings bank having custody 4
of records or examination of records by a certified public accountant
or other person 5
engaged by the savings bank to perform an independent
SB475, s. 2
214.725 (2) of the statutes is amended to read:
The division shall consider it to be necessary to conduct an 2
examination more often than every 18 months if a required report from a savings 3
bank indicates a material change in financial condition or a material violation of a 4
state or federal law, of a federal regulation or of a rule of the division. If that condition 5
is grounds for taking custody of the savings bank under s. 214.76
, the examination 6
shall be initiated within 10 business days.
SB475, s. 3
214.76 of the statutes is repealed and recreated to read:
8214.76 Annual audit requirement. (1)
Except as provided in sub. (2), the 9
board of directors of a savings bank shall hire a certified public accountant licensed 10
or certified under ch. 442 or other qualified person to conduct a comprehensive 11
annual audit of the records, accounts, and affairs of the savings bank.
The board of directors of a savings bank may appoint an auditing committee 13
of one or more capable persons to annually audit the records, accounts, and cash of 14
the savings bank and to verify customer accounts. Verification procedures shall be 15
conducted according to the savings bank's auditing program or the rules of the 16
Audit reports under this section shall be submitted to the savings bank's 18
board of directors and retained as records of the savings bank.
SB475, s. 4
214.772 (5) of the statutes is amended to read:
A foreign savings bank doing business in this state shall be 21
examined by the division as provided under s. 214.725, audited under s. 214.76 and 22
assessed fees as provided under s. 214.715 (1) (h), together with any out-of-state 23
travel expenses incurred in the course of an examination or audit
. The division may 24
accept an examination to the extent permitted under s. 214.725 (1) (b) and, in lieu
25of the requirement under s. 214.76 (1),
may accept all or part of an audit prepared
on behalf of the regulatory authority responsible for the supervision of the foreign 2
savings bank in the jurisdiction in which the foreign savings bank is organized.
SB475, s. 5
214.82 (1) (a) of the statutes is amended to read:
(a) The savings bank fails to produce an annual audited financial
5statement audit report
, after receiving one extension 2 requests for the report
SB475, s. 6
214.82 (1) (j) of the statutes is amended to read:
(j) The directors, officers, trustees or liquidators have neglected, 9
failed or refused to take any action that the division considers necessary for the 10
protection of the savings bank, including production of an annual
11statement audit report
after an extension was granted 2 requests were made
, have 12
continued to maintain the savings bank's books and records in an inaccurate and 13
incomplete condition for 2 consecutive quarters after 2 notices from the division or 14
have impeded or obstructed an examination.
SB475, s. 7
214.825 of the statutes is amended to read:
16214.825 Purposes of taking custody.
The purposes of taking custody of a 17
savings bank may include examination; production of an audit report or
financial statement; reconstruction of books and records; conservation of assets; 19
restoration of impaired capital; the making of any necessary or equitable 20
adjustment, including changes in officers and management, considered necessary by 21
the division under any plan of reorganization or liquidation; restructuring of the 22
savings bank through a merger or formation of an interim institution; establishment 23
of a conservatorship to operate and manage a savings bank as an ongoing concern 24
until the grounds for custody and conservatorship are remedied; or the maturing of 25
an obligation of the deposit insurance corporation.
SB475, s. 8
215.25 of the statutes is repealed and recreated to read:
2215.25 Annual audit requirement. (1)
Except as provided in sub. (2), the 3
board of directors of an association shall hire a certified public accountant licensed 4
or certified under ch. 442 or other qualified person to conduct a comprehensive 5
annual audit of the records, accounts, and affairs of the association.
The board of directors of an association may appoint an auditing committee 7
of one or more capable persons to annually audit the records, accounts, and cash of 8
the association and to verify customer accounts. Verification procedures shall be 9
conducted according to the association's auditing program or the rules of the division.
Audit reports under this section shall be submitted to the association's 11
board of directors and retained as records of the association.
SB475, s. 9
215.33 (4) of the statutes is amended to read:
215.33 (4) Examination and audit of foreign associations.
Each foreign 14
association doing business in this state shall be examined by the division as provided 15
under s. 215.03, audited under s. 215.25 and assessed fees and costs as provided 16
under s. 215.02 (16), together with any out-of-state travel expenses incurred in the 17
course of the examination and audit
. However, the division may accept an 18
examination to the extent permitted under s. 215.03 (2) (b) and, in lieu of the
19requirement under s. 215.25 (1),
may accept as all or part of the audit, all or any part 20
of an audit made on behalf of the agency responsible for the supervision of the foreign 21
association in the jurisdiction in which the association is organized.
(1) This act first applies to audits commenced on the effective date of this 24
This act takes effect on the first day of the 4th month beginning after 2