Banks and Financial Institutions

Plain English Breakdown

Checked against official source text during the last sync.

Annual Audits for State-Chartered Banks

This bill requires state-chartered banks in Tennessee to get an annual audit of their financial statements and report certain information to the commissioner.

What This Bill Does

• Requires state-chartered banks to have a yearly audit by an independent certified public accountant at intervals no longer than 15 months, unless included in a holding company's consolidated financial statements.
• Needs bank boards to review and discuss the audit results and record them in meeting minutes.
• Requires banks to give the commissioner of financial institutions a copy of their external audit within 45 days after receiving it.
• Banks must tell the commissioner when they hire, change, or end relationships with independent public accountants.

Who It Names or Affects

• State-chartered banks in Tennessee
• Independent certified public accountants who do audits for these banks

Terms To Know

holding company

A company that owns or controls another company, often called a subsidiary.

consolidated financial statements

Financial reports that combine the finances of a parent company and its subsidiaries into one set of documents.

Limits and Unknowns

• The bill does not specify what happens if banks do not follow these rules.
• It is unclear how this will affect smaller or newer banks compared to larger established ones.

Official Summary Text

Abstract summarizes the bill.

Current Bill Text

HOUSE BILL 109
By Lamberth

SENATE BILL 1280
By Johnson

SB1280
000179
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 45,
relative to financial institutions.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 45-2-402, is amended by deleting
subsection (c) and substituting instead the following:
(c) All Tennessee state-chartered banks shall obtain an annual audit of their
financial statements by an independent certified public accountant at least once in each
calendar year at intervals of no more than fifteen (15) months, unless the bank's financial
statements are included in the audit of its holding company's consolidated financial
statements. The board shall review and discuss the audit and record such in the
minutes. Each bank shall provide to the commissioner a copy of the independent
external audit, including any management letters, within forty-five (45) days of receiving
the external audit, and shall promptly notify the commissioner when any independent
public accountant is initially engaged to perform external auditing work, or when a
change in, or termination of, the bank's independent accountant occurs.
SECTION 2. This act takes effect upon becoming law, the public welfare requiring it.