(a)

1. (1) The supervisory committee of each credit union shall make or cause to be made a minimum of two (2) audits under controlled conditions each calendar year.
2. (2) One (1) of the audits shall be a comprehensive annual audit covering the period elapsed since the last comprehensive annual audit.
3. (3) A report of each audit shall be promptly made to the board of directors of the credit union.
4. (4) If violations of the act or rules or violations of the requirements for share insurance promulgated by the National Credit Union Administration, if applicable, are found, or if the credit union is being operated in a manner which could result in suspension, liquidation, or filing of a bonding or National Credit Union Administration claim, a copy of the report shall be promptly forwarded to the State Credit Union Supervisor.
5. (5) A summary of each such report shall be submitted to the members at the annual meeting.

(b)

1. (1) The audits shall contain a one hundred percent (100%) negative confirmation under controlled conditions with the auditor retaining all returned notes, comments, and a record of incorrect addresses.
2. (2) All accounts, including share, loan, certificate of indebtedness, and any other member accounts, shall be verified.

(c)

1. (1) The supervisory committee shall be responsible for the preparation and maintenance of work papers used in the audits.
2. (2) These work papers shall be made available by the committee for review by the Credit Union Division examiners during the annual examination.

(d)

1. (1) The supervisory committee is authorized to employ an outside party to conduct the audits described in subsection (a) of this section.
2. (2) The party so employed, however, must be a person who is independent of the operation of the credit union.
3. (3) The treasurer, assistant treasurer, manager, assistant manager, or other member of the official family other than members of the supervisory committee are specifically excluded.
4. (4) Nothing in this section shall prohibit the supervisory committee from conducting the required audits.

(e)

1. (1) The supervisory committee shall conduct supplementary audits upon request of the supervisor.
2. (2) The committee also may conduct additional audits on its own initiative.