6-859

6-859. Records; audits; preservation of records;
protection; insurance; bond; contingency plan

A. A bank, savings and loan association or trust company shall keep and use in its
business any books, accounts and records which will enable the superintendent to
determine whether the bank, savings and loan association or trust company is complying
with the provisions of this article and the rules of the superintendent. The
superintendent by rule may provide the periods of time and the manner in which such
books, accounts and records shall be preserved.

B. A certified public accountant shall audit the corporate records and trust
business of each trust company at least once each fiscal year. The trust company shall
file a copy of the audit report with the superintendent not more than one hundred twenty
days after the end of the trust company's fiscal year. The audit requirement may be
satisfied by filing a copy of the audit report of the parent of the trust company if the
audit report is prepared by a certified public accountant and includes a detailed
examination of the trust company's assets and liabilities and trust business. If the
trust company shows good cause the superintendent may extend the time to file the audit
report by not more than ninety days.

C. The audit shall include an examination of the trust company's internal control
structure over the financial reporting and accounting of the trust business plus any
reportable conditions of the trust company's internal control structure. For purposes of
this subsection, "reportable conditions" means significant deficiencies in the design or
operation of the internal control structure that would adversely affect the trust
company's ability to perform its business activities and carry out its fiduciary duties
and responsibilities consistent with the safe, sound and lawful operation of the trust
business.

D. The board of directors of a trust company shall require protection and indemnity
for the trust company, pursuant to section 6-868, against dishonesty, fraud, defalcation,
forgery, theft, embezzlement, and other similar insurable losses, with corporate
insurance or surety companies authorized to do business in this state. Coverage against
such losses shall include all agents who do not otherwise provide protection and
indemnity for the trust company, directors, officers and employees of the trust
company acting independently or in collusion or combination with any person or persons
whether or not they draw salary or compensation.

E. The board of directors shall require suitable insurance to protect the trust
company against burglary, robbery, theft and other insurable hazards to which it may be
exposed in the operation of the business.

F. The board of directors shall procure errors and omissions insurance of at least
five hundred thousand dollars.

G. At least once each year the board of directors shall review the fidelity bond
and the errors and omissions insurance to determine the adequacy of coverage in relation
to the exposure. The minimum amount of insurance required in this chapter does not
automatically represent adequate bond and insurance coverage in relation to the
exposure. The actions by the board of directors shall be recorded in the minutes of the
board. Immediately after procuring the bonds, the board of directors shall file them
with the superintendent.

H. The board of directors and senior management shall:

1. Establish policies, procedures and responsibilities for comprehensive
contingency planning.

2. Annually review and approve the trust company's contingency plans and record the
actions in the minutes of the board of directors.

I. If the trust company receives information processing from a service bureau the
board of directors and senior management shall:

1. Evaluate the adequacy of contingency plans for its service bureau.

2. Ensure that the trust company's contingency plan is compatible with its service
bureau's plan.