My feeling is that since we set a fairly high standard for our borrowers, we should set the same kind of standards for ourselves in terms of independently approved financial statements.
For that reason, I'm in favor of having prepared financial statements reviewed by independent accounting firms.
I think it can be done without a high cost. Auditors are always willing to adjust their fees accordingly for small banks. They don't have to be charging an arm and a leg for a $20 million bank.
It sends the wrong message to the public, I think, if we are not willing to be audited by an outsider. I think it's a trust issue.
I think it is a necessary cost of doing business, but it is a significant expense for a small bank.
There are several reasons why I think annual audits should be done. Even in the absence of regulation most banks would and do have outside audits.
It is inconceivable to me that a director of a bank facing the legal liability that they do would operate without an outside audit.
Also, the idea of exempting small banks is illogical because the small bank is less likely to have a capable internal audit function.
I think there is some legitimate concern about posing excessive costs on [community] institutions because those institutions are so small.
I think we have to pay some sort of attention to the size of the institution. Audits by and large are not inexpensive, especially for smaller institutions where every dollar does count.
I would be much more concerned if the regulators said we are going to ignore the books of the institution. Certainly, the regulatory authorities should check the books of the depository institutions on a fairly regular basis.