BankAudit.net : Audit Committee Member

external audits


	Dear Audit Committee Member - Answer This!

Would the following scenarios normally cause the Audit Committee, Auditor and Board to worry about overstatement or understatement of earnings?

	Overstatement	Understatement	Not Sure
Bank is struggling to comply with Capital Ratios
Management's bonus is based on net income
Bank is an "S" corporation and cares little about GAAP earnings
Bank is having a terrible year, far worse than expected
Bank is under intense budget pressures
Bank has easily exceeded this year's budget
New senior management takes over 6 months into the year
Private company wants to go public in a few years (or is preparing to request new financing)
Bank is owned and managed by a family and has excellent Capital Ratios
A de novo Bank in operation for two years, which projected a profit in year 3

These type questions should be asked continuously by any Audit Committee.

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