Arizona Laws 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 deputy director to determine whether the bank, savings and loan association or trust company is complying with this article and the rules of the deputy director. The deputy director by rule may provide the periods of time and the manner in which such books, accounts and records shall be preserved.
Terms Used In Arizona Laws 6-859
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Bank: means a corporation that holds a banking permit issued pursuant to chapter 2 of this title. See Arizona Laws 6-101
- Contingency plan: means a document stating a trust company's means of conducting business and preserving records in the event of any power outage, flood or other physical emergency. See Arizona Laws 6-851
- Deputy director: means the deputy director of the financial institutions division of the department. See Arizona Laws 6-101
- Embezzlement: In most states, embezzlement is defined as theft/larceny of assets (money or property) by a person in a position of trust or responsibility over those assets. Embezzlement typically occurs in the employment and corporate settings. Source: OCC
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Forgery: The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. Source: OCC
- Fraud: Intentional deception resulting in injury to another.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Person: includes a corporation, company, partnership, firm, association or society, as well as a natural person. See Arizona Laws 1-215
- Trust business: means the holding out by a person to the public at large by advertising, solicitation or other means that the person is available to act as a fiduciary in this state and accepting and undertaking to perform the duties as such a fiduciary in the regular course of business. See Arizona Laws 6-851
- Trust company: means a corporation holding a certificate issued under this article. See Arizona Laws 6-851
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 deputy director 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 deputy director 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 $500,000.
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 deputy director.
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.