Annual Report - CoBank

Board of Directors Disclosure as of December 31, 2011CoBank, ACBCommittee ResponsibilitiesAudit CommitteeThe Audit Committee members are appointed by the Board chair in consultation with the Board officers and committee chairs.The Audit Committee is governed by a formal charter and chaired by one of the Board’s outside directors. All members of the AuditCommittee are independent of management of the Bank and any other System entity. During 2011, the Audit Committee met duringfour of the regular meetings of the Board of Directors, including regular meetings in executive session with senior management, theChief Risk Officer, the head of the Internal Audit Division, the head of the Asset Review Division, and the Bank’s independentauditors. The Audit Committee reviews and approves the quarterly and annual financial statements.Mr. Barry M. Sabloff serves as Chairman of the Audit Committee. The Board of Directors has determined that Mr. Sabloff hasthe qualifications and experience necessary to serve as an “audit committee financial expert,” as defined by the rules of the Securitiesand Exchange Commission, and he was so designated.The primary purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities by carrying out thefollowing responsibilities:(1) Overseeing management’s conduct of the Bank’s financial reporting process and systems of internal accounting andfinancial controls;(2) Monitoring the independence and performance of the Bank’s internal audit function, the risk assessment process,and the independent auditors;(3) Ensuring the Bank’s compliance with legal and regulatory requirements; and(4) Providing an avenue of communication among the outside auditors, management and the Board.Management has the primary responsibility for the consolidated financial statements and the financial reporting process, includingthe system of internal controls. The Audit Committee oversees the Bank’s independent auditors, systems of internal accounting andfinancial controls, and financial reporting process on behalf of the Board of Directors. In this regard, the Audit Committee helps toensure independence of the Bank’s independent auditors, the integrity of management and the adequacy of disclosure to shareholders.The Audit Committee has unrestricted access to representatives of the Internal Audit Division, independent auditors and financialmanagement.The Audit Committee preapproves all audit and audit-related services and permitted nonaudit services (including the fees andterms thereof) to be performed for the Bank by its independent auditors, as negotiated by management. The Audit Committee mayform and delegate authority to the chairman of the Audit Committee, or a subcommittee of the Audit Committee (consisting of one ormore members), when appropriate, including the authority to grant preapprovals of audit and permitted nonaudit services, providedthat decisions of the chairman or any subcommittee to grant preapprovals is presented to the full Audit Committee at its nextscheduled meeting.The Audit Committee reviewed the audited consolidated financial statements in the Annual Report for the year endedDecember 31, 2011, with management and the Bank’s independent auditors. The independent auditors are responsible for expressingan opinion on the conformity of the Bank’s audited consolidated financial statements with accounting principles generally accepted inthe United States of America, including a discussion of the quality of the Bank’s accounting principles, the reasonableness ofsignificant judgments, the clarity of disclosures in the consolidated financial statements and the adequacy of internal controls. TheAudit Committee discussed with the independent auditors the results of the 2011 audit and all other matters required to be discussedby Statements on Auditing Standards. In addition, the Audit Committee received, reviewed and discussed the written disclosures fromthe independent auditors required by Independence Standards Board Standard No. 1, “Independence Discussions with AuditCommittees.” Based on the review and discussions described above, the Audit Committee recommended to the Board of Directors thatthe audited consolidated financial statements be included in the Bank’s Annual Report for the year ended December 31, 2011 and forfiling with the FCA.CoBank 2011 Annual Report119