Audit Committee Charter

GLEN BURNIE BANCORP
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS CHARTER

AUDIT COMMITTEE MISSION

The Audit Committee is appointed by the Board of Directors to assist the Board in fulfilling its oversight responsibilities. The Audit Committee’s primary duties and responsibilities are to:

  • Monitor the integrity of the Company’s financial reporting process and systems of internal controls regarding finance, accounting and regulatory compliance.
  • Monitor the independence and performance of the Company’s independent auditors and internal auditing department.
  • Provide an avenue of communication among the independent auditors, management, the internal auditing department, and the Board of Directors.

To effectively perform his or her role, each Committee member will obtain an understanding of the detailed responsibilities of Committee membership.

AUDIT COMMITTEE ORGANIZATION

The Audit Committee shall be comprised of three or more directors as determined by the Board. The members of the Audit Committee shall be outside directors, the majority of whom shall be independent of management of the Bank. One of the members shall be designated as “The Chair”. Each member of the committee shall be financially literate, as such qualification is interpreted by the Board in its business judgment.

The Committee will meet as needed, or at least quarterly, with the authority to convene additional meetings as circumstances require. All Committee members are expected to attend each meeting. Committee members are paid a fee as determined by the Board of Directors for each meeting attended, with fees paid for one excused absence annually. The Committee will invite members of management, auditors or others to attend meetings and provide pertinent information, as necessary. The Committee may, in its discretion, hold private meetings with auditors (see below) and executive sessions. Meeting agendas will be prepared in advance, along with appropriate briefing materials. Minutes will be prepared.

The Committee believes that the above mission statement sets forth its primary roles and responsibilities. In that connection, the following is meant to serve as a guide in achieving that mission.

ROLES AND RESPONSIBILITIES

Financial Statement Review Procedures

1.  Discuss the annual audited financial statements with management and the external auditors:

  • Review significant accounting and reporting issues, as presented by the independent accounting firm and understand their impact on the financial statements.
  • Review analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements.
  • Review with management and the external auditors the results of the audit, including any difficulties encountered. This review will include any restrictions on the scope of the independent auditor’s activities or on access to requested information, and any significant disagreements with management.
  • Review reports regarding any potential deficiencies in the design or operation of internal controls or any fraud that involves management or other employees who have a significant role in the Company’s internal controls.
  • Ensure that the Committee and the Bank’s audit partners have unrestricted access to information provided by management to ensure the Company’s audit partners are able to perform a comprehensive review and for allocating sufficient time to ensure the review can be performed in a timely manner.

2.  Review the adequacy of the company’s internal controls.

3.  In consultation with management, independent accountants, and internal auditors, consider the integrity of the Corporation’s financial reporting processes and controls. Discuss significant financial risk exposures and steps taken by management to monitor, control, and report such exposures.

4.  Review significant findings prepared by the independent accountants and the internal auditors together with management’s responses. Confirm that management has implemented internal control recommendations made by internal auditors and independent accountants, if any.

5.  The Committee’s job is one of oversight as set forth in this Audit Charter. It is not the duty of the Committee to prepare the Company’s financial statements, to plan or conduct audits, or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. The Company’s management is responsible for preparing the Company’s financial statements and for maintaining internal control, and the independent auditors are responsible for auditing the financial statements.

6.  In performing their duties and responsibilities, Committee members are entitled to rely in good faith on information, opinions, reports or statements prepared or presented by:

  • One or more Officers or employees of the company whom the Committee members reasonably believe to be reliable and competent in the matters presented;
  • Counsel, independent auditors, or other persons as to matters which the Committee members reasonably believe to be within the professional or expert competence of such person; or
  • Another committee of the Board as to matters within its designated authority which committee the Committee members reasonably believe to merit confidence.

Independent Accountants

1.  The independent accountants are ultimately accountable to the Audit Committee and the Board of Directors. The Audit Committee shall review the independence and performance of the accountants and shall be directly responsible for the appointment and compensation for the independent accountants and any discharge of the independent accountants when circumstances warrant.

2.  Review and discuss with the independent accountants and management, as may be required by law or regulation (1) all critical accounting policies and practices to be used, (2) all alternative treatments of financial information within GAAP that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent accountant, and (3) other material written communications between the independent accountant and management, such as any management letter or schedule of unadjusted differences.

3.  Obtain from the independent accountants their required annual communication to the Audit Committee in satisfaction of applicable audit standards regarding communication with the Audit Committee. Ensure confirmation from the outside auditors  a statement delineating all relationships between the auditor and the Company, actively engage in a dialogue with the auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the auditor and take, or recommend that the full board take, appropriate action to oversee the independence of the outside auditors.

4.  Review and pre-approve all audit and permitted non-audit services provided by the independent accountants. The Chair of the Committee has the authority to grant pre-approvals for certain permitted non-audit services to the extent permitted by law. All pre-approvals granted by the Chair of the Committee shall be presented to and reviewed by the full committee at its next regularly scheduled meeting.

5.  Resolve any financial reporting disagreements between the independent accountants and management.

 

Review and pre-approve all audit and permitted non-audit services provided by the independent accountants. The Chair of the Committee has the authority to grant preapprovals for certain permitted non-audit services to the extent permitted by law. All preapprovals granted by the Chair of the Committee shall be presented to and reviewed by the full committee at its next regularly scheduled meeting.

Resolve any financial reporting disagreements between the independent accountants and management.

Internal Auditors

1.  Review the Internal Audit Risk Assessment and Audit Plan developed by the internal auditors.

2.  Meet quarterly, or as needed, with the internal auditors to gain an understanding of the effectiveness of the internal audit function. These meetings will also serve in evaluating their performance.

3.  Review significant reports prepared by the internal auditors together with management’s response and follow-up to these reports.

4.  The Audit Committee may contract for internal audit services as necessary to assess the adequacy and effectiveness of internal controls, the accuracy of management reporting and compliance with laws, regulations and bank policy. The Audit Committee will set forth the
outsourcing vendor’s responsibilities in a written contract the terms of which comply with the “Interagency Policy Statement of Internal Audit and Internal Audit Outsourcing.”

Compliance with Laws and Regulations

1.  Receive updates from management and compliance auditors regarding compliance with laws and regulations.

2.  Review the findings of any examination by regulatory agencies such as the Federal Reserve, FDIC, or State of Maryland.

3.  Review Management’s response to regulatory examinations.

Other Committee Responsibilities

1.  Review the Audit Charter annually and submit proposed amendments, if any, to the Board of Directors for review and approval.

2.  Perform other oversight functions as requested by the Board of Directors. Further, the Audit Committee shall have the power to conduct or authorize investigations into any matters within the committee’s scope of responsibilities.

3.  The Audit Committee has the authority to engage independent counsel and other advisors, as they determine necessary to carry out their duties, and to obtain appropriate funding, as determined by the Audit Committee, for compensating such advisors, for compensating the independent accountants for their audit services and for ordinary administrative expenses necessary or appropriate in the carrying out of the committee’s duties.

4.  Maintain minutes of meetings and periodically report to the Board of Directors on significant results of the activities.

5.  Meet as needed with the internal auditors, the independent accountants, and management in separate executive sessions to discuss any matters that the committee or these groups believe should be discussed privately with the audit committee.

6.  Report Audit Committee actions to the Board of Directors with such recommendations, as the Audit Committee may deem appropriate. This includes significant delinquencies and uncorrected audit program deficiencies. Such deficiencies will be reported to the Board of Directors promptly and the full Board of Directors will determine the appropriate escalation and remediation of issues.

7.  Review, at least annually, the Allowance for Credit Losses (ACL) or CECL methodology employed by the Corporation.

8.  Establish procedures for the receipt, retainment and treatment of complaints received regarding accounting, internal accounting controls, or auditing matters. Such procedures shall have provisions designed to protect the confidentiality of any anonymous complaints from the employees of the Company or its subsidiary regarding such matters.

Approved by Audit Committee: March 16, 2026
Approved by Board of Directors: April 16, 2026