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NCUA Examiniation Emphasis For 2013

In a recent NCUA webinar, titled Examination Focus for 2013, the administration discussed a movement towards a greater emphasis on operational and balance sheet risk for 2013 credit union examinations. Starting in 2013, examiners will be looking at new technology, including on-line banking, remote deposit capture, mobile banking and social media to determine a credit union’s ability to manage operational issues.

A letter to credit unions will be issued by NCUA in the next few months regarding EBanking. Currently, examiners are in the process of training, as EBanking will be incorporated into the examinations beginning in the second half of 2013.

Another area of risk discussed in this webinar was the issue of fraud. It was indicated examiners will closely scrutinize credit unions’ audit processes to make sure a ‘quality audit’ exists. Examiners will now be taking a closer look to ensure the credit union is relying on and management is responding to comments raised during the audit, especially regarding internal controls.

The following are some fraud hot spots:

  • Poor accounting controls/un-reconciled books Fictitious and fraudulent loans
  • Un-cleared overdrafts
  • Dormant/inactive share accounts
  • Unrecorded shares (money “deposited,” but never recorded)
  • False expenditures

With regard to balance sheet risk, examiners will be expected to evaluate policies, procedures, decision and internal controls. Examiners will also ensure the credit union can support their assumptions and has been tested and validated on these assumptions. Lastly, they will also be looking for strong liquidity management.

In 2013, to enhance clarity, NCUA will be issuing guidance on:

  • Member Business Lending (MBL) Waivers
  • Alternatives to Credit Ratings
  • Additional Guidance on Troubled Debt Restructurings (TDR’s)
  • Gary Condit
  • Director, Assurance & Business Advisory Services
  • (614) 947-5272