The NCUA has released their Supervisory Focus Letter for 2013. Headlining the letter are concerns by the NCUA about information security and fraud detection. Prior to an examination, management and the board of directors should review controls in CU*BASE regarding employee security, online banking security, and abnormal activity monitoring.
In addition, the NCUA still has concerns regarding liquidity and concentration risk. If the Central Liquidity Facility was the credit union’s primary source of contingent funds and the credit union has not yet re-established a “reliable contingency funding arrangement” now is the time to do so! CU*Answers has tools in CU*BASE to allow your team to do a quick review of loan/share balances, contingent liabilities, and investment activity. CU*Answers has extensive new tools for credit unions to configure and manage concentration risk as well.
The NCUA has a new Supervision Policy Manual for 2013. AuditLink is in the process of reviewing the manual and will publish our findings shortly. Note that the NCUA has a major initiative to improve consistency for all exams going forward, so use that to your advantage. The NCUA spent $2.4 million on development and training of examiners in 2012, and much of those funds centered around the new Supervision Manual. Be sure to challenge the examiners on inconsistent findings or findings that are not supported by the evidence. Credit unions will have the ability to contact supervisory examiners through CU Online.
AuditLink offers several services to assist credit unions. AuditLink has programs to assist with compliance, fraud detection and concentration risk. In addition, AuditLink is offering a new consulting service to help credit unions before, during, and after the examination. Please contact Jim Vilker, Marsha Sapino, or Patrick Sickels for more information on how we can help.