Credit union audit manual

This guide outlines the procedures for a federally insured credit union to apply for a prompt corrective action risk-mitigation credit under the NCUA's Rules and Regulations.

This guide instructs federally insured credit unions that are not required to obtain a financial statement audit with information to help fulfill their supervisory committee responsibility by obtaining an Other Supervisory Committee Audit.

All financial institutions operating in the United States, including insured banks, savings associations, and credit unions, among others, are required to submit suspicious activity reports to FinCEN if they discover activity involving potential money laundering or violations of the Bank Secrecy Act. This letter is used to inform government officials and private businesses about the tax-exempt status of federal credit unions.

Manuals and Guides. Asset Valuation Workbook This work provides information that a credit union can use to evaluate its interest-rate risk levels. The retail price does not and will not include shipping and handling. Subscriber are advised of the number of updates that were made to the particular Publication the prior year.

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Each audit program is presented with an overview section to introduce and explain the major components of the audit, followed by detailed checklists and a questionnaire to help gather necessary information before the audit. The Internal Auditing Manual for Credit Unions also helps you identify and address areas of risk before they become a problem. Periodic updates help you modify and update your internal audit programs as laws, regulations, and best practices change.

We even show you how to test your internal controls and document their effectiveness for your next exam! Click here for more information about LexisNexis eBooks. Joy B. Boone is a bank compliance professional, specializing in compliance program management.

She has held the positions of Senior Vice President and Director of Compliance for several large and mid-sized regional financial institutions and was an owner of Braasch and Blackstock, a bank compliance consulting firm.

She enjoys running and traveling; her favorite experience was teaching for two years in the business department of LCC International University in Klaipeda, Lithuania. Internal Auditing Manual for Credit Unions delivers internal audit plans, procedures, and checklists. Boone Author. Publisher: LexisNexis Sheshunoff. Select a format. Print Book. Investments in mutual funds are reviewed to determine compliance with state and federal regulations as well as the adequacy of investment policies, procedures, and controls.

Browsers that can not handle javascript will not be able to access some features of this site. Some functions of this site are disabled for browsers blocking jQuery. Sign up for email from DIFS. Controls must be in place to mitigate risk within the credit union and safeguard credit union assets. The contracts should evaluate financial impact, ensure independence, ensure legal and compliance risk is mitigated and the contract represents a sound business decision.

Sales activities for nondeposit investment products should ensure that members are clearly and fully informed of the nature and risks associated with these products. This includes any arrangement in which an employee receives future economic benefits, including health care, life insurance, disability income replacement plans and retirement plans. These arrangements may be qualified or nonqualified retirement plans under the Internal Revenue Code, including those fully or partially funded by the credit union.

The board and management must have clear understanding of the associated risks, and satisfactory risk management tools in place which are functioning soundly. The organization and accuracy of accounting is a very strong indicator of management effectiveness. All aspects of the program should align and adhere to the policy. Proper documentation should be maintained to support corporate credit card expenses. The ALLL should be reviewed to ensure compliance with state and federal regulations and that the account is adequately funded.

Methodology for the determining the required balance in the account must be consistently applied and regularly reviewed. Call reports are to be filed quarterly. This includes: Consumer and Real Estate Loan Agreements Member Business Loan Agreements and Covenants Contracts with third parties to perform lending services Consumer Lending Examiners must determine the overall level of risk in the consumer loan portfolio, the potential impact to the financial condition, and ascertain compliance with state and federal regulations.

The real estate lending program must include an appropriate real estate appraisal and evaluation program and provide an effective and reliable method of determining the value of collateral securing real estate loans. Management must be knowledgeable about the requirements of construction lending and establish acceptable limits to mitigate credit and concentration risks.

Examiners must evaluate Courtesy Pay programs to determine the amount of risk present, compliance with state and federal regulations and the type of monitoring management completes to mitigate risk. Examiners must ensure that obligations meet the requirements of the MCUA, bylaws and lending policies as established by the Board.

Examiners must evaluate the levels of risk in the indirect loan portfolio, determine if this level of risk is acceptable and determine whether management has sufficient controls in place to mitigate the risk. Examiners must ensure management complies with the requirements of state and federal regulations. Management must have appropriate controls in place to monitor and mitigate risk s and ensure the level of risk remains acceptable for the credit union. Management and the Board of Directors must understand the risks of business lending.

Management and staff must have appropriate experience, expertise and resources to ensure compliance with policy, procedure, and regulation. Risk management systems must be comprehensive and ongoing and review of business loans must be completed on a regular basis. Credit and collateral risk may vary depending on the controls the Board of Directors and management have established to govern loan extensions and modifications.

Compliance with applicable state and federal regulations and guidelines in policies and procedures will also be reviewed. The adequacy of policies, procedures, and controls will be reviewed to determine if proper rick assessment and due diligence was performed in implementing any loan workout program.

Management infrastructure to identify, control, and manage any loan workout activity as well as the experience and training for individuals involved in this program will be evaluated. The effectiveness of loan collection procedures as well as proper accounting and reporting of workout loans and TDRs will evaluated.

All reporting guidelines, supervisory guidance and adherence to statutory, regulatory and internal rules, regulations and internal lending limits will be evaluated. Management must demonstrate sufficient expertise to manage risks while balancing safety, liquidity, and yield.

Government and Related Securities Investments in federal agency and U. Procedures to measure interest rate risk, liquidity risk, concentration rick, strategic risk and reputation risk are also reviewed. Policies and procedures must be appropriate for individual credit union operations.

These controls should include identifying the existence of cash flow demands and measuring the extent of those demands, processes to identify emerging liquidity demands and ensuring corrective measures are in place to minimize liquidity risk and disruption of member services Concentration Risk Examiners must evaluate all measures, policies, and procedures credit union officials have in place to identify, measure, monitor, and control concentration risk.

Examiners must ensure concentration risk is managed in conjunction with credit, interest rate and liquidity risks; as a negative event in any category may have significant consequences on the other areas, as well as strategic and reputation risks. Examiners should evaluate industry accepted security standard practices and guidelines and their integration with the institution's operations and environment. Without appropriate information security controls and oversight, management places consumers' personally identifiable information at risk, which in return, places the institution's reputation at risk.

Since information technology is integrated throughout operations, numerous inherent risks exist which impact institutions.