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Enhancing Safety and Soundness: NCUA's 2012 Supervision Update for Credit Unions

The NCUA's 2012 update on examination and supervision provides essential guidance for ensuring safety and soundness in credit unions. This comprehensive manual includes key topics such as understanding risks, financial data accuracy, internal controls, and effective audits. It emphasizes the importance of active supervisory committees, strategic planning, and transparent communication. With thorough internal reviews and a rigorous follow-up process, this policy aims for uniform supervision across the nation, ultimately enhancing operational efficiency and risk management within credit unions.

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Enhancing Safety and Soundness: NCUA's 2012 Supervision Update for Credit Unions

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  1. Examination & Supervision 2012 Update

  2. Chairman's Statements on Supervision

  3. What is Safety and Soundness? • Management and Officials Understand Risks • Accurate and Timely Financial Data • Sound Internal Controls / Effective Audits • Active Supervisory Committee • Efficient Operations / Operating Expense Controls • Written Policies that Reflect Actual Practices • Realistic Budget and Strategic Plan • Communication and Transparency

  4. Today’s Topics • National Supervision Policy Manual • Examination Questionnaires • Credit Union Online (NCUA 5300) • NCUA Assessments • Fraud Risk Indicators in Credit Unions

  5. National Supervision Policy Manual • Two years in development • Collaborative effort by NCUA staff at all levels, all Regions • Thorough internal review and comment process • Provides for uniform supervision of CU’s nationwide • Includes more rigorous follow-up process 6

  6. National Supervision Policy Manual Implementation Timeline • Field use began January 2012 • Examiner training - pilot • January through June 2012 • Agency-wide policy • Mid-year 2012

  7. National Supervision Policy Manual Table of Contents

  8. 2012 Examination ScopeMinimum Review Requirements

  9. 2012 Examination ScopeRequired Questionnaires

  10. Examination Questionnaires

  11. Examination Questionnaires • AIRES • Automated Integrated Regulatory Examination System • All AIRES Questionnaires are posted on NCUA web site • http://www.ncua.gov/Resources/CUs/Pages/AIRES.aspx 13

  12. ExaminationQuestionnaires (full screen shot of web page) 14

  13. Examination Questionnaires Demonstration 15

  14. CU Online – Version 2 • Silverlight must be installed to access CU Online • Website to install: http://www.microsoft.com/getsilverlight/Get-Started/Install/Default.aspx • System Requirements • Windows • Operating System: Windows 7, Windows Vista; Windows XP Service Pack 3 • Intel® Pentium® III 450MHz or faster processor (or equivalent) • 128MB of RAM • Mac OS • Operating System: Apple Mac OS X 10.4.8 or above • Intel Core™ Duo 1.83GHz or faster processor • 128MB of RAM

  15. CU Online – Version 2 • User Interface updated • Security improvements • View only screens display all checkboxes • Programs/Services categorized like the paper form New Version CurrentVersion

  16. CU Online – Version 2 • Profile Certification • Required quarterly to submit Call Report • Certify Profile button appears anytime changes are made, and when quarterly certification is due • Users can make several changes to the profile and then certify • Must certify to permanently save all changes to the NCUA • Changes will be lost if the user logs off or leaves the profile area without certifying

  17. CU Online – Version 2 • Warnings in the Profile • Implemented to help improve data integrity • Warnings must be commented on prior to certification (similar to call report process) • Will not prevent profile certification

  18. CU Online – Version 2 • Profile Snapshot taken each quarter when the Call Report is submitted • Permanent record of the profile for the quarter • Ability to print as a PDF

  19. CU Online – Version 2 • Eliminated edit and delete functionality on Regulatory and IS&T pages • Can only add a date • Sections impacted: • financial statement audit, • member account verification, • annual meeting, • disaster recovery test, and • data processing conversion.

  20. CU Online – Version 2

  21. CU Online – Version 2 Current Version • Request FPR button moved • Used to obtain a 20 page FPR on a submitted or validated Call Report New Version

  22. CU Online – Version 2 • Warnings: Compares Call Report and Credit Union Profile • Warnings identify potential reporting errors • Displayed in the Call Report • Do not backdate the profile to match call report cycle date to remove the warnings • Profile should always reflect current operations

  23. CU Online – Version 2 • Added a CU Basic role • View only permissions for your credit union • Requested by CUs so they could give their Board Members access to CU Online • Optional for credit unions

  24. More Information to Come… • NCUA will host a webcast for credit unions to provide more information prior to system upgrades • Email notification of Webcast • CU Online Administrators and Users • Call Report Contact • Profile Information Contact • Organizational email of the Credit Union (IST page of profile)

  25. Assessments - Perception

  26. Assessments - Perspective "The amount of the assessments for the national share insurance fund really depends on the industry's own performance." NCUA Chairman Debbie Matz

  27. Troubled CU Shares to Total Insured Shares 2006 – 2011 31

  28. Credit Union Failures2002 - 2011

  29. Assessments - Future

  30. Fraud • Credit Unions are experiencing higher losses due to fraud • Do you have a Fraud and Ethics Policy?

  31. Fraud Failure Statistics 2004 - 2010 13 Fraud Related Credit Union Failures

  32. Fraud Losses – Common Traits

  33. NCUA Red Flag Questionnaire 37

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