Posted by Steve Gibbs, CUCE, BSACS, AVP Shared Compliance, Credit Union Resources, Inc on 9/20/2017

Let’s face it, the onslaught of regulatory compliance changes and additions are out there like a field of land mines just waiting to be stepped on.  We soldier on, trying to pretend they aren’t there but knowing the risk of hitting one could be the end of our credit unions and even our careers.  What we need is a map, a GPS, or some kind of “compass” to navigate us through the dangerous and often confusing regulatory landscape.  The following are some simple and very general  guideposts to keep you on the “safe” path and away from those things that could ultimately “blow-up” in your face.

Plot a Safe Course:  We all have a strategic plan that keeps us moving forward with actions necessary to meet our goals.  What we need to remember is that our industry is constantly changing with new technologies and products being rapidly introduced.  There are always regulatory ramifications with any new product or service.  For example, what regulation/regulations govern this item? Should periodic risk assessments or audits be performed? Are there mandatory training/certification requirements that must be upheld?  Will we need new or expanded policies or procedures to implement this? In short, the Risk/Compliance Officer should be the final stop in preparing a safe passage for any product or service that is introduced to members. 

Know the Landscape:  Most credit unions are regulated by appointed authorities in their home states or  by the National Credit Union Administration (NCUA), if federally chartered.  Credit unions should remember that although the newly created Consumer Financial Protection Bureau (CFPB) doesn’t directly regulate them, it still has authority over regulations once governed by the Federal Reserve Board.  We are subject to many of these regulations, therefore there is an effect every time they alter or introduce regulations. Additionally, there are rules like Telephone Consumer Protection Act (TCPA) and ADA Web Site Accessibility.  Although most credit unions have not been subject to these, from a risk perspective, we have to understand them as they generate class action suits. 

Be Prepared: Regulatory changes are frequent and, in some cases, time consuming.  Many of us can’t afford an individual, dedicated Risk/Compliance Officer.  In some cases, duties can be shared by two or more members of staff (as long as they are well documented and specified for each person).  Outsourcing is another alternative for cost-effective regulatory and compliance solutions for those who can’t afford the extra employee.  In addition, staff training is always an effective use of time and resources.  A well-trained staff can sometimes fill in gaps when staff are missing or absent and ultimately save money through understanding  and reducing the potential of what might be costly regulatory violations.

Maintain Control – No Coasting:  It’s so easy to let things go when you have a good exam or audit.  We have to consider that there are only a limited number of items that can be reviewed within the set times allotted for examiners and auditors.  The key here is to keep those items that have been already looked at on the radar while continuing to scrutinize areas that could be the next focus of these groups.  This can only be accomplished through diligent research and review of trends and issues in trade periodicals, newspapers, white papers, industry internet sites and communication with state and federal advocacy representatives.  That’s why it’s always better to have more than one person (even consider a Risk Management/Compliance Committee made up of specific officers) to be on the lookout for relevant items and issues.  

In short, know the road that you travel on.  Put experienced Risk/Compliance professionals in the “driver’s seat” and keep your eyes to the horizon for new rules and changes to laws and regulations. If you need further assistance contact Steve Gibbs, AVP, Shared Compliance Resources at (office) 800-442-5762, or (cell) 214-402-7640.


Categories: Compliance
Posted by Ms. Cheryl Ehmann, AVP Staff Analyst, Credit Union Resources, Inc on 9/15/2017

On July 24, my blog introduced two key types of Supervisory Committee Annual Reviews that I would like to expand upon further here today.

Many firms offer different levels of service – Credit Union Resources is no exception.  We offer two types of Supervisory Committee Annual Reviews.  I will go into detail on these different services here.  I realize not everyone reading this blog will use us for this service, but the key take-away here is to read the engagement letters carefully to know exactly what you are getting.

Our full scope review basically involves a review of an approximately 40-page internal control questionnaire, a review of all outstanding loans to officials, employees and family members, a review of a selection of member loans, a review of various loan exception reports and file maintenance reports, a review of every balance sheet account with an outstanding balance as of the review date, a review of overdrawn and dormant member accounts, testing of income and expense, a review of Board of Directors’ minutes, and a review of bond and fire and hazard insurance coverage.  This is an extremely thorough approach, and has enabled us to help many credit unions with issues they didn’t even know they had.

However, with the lagging revenues many credit unions are experiencing, many are hesitant to pay the fees it takes to support such a thorough review.  If the Supervisory Committee is not aware of any issues, they often would prefer a more general and less expensive review.

One thing the Supervisory Committee often does not realize is that any steps not performed by the external review team fall back on them.  They are responsible for ensuring that all areas of credit union operations are reviewed.  If the Committee does not have much time or is not familiar with the operations of a financial institution, it may be worth the extra money to have the more thorough review.  The increase in fees is often small when compared to the extra time and effort the Committee would need to put in themselves.

Our minimum procedures review includes only the steps outlined in the NCUA Supervisory Committee Guide as evidence of an acceptable review.  This means the following is omitted:

  • A full review of official, employee and family loans.  Instead of reviewing all of these loans outstanding, we will make a selection of between three to 10 loans.
  • Review of lending exception reports.
  • A full internal control review.  These questions are limited to the eight areas noted in the Guide.
  • A full general ledger account review.  Areas not reviewed include prepaid expenses, fixed assets and accrued expenses.  A selection of receivable and payable accounts will be reviewed rather than all accounts.  A selection of cash and investment accounts will be tested and confirmed rather than all accounts.
  • Income and expenses are not tested.
  • Only three months of Board of Directors’ meeting minutes are reviewed.
  • No review of bond or fire and hazard insurance coverage.

As you can see there is a big difference between the work performed in these two types of engagements.   The minimum procedures engagement places much more responsibility on the Supervisory Committee.  However, we do know that credit unions’ revenue margins are being squeezed now more than ever, so we also offer a combination engagement.

A combination engagement is a multiple year engagement (usually three or five years), with alternating procedures each year.  For example, in a three year engagement, the first and third years would be minimum procedures, while the middle year would be full scope.

This is important because although having a minimum procedures engagement performed in any particular year might not be so risky, having nothing but minimum procedures performed year after year could leave a lot of areas untested and rife for problems.

The engagement letter you receive from your firm should address exactly what procedures will be performed.  Be sure to read this thoroughly to ensure you are performing your fiduciary duty!



Categories: Financial & Auditing
Posted by Jason Sandler, Principal, OneDigital on 9/14/2017

On a daily basis, I’m wowed by the attitude, energy and passion that I see in our team here at OneDigital. It’s a reminder of how far we’ve come together and the exciting path we have in front of us. I never want to take this gift for granted, and I’m reminded of this unique culture on a regular basis.

Visitors at our Dallas office ALWAYS say they are astounded by the positive energy that comes from our people.  I see this same spark in our corporate office in Atlanta and when visiting other offices throughout the country.  I appreciate being a part of a great organization.

Today, I’d like to encourage you to be appreciative of your team, your peers, your manager, your employees and whoever else you come across.  It takes a village for us all to be successful and every individual contributes to the whole. Please take the time to recognize that and say thank you. You’d be surprised by how much a small gesture or a few words can positively impact someone’s day.  

On Fire. I read recently “To live a radically inspired life, you must choose to go All In each day with a purpose greater than yourself”.  At OneDigital, we definitely practice this and it’s one of our important principles in the Digital Way.   One of our executives often says that we need to be intentional and purposeful in our culture. We’ve built a company where this happens naturally, but it helps to have a reminder and make gratitude a part of our daily routine. 

My attempt to share an uplifting message without mentioning Harvey and Irma was almost successful, but I wanted to share the following brief story.  But first, my thoughts and prayers go out to all the great people who have been impacted as they work to rebuild their homes, lives and themselves. 

A colleague of mine in the Houston area was fortunate and had very minimal flooding to their home.  A week and half ago, he and his son and the rest of their baseball team went to an area in Houston that received significant damage to their homes and community.  The team went door by door to offer assistance to anyone that needed it.  They successfully help many families move damaged furniture, knocked down drywall, and anything else these families needed.  At the end of a long day, the team and parents were all exhausted and huddled together talking about the day and what they experienced. 

The overall message that was shared with me, how appreciative all of them were that they and their families were not impacted to the levels that this neighborhood and many others that were destroyed.   The part of the story that hit home for me, was when my colleague shared a message from one of the 14 year old boys, ‘I feel terrible for all of these families who houses and things have been destroyed and we are sitting around here with minimal impacts to our homes.  I now understand why our homes were protected during these floods. Someone was looking out for our team, because they knew we would be out here helping build back the community’.  Words from a 14 year old boy, how awesome is that?  I am sure all of us can share story after story about coming together and the support from around the world and country. 

So please join me in Being Appreciative.

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