Posted by Stacy Gibson, Senior Internal Audit Specialist, Credit Union Resources, Inc on 4/27/2015

Let’s bake a cake…..Internal Audit style

Have you ever been invited to a dinner party and asked to bring a cake?  If so, you may find yourself fretting over what exactly you should bake.  You know what the main course is, so you want to make sure you bake something that pairs well with the main course.  Otherwise, you may spend time and energy preparing something that will not be touched by other guests.

Now, let’s talk about how baking a cake can be applied to internal audits.  When your internal auditor walks into your credit union, they almost always ask for the policies and procedures that relate to the areas for which they will audit.  When an auditor reviews your policies and procedures, they know how you define certain departments and functions of your credit union.  They also learn the steps you take to ensure that the departments and functions are running properly and within policy and regulation guidelines.  Therefore, you can think of your policy as the description of the cake and the procedures can be viewed as the recipe.  Departments and functions do not work well without having policies and procedures in place, the same way that a cake may not taste good if the recipe is not followed.

If you had originally planned to bake a cake for 10 people at the dinner party, and learn that the number of guests will be 20, you now know that you have to adjust the recipe.  When you adjust the recipe, you are modifying the steps to bake the cake, while the flavor of the cake remains.  The same applies to policies and procedures; procedures can change more often than policies.  If a change needs to be made to a function, then the change is made in the procedures without having to modify the policy.  Therefore, not only is it a best practice, but it is also more convenient to have policies and procedures as two separate documents.

The next time an auditor asks for policies and procedures, remember they are simply trying to bake a cake internal audit style.

Categories: Compliance, Financial & Auditing
Posted by Vicky Salkeld, Vice President of Sales, Credit Union Resources, Inc on 4/24/2015

“That which does not kill us, makes us stronger.” – Friedrich Nietzsche, German philosopher

This week I had the privilege of attending the Green Country Chapter Meeting in Tulsa, OK. Amy Downs from Allegiance Credit Union in Oklahoma City was the guest speaker. She was working for the credit union (then known as the Federal Employees Credit Union) in the Alfred P. Murrah Federal Building on April 19, 1995. We all know what happened that day and have seen much of it replayed on the news this week, the 20th anniversary of this devastating event.

It started out to be a normal day at work at the credit union, but then life changed forever. Amy recalled the blast and how she initially thought she had been shot in the back of the head. She realized she had fallen three floors down when the building collapsed below her and was buried under a huge pile of debris. She stayed there for six and a half hours until rescue workers were able to free her. I can only imagine how slowly the time must have passed as she laid there injured, not knowing for sure if she would make it out alive. It would be some time before she realized exactly what had happened and that eighteen of her thirty-three coworkers and many of the credit union’s members were killed and many more were injured.

During her time in the rubble and in the following days, Amy made decisions that would change her life forever and she is a better person today because of her experience. She talked of recognizing the areas she had fallen short and vowing that, if she made it out alive, she would never be the same.

Amy talked about that day from a disaster recovery standpoint. A bomb destroying the credit union and taking the lives of half of the employees wasn’t something the management team and volunteers could have prepared for. But, once it happened, things swung into action. Nearby credit unions and credit unions around the country offered assistance. Because of the selfless actions of others, they were back in business and able to help their members; many of whose lives or family members’ lives were lost or devastated.

Amy’s inspiring story serves as a reminder for all of us.  With the right attitude, positive results can come out of the most horrible situations.  The choice is ours. Nietzsche was right. That which does not kill us, makes us stronger.

Thanks for sharing your story, Amy. I will be a better person because of it.


Categories: Education & Training, Human Resources
Posted by Mr. Richard Grady, VP Research, Cornerstone Credit Union League on 4/22/2015

Eighty years ago, shortly after the Great Depression, T.S. Eliot penned in his poem “Choruses from The Rock” these words:

“Where is the Life we have lost in living?

“Where is the wisdom we have lost in knowledge?

“Where is the knowledge we have lost in information?”

To these lines I would add the question “Where is the information we have lost in data?”

Recently I read a series of articles in a trade publication on core processing. I realized, after having spent over two decades in EDS and other technology companies, and now having spent nearly a decade and one-half outside of technology companies, that we are no further along the path of understanding how to gain wisdom out of these systems than we were in the early 1980’s. We still struggle with data and are now being asked to swallow bigger chunks of it.

The principle known as DIKW (for Data, Information, Knowledge, Wisdom) is typically graphed as a pyramid. However, my leaning is to graph it as a flowchart because of the suppressive nature the pyramid image gives me. That is, it forces the vision that one cannot achieve the next level until the first level is built. (d = data, i = information, k = knowledge, u = understanding, w = wisdom, t = tacit knowledge, and e = explicit knowledge.)

But that is not the case. The best practice is to gather what one has and act upon it, testing the results and then improving on the discoveries.

In a presentation I give often, which I loving call the “Bullet-Hole Presentation,” I impart on the audience the theory that all too often we are looking at where the bullet holes are, rather than where they are not.

We look at our membership base and make assumptions that to grow we need to gain more members. Yet we forget that numerous research pieces point to findings showing credit unions only have a 45 percent share of the collective members’ wallet. A greater share is lost to the competition.

We struggle with core processing systems and design mobile applications around teller functions. Yet we fail to realize user experience and perspective drives mobile application design.

We worry about bringing in too many deposits and the dilutive factor to our ratios. Yet we may not realize research papers indicate boomers will move large chunks of deposits into wealth management firms and financial institutions could lose large amounts of deposits overnight.

I say, move forward. Try new things. Push the limit. Read the data but do not expect to have all the answers before moving into trying and understanding. Part of the glory of failure is of knowing what not to do.

As T.S. Eliot would write near the poem's conclusion:

Out of the meaningless practical shapes of all that is living or lifeless

Joined with the artist's eye, new life, new form, new colour.

And, if all of this new creation is confusing, give me a call. We can help.

Categories: Research, Strategic Planning & Consulting
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