When do I have to have my annual audit?
Posted by Ms. Cheryl Ehmann, Supervisory Committee Annual Reviews AVP, Credit Union Resources, Inc on 4/17/2015

When do I have to have my annual audit?

The answer is – it depends! 

Every credit union is required to have an annual review of their books and records.  Because the word “audit” is a technical term with a specific meaning for CPAs – that is, it is only used if an opinion is issued – in this article we will use the term Supervisory Committee Annual Review for what most people consider to be an audit.  Only credit unions with assets equal to or greater than $500 million must have a certified or opinion audit; therefore, the term Supervisory Committee Annual Review will most likely apply to most people reading this blog.

Part 715.5 of the NCUA Rules and Regulations states that a federally insured credit union must obtain an annual Supervisory Committee audit as prescribed in Part 715.7 of the Rules and Regulations.  (This section of the regulations details the three types of audits that are acceptable.)  The key word is annual.  This means once a year.  The regulation does not state every 12 months.  We interpret this to mean that if a credit union has a review performed in 2014 and again in 2015 they would be in compliance with the regulations because a review was performed annually even if they were not performed with the same month-end. 

Arkansas does not have a specific state requirement separate from NCUA requirements; however, the Oklahoma Banking Department and the Texas Credit Union Department do.  Title 6, Chapter 2, Section 2010.D.2 of the Oklahoma Statutes and Title 7, Part 6, Section 91.516 of the Texas Administrative Code also require an annual review to be performed.  Again, only the word “annual” is used – a number of months is not specified.

Management of most credit unions prefer to keep a consistent review period; for instance, if the effective date of the review was March 31 last year they would like an effective date of March 31 this year as well; however, this is not required by the regulation.  Management may also prefer a year-end cutoff because their credit union operates on a calendar year for a fiscal year; however, this is also not required.  December 31 is the most requested review date, and it is just physically impossible to complete all reviews as of December 31.  Sometimes audit firms will offer a discount to clients willing to take a review date in their slowest time of year – normally around July or August.

With this being said, if you are planning to extend your review date this year, it would be a good idea to be proactive and contact your examiner first to ensure they will not have an issue with the prospective review date.  In most cases, as long as all months are covered in the review and there are no gaps, they will not have a problem with it, especially if the review period is 18 months or less.

Categories: Financial & Auditing
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