what’s my role? areti moularas, senior manager the material appearing in this presentation is for...
TRANSCRIPT
WHAT’S MY ROLE?
Areti Moularas, Senior Manager
The material appearing in this presentation is for informational purposes
only and should not be construed as advice of any kind, including, without
limitation, legal, accounting, or investment advice. This information is not
intended to create, and receipt does not constitute, a legal relationship,
including, but not limited to, an accountant-client relationship. Although
this information may have been prepared by professionals, it should not
be used as a substitute for professional services. If legal, accounting,
investment, or other professional advice is required, the services of a
professional should be sought.
Where Are Duties Promulgated?
• Federal Credit Union Bylaws
• Federal Credit Union Act
• Part 715 – NCUA Rules and Regulations “Supervisory Committee Audits and Verifications”
Number of Committee Members
• The number of members is determined by the Board of Directors
• Minimum number of members is THREE. The maximum is FIVE.
Terms of Service
• The term is determined by the Board
• The terms are one, two, or three years
• All terms must be for the same period
• Terms should be staggered to provide continuity of the committee
• Regular terms expire after the first Board meeting after the annual meeting
• Committee members select a Chairperson and Secretary
• Chairperson and Secretary may be the same person
• The Secretary must maintain a record of actions taken by the committee
• Minutes of meetings should be kept and summarize procedures performed
• Credit Union information is confidential
Committee Leadership
Who Can Be on The Committee?
• Must be a member of the Credit Union
• Must be bondable by the Surety
• Employees and members of the Credit Committee are not eligible to be members
Goals of the Supervisory Committee
The Supervisory Committee has two general goals:
1. Management’s financial reporting objectives have been met
2. Management's practices and procedures safeguard members’ assets
To Meet These Goals
• The Committee is responsible for determining: Management has established and maintained effective
internal controls. Management promptly prepares accounting records and
financial reports to accurately reflect operating results. Management properly administered the relevant plans,
policies, and control procedures established by the Board. Management has established policies and control
procedures that safeguard against error, conflict of interest, self dealing, and fraud.
• Generally, these determinations are made through conducting audits and verifications.
Actions of the Supervisory Committee
• Audit – Once a calendar year, the Committee must have an audit completed
• At least once every two years, your Committee must perform a member verification
California State Chartered CU is required annually
• Your Committee must ensure that the Board is safeguarding assets and that management complies with their policies and plans
• The Supervisory Committee must report to members at the annual meeting
Actions of the Supervisory Committee• Suspend, by unanimous vote, any Board Member, Executive
Officer, or Credit Committee member. Need to call a special meeting within 14 days to act on
the suspension Individual suspended must be given an opportunity to
present a defense• The Committee may call a special meeting to consider a
violation of the following: Federal Credit Union Act Rules and Regulations Charter Bylaws Any practice considered unsafe or unauthorized
Responsibilities In Summary
Responsibilities are to ensure the policies and control procedures are sufficient to safeguard against error, conflict of interest, self dealing, and fraud.
Expectations of the Regulator
• An Active Supervisory Committee
Familiar with the FCU Act, Bylaws, and Rules and Regulations
Understanding of accounting, auditing, and internal controls
Coordinates annual audit and member account verification
Development of an audit plan tailored to your credit union
Types of Audits
• Supervisory Committee Audit (agreed-upon procedures)
• Balance sheet audit
• Full opinion audit
• Report on internal controls related to the preparation of the call report
Supervisory Committee Audit
• NCUA has detailed minimum procedures
• These are MINIMUMS - Consider additional procedures
• Sample methods and size need to be considered
• Coordination of verification of accounts
• Supervisory Committee is responsible for an effective audit, and must be in charge of the audit process
Sign engagement letter, select auditor, report from auditor
•Highest level of audit coverage
•Higher costs due to:
Risk Assessment Standards Preparation of financial statements and other related
reports More audit procedures More professional standards, which require more
procedures, tests, and documentation
Opinion Audits
• Methodology
Controlled Verification of 100% of member accounts
Statistical Method
Non-statistical Method – Option under an Opinion Audito If performed by one independent person licensed by the
stateo Sufficient accounts in both scope and numbero Additional procedures to be performed if confirmation
evidence is not alone sufficient o Documentation of the sampling procedures used and their
consistency with GAAS
Member Account Verifications Part 715.8
• Easiest and most efficient – 100% member statement message
• Statement Message “America’s Best Credit Union’s Supervisory Committee has
engaged Moss Adams LLP CPAs to conduct a verification of member accounts. As a part of the verification, please review your account information on this enclosed statement, and should there be any difference, please provide a written response indicating the difference to Moss Adams LLP at Address, Seattle, WA 99XXX.”
Member Account Verifications Part 715.8
• Other Considerations
Focus on completeness of membership population
Consideration of no-mail accounts
o Print suppressed
Consideration of E-statement accounts
Reconciliation of population of number of members to the number of statements issued
Control over “non-deliverable” mail returned statements
• Retain documentation until the next verification is complete
Member Account Verifications Part 715.8
• The Committee should perform the following tasks:
Follow-up on weaknesses or issues identified in audits or examinations and then monitor resolution
Review internal controls
Work with internal and external auditors
Meeting with examiners
Research member complaints
Complete other recommended procedures
Supervisory Committee Tasks
• Documentation of Committee Work Hold regular Supervisory Committee meetings Document meeting and work performed in minutes Follow your work plan and document when it varies When performing testing in your plan, document what was
tested and the results Report results of audit and Committee work to the Board Discuss findings with management, for resolution of findings
o Failure of staff to follow plans, policies and procedures established by the Board
o Insufficient policies and or procedures
Supervisory Committee Work Documentation
• The SC engages in an open transparent relationship with the chief audit executive (generally internal auditor)
• The SC reviews and approves the internal audit charter annually
• As a result of the discussions with the CAE, the SC has a clear understanding of the strengths and weaknesses of the credit union’s internal control and risk management systems
The Oversight Checklist
• Internal audit activity is sufficiently resourced with competent objective professionals to carry out the audit plan, which has been reviewed and approved by the Supervisory Committee
• Internal audit activity is empowered to be independent by its appropriate reporting relationships to executive management and the Supervisory Committee
The Oversight Checklist
• The SC addresses with the CAE all issues related to internal audit independence and objectivity
• The internal audit activity is quality oriented and has in place a Quality Assurance and Improvement Program
• The SC meets regularly with the CEO about the performance and improvement of the CAE and the internal audit activity
The Oversight Checklist
• Internal audit reports are actionable and audit recommendations are successfully implemented by management
• The Supervisory Committee meets periodically with the CAE without the presence of management
The Oversight Checklist
