examination & supervision 2012 update chairman's statements on supervision “ncua will not...
TRANSCRIPT
Examination & Supervision2012 Update
Chairman's Statements on Supervision
“NCUA will not sacrifice safety and soundness as we work to help the credit
union industry recover in the coming years.”
January 2011
“NCUA will remain focused on due diligence and risk management…NCUA will continue to encourage responsible
lending.” January 2012
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
Today’s Topics
• National Supervision Policy Manual
• Examination Questionnaires
• Credit Union Online (NCUA 5300)
• NCUA Assessments
• Fraud Risk Indicators in Credit Unions
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
National Supervision Policy Manual Implementation Timeline
• Field use began January 2012
• Examiner training - pilotJanuary through June 2012
• Agency-wide policyMid-year 2012
National Supervision Policy Manual Table of Contents
District Management
FCU Program and
Procedures
FISCU Program and
Procedures
Quality Assurance Program
Audits Recordkeeping
Fraud
WaiversOther Regulatory
Actions
Credit Union Service
OrganizationsSmall Credit
Union Program
Bank Secrecy Act
Enforcement
Prompt Corrective
Action
Administrative Remedies
2012 Examination ScopeMinimum Review Requirements
Resolution of Prior DOR Items
Loans - Concentrations, High Risk, Insider, Extensions, Share
Concentrations = in relation to Assets and NW
Allowance For Loan and Lease Losses
SC Activities, Audit (Audit Work Papers)
File Maintenance Reports
Bank and Corporate Account Reconciliations (Testing)
Strategic, Business, and Marketing Plans
2012 Examination ScopeRequired Questionnaires
BSA – Bank Secrecy Act * Loan – Participation Loans IC – Financial Triggers
Loan – Flood Act * Loan - Controls IC – Cash *
5300 Review * Loan – Real Estate – IC Red Flag Questionnaire *
SC Audit and Verification * Loan – Indirect Lending – IC Foreclosure Procedures
Interest Rate Risk – A Loan – Sub-Prime – IC Third Party Relationships
Interest Rate Risk – B Loan – Home Equity– IC Credit CARD Act
Interest Rate Risk – C Loan – Business Loans– IC SAFE Act
Interest Rate Risk – D Loan – SBA– Parts I and II
Liquidity – A Share – Controls IT - Website and E-banking *
Liquidity – B Share – Internal Controls IT - FFIEC Authentication *
Liquidity – C Third Party RelationshipsUnlawful Internet Gambling Enforcement Act 2006 (UIGEA)Investment Controls (New) IC – Lines of Credit
Examination Questionnaires
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
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ExaminationQuestionnaires
(full screen shot of web page)
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Examination Questionnaires Demonstration
15
Microsoft Office Excel 97-2003 Worksheet
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
CU Online – Version 2• User Interface updated• Security improvements• View only screens display all checkboxes• Programs/Services categorized like the paper
formNew
Version
CurrentVersion
CU Online – Version 2• Profile Certification
Required quarterly to submit Call ReportCertify 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
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
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
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.
CU Online – Version 2Current Version – CU Online Version 2 – CU Online
Profile Changes:
Inability to print profile easily Profile PDF on demand
Merger Partner Registry on General Tab MPR on its own tab
Part 748 Certification on General Tab Part 748 on Regulatory Tab
Call Report Changes:
Must click “Save” for calculations and edits to refresh
Refresh during data entry
December 1990 – June 2009- no profile fields on forms
All forms display profile fields
No easy way to print warnings Ability to export to PDF or Microsoft Excel
CU Online – Version 2
• Request FPR button moved– Used to obtain a 20
page FPR on a submitted or validated Call Report
Current Version
New Version
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
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
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)
Assessments - Perception
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
Troubled CU Shares to Total Insured Shares 2006 – 2011
31
Credit Union Failures2002 - 2011
2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
5
10
15
20
25
30
1513
21
1516
12
18
28 28
16
Assessments - Future
Fraud
• Credit Unions are experiencing higher losses due to fraud
• Do you have a Fraud and Ethics Policy?
Fraud Failure Statistics 2004 - 2010
13 Fraud Related Credit Union Failures
Total Assets in Fraud Failures
Total Losses in Fraud Failures
Average Loss to Assets
$ 330,263,481 $ 252,641,813 76.5%
Assets Loss Loss/AssetsSmallest CU $972,266 $3,690,194 379.55%
Largest CU $247,512,380 $187,834,226 75.89%
Fraud Losses – Common TraitsCU Weak SC Limited
StaffRecords
OOBAudit / MAV
LackingManipulated
RecordsTrusted
Staff
A X X X X X X
B X X X X X XC X X X X X XD X X X X X
E X X X X X XF X X X X XG X X X X XH X X X X X XI X X X X XJ X X X X X XK X X X X XL X X X X X XM X X X X
NCUA Red Flag Questionnaire
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Microsoft Office Excel 97-2003 Worksheet