Credit unions will be able to submit comments to their federal regulator until April 26 on a set of proposed revisions to the agency’s supervisory committee audit rules, according to a notice slated for publication Monday in the Federal Register.
Last updated in July 1999, the rules outline options for a federally insured credit union (FICU) to comply with the annual audit requirement if it has elected not to voluntarily obtain a financial statement audit.
The proposal for comment, issued by the National Credit Union Administration (NCUA) Board Feb. 14, is out for comment for 60 days after its publication in the Register. It would do the following:
- Minimum audit procedures: The proposal would replace the option to perform an audit according to the Supervisory Committee Guide with the option to meet certain minimum requirements as provided in a new Appendix A to the supervisory committee audit regulation. The minimum procedures outlined in Appendix A reflect common industry practices for testing accounts and controls over financial institution financial statements. The NCUA Board also plans to decommission the Supervisory Committee Guide. NCUA would instead issue reference material on how to conduct procedures that would meet Appendix A’s minimum requirements.
- Report on examination of internal controls: The proposal eliminates this option, which NCUA says was only used by 20 credit unions as of last September.
- Timeframe for auditor report: The proposed rule eliminates a requirement that an auditor engagement letter specify a 120-day timeframe for delivery of the written report. The proposal eliminates the 120-day timeframe and allows the credit union to negotiate a target date as long as that target date allows the credit union to satisfy its annual audit requirement. (This also eliminates the need to get a waiver from the NCUA regional director in the event the prescribed timeframe were to be exceeded.)
The board is seeking comments on other areas that could be improved. For example, input is also sought on whether the agency should also remove the balance sheet audit as an option for credit unions not required to obtain a financial statement audit. NCUA says this option is used by fewer than 100 credit unions and has limited value, as it does not include an audit of the credit union’s income statement.
Reg lookup: Supervisory Committee Audits and Verifications
RR article: Credit union audit rules would be more flexible under NCUA proposal (Feb. 14, 2019)