OIG finds NCUA effective in budgeting exam hours, provides some comparisons with banking regulator

A 2021 study shows the federal credit union regulatory agency budgeted much fewer examination hours for supervised credit unions than the federal bank deposit insurer did for supervised banks in the periods covered, according to an inspector general report from June posted online recently.

The National Credit Union Administration (NCUA) Office of Inspector General (OIG) referenced and discussed the study as it reported on the OIG’s own scrutiny of the effectiveness of the NCUA’s scheduling of examination hours. The OIG’s testing of examination hours showed just a 2.2% difference in 2023 between budgeted hours and actual hours expended. In brief, the OIG deemed the NCUA effective in budgeting examination hours and ensuring proper regulatory safeguards.

The 2021 study noted above compared the average number of examination hours the FDIC used from 2018-2020 to the average number of examination hours the NCUA budgeted for 2022. The study, which the OIG said was conducted by the NCUA’s examination and insurance office, detailed numerous differences between bank operations and credit union operations, between how the two agencies log their examiner hours, and between processes each uses for allocating resources. Where the FDIC uses a “top-down” process when allocating resources, the NCUA uses a “bottom-up” process, in which “NCUA examiners and [supervisory examiners] establish the number of examination hours budgeted for each credit union to be examined in the coming cycle.

“We have concluded that NCUA was effective in establishing examination hours and would not recommend changing its approach,” it stated.

Audit of the NCUA’s Examination Hours (Report #OIG-24-07), June 18, 2024

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