WORKING ON WORK PLANS

Supervisory Committee Work Plans

“The better the planning, the better the result!”

• Work plans provide an organized, systematic process

• Enhanced Documentation for Regulator Oversight

Supervisory Committee Work Plans

Questions:

• How many have a work plan?

• How many utilize internal auditors or other employees to help fulfill audits?

Supervisory Committee Work Plans

Plan Considerations:

• How much volunteer time does the Committee have?

• Is there an Internal auditor

• Utilize employees

– Process owners?

• What are risks facing the Credit Union?

• Results of examinations and audits• What procedures has the Committee performed in the

past?

• Credit – nonpayment – ALLL – TDRs -Delinquency

• Compliance – (noncompliance with laws and regulations)

• Liquidity – (insufficient cash resources)

• Interest rates – (loss due to changes in interest rates)

• Strategic – (poor business decisions)

• Transaction – (transactions are not processed completely or accurately)

• Reputation – (loss of credibility or standing)

Risk Categories for Credit Unions

2013 NCUA Supervisory Focus – 13-CU-01

• Operational Risk– Technology (controls over adopting new technology – remote

deposit, mobile banking, social media, on-line banking)– Internal Controls

• Balance Sheet Management– Interest Rate and Liquidity Risk (contingency funding)– Concentration Risk– Less Established Products (expertise and risk management)

• NCUA – Clarity– Member Business Lending– Credit Ratings (assessment of securities and money market)– Troubled Debt Restructures

Typical Supervisory Committee Procedures

• New member eligibility verification• Verify new loans with members

Thank you letters• Employee account review• Review dormant accounts• Closed accounts

Typical Supervisory Committee Procedures

• Surprise cash counts – teller controls• Annual testing of market values of investments to an

independent source – Part 703 of Rules and Regulations

• Review of bank account reconciliations• Review of Risk Assessments – Entity Level, Security

Program, IT

• Loan reviews System reports Utilize internal employees for increased knowledge

• Review charged-off loans

• Review ALLL – perform validation

• Oversee Internal Audit and the internal audit plan

• Engage and monitor results of external auditors

• Follow up on findings from audits/exams

Typical Supervisory Committee Procedures

Typical Supervisory Committee Procedures

• Expense account review

• Review file maintenance reports

• Review new products

• Review financial results/ financial statements

• Talk with auditor on critical areas you would like

addressed

Considerations for Work Plans

• Consider utilizing management to perform

procedures with Committee oversight

Public institutions utilize process owners

Consider whether they have influence over the

control

• Spend time with management personnel to

understand processes before you test

Very important to understand it first

Considerations for Work Plans

• Document results of the work performed

• Evaluate the quality of testing from the number of items

tested

• Look for “systematic” problems when evaluating errors

• Maintain minutes and report to the Board

Considerations for Work Plans

• We have included basic sample work plans in your manual on the usb drive

Includes sample testing forms for numerous areas

Considerations for Work Plans

• We have included basic sample work plans in your manual on the usb drive

Includes sample testing forms for numerous areas

Questions

Scott Ewing, Credit Union ConsultantMoss Adams LLPscott.ewing@mossadams.com