Compliance Question of the Week

What are the ways a Supervisory Committee can verify accounts and passbooks?

Account verification is simply a means of requesting that members respond to the credit union if the activity or balance on their statements is not accurate. Account verification—sometimes called a confirmation—applies to all types of share, share draft, and share certificate accounts as well as loan accounts.

Verification must be done both of accounts that are currently outstanding and of accounts that have closed since the last account verification. Regulators strongly recommend that credit unions complete the verification of closed accounts on a more timely basis than a two-year account verification cycle, such as by doing a mailing quarterly to all the people who closed their accounts in the prior three months.

The National Credit Union Administration’s (NCUA’s) Rules and Regulations [Section 715.8(b)] allow three methods for verifying accounts:

  • Controlled verification – this includes 100 percent of members’ share and loan accounts.
  • Statistical method – this includes a sampling that provides for one of the following alternatives: random sampling; a sample which is representative of the population from which it was selected (an equal chance of selecting each in the population); and sufficient accounts in both number and scope on which to base conclusions concerning management’s financial-reporting objectives.
  • Nonstatistical method – this is a sampling that can only be done by an independent certified public accountant (CPA), choosing sampling methods consistent with generally accepted auditing standards (GAAS), with documentation recorded and available to the NCUA upon request.

ORS 723.322 allows two methods for verifying accounts:

  • A controlled verification of 100 percent of members’ share and loan accounts; or
  • A controlled random statistical sampling method in accordance with rules that the director may prescribe.

Washington State credit unions are granted parity with the federal credit unions for the supervisory committees and outside audits.

Related Links

12 CFR 715.8
ORS 723.322

DCU letter 97-3

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance.