Source: https://nascus.org/regulatory-resources/03.20.19_summary_proposal_sup_cmte_audits.php
Timestamp: 2019-04-19 08:33:09+00:00

Document:
(a) The supervisory committee of each credit union insured pursuant to title II of the Act shall make or cause to be made an audit of the credit union at least once every calendar year covering the period elapsed since the last audit. The audit must fully meet the applicable requirements set forth in part 715 of this chapter or applicable state law, whichever requirement is more stringent.
(b) Each credit union which is insured pursuant to title II of the Act shall verify or cause to be verified, under controlled conditions, all passbooks and accounts with the records of the financial officer not less frequently than once every 2 years. The verification must fully meet the requirements set forth in §715.8 of this chapter.
NCUA’s proposed rule may be read here. The proposed rule is open for comment until April 26, 2019.
Section 202(a)(6)(A) of the FCU Act authorizes the NCUA to prescribe audit standards that require an outside, independent audit by a certified public accountant for any fiscal year for which a credit union has not conducted an annual supervisory committee audit, has not received a complete and satisfactory supervisory committee audit, or during which the credit union has experienced persistent or serious record keeping deficiencies.
Section 202(a)(6)(D) of the FCU Act requires larger FICUs having assets of $500 million or more to obtain an annual independent audit of its financial statements performed in accordance with generally accepted auditing standards (GAAS). That audit must be performed by an independent certified public accountant or licensed public accountant.
The first two options are analogous to options adopted in 1999 by the Federal Financial Institutions Examination Council for other federally insured financial institutions. The third option was clarified by NCUA in 1999 when the agency amended the Supervisory Committee Guide to detail the minimum scope and procedures for an audit distinct from a financial statement audit.
NCUA proposes eliminating references to the Supervisory Committee Guide as an audit alternative. NCUA would replace a Supervisory Committee Guide audit with an option to conduct an audit so as to meet certain minimum requirements incorporated into a proposed new Appendix A to Part 715.
In addition to the proposed changes, NCUA is seeking comment on whether other areas should be included in Appendix A such as loans to insiders, pay and benefits to employees and board members, regulatory compliance, compliance with the Bank Secrecy Act, or other topics.
NCUA proposes amending §715.9(c)(6), the provision addressing engagement letters a credit union may use to hire a compensated auditor to perform audit functions. Current NCUA rules require credit unions stipulate audit reports must be completed and delivered no later than 120 after the calendar year end for which the audit was performed.
NCUA proposes amending §715.9(c)(3), §715.9(d), and §715.9(e) to remove references to the Supervisory Committee Guide. NCUA will revoke the Supervisory Committee Guide and replace it with minimum requirements in a new Appendix A consistent with the proposed changes to §715.7(c).
NCUA will also amend §715.7 by removing a current option a credit union has to obtain “a report on examination of internal controls over call reporting” as an alternative to obtaining a financial statement audit. NCUA believes this option is of limited value and has been used by less than 1% FICUs.
NCUA seeks comment on whether it should also eliminate the “balance sheet audit” alternative. It has been the NCUA’s experience that the balance sheet audit alternative is utilized only by a small number of credit unions (approximately 2.5 percent) and provides limited value, as it does not include an audit of a credit union’s income statement.

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