Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

Washington
NCUA Webinar Covers Fraud Signs, Solutions
ALEXANDRIA, Va. (11/15/13)--Why credit union employees commit fraud, and how proper supervision and strong internal controls can help fight fraud were discussed during a Thursday National Credit Union Administration webinar.

The webinar, titled "Deterring Employee Fraud," featured fraud detection and prevention tips from Joni Lovingood, a senior consultant with CUNA Mutual Group, and Scott Butterfield of Your Credit Union Partner. The webinar was hosted by NCUA Office of Small Credit Unions Initiatives Economic Development Specialist Lauren Bethea.

The median loss in financial institution fraud cases is $140,000, according to an Association of Certified Fraud Examiners report.

Any credit union employee, including vice presidents, managers, collectors, data processors, tellers, loan officers and accountants, can commit an act of financial fraud, Lovingood said. Signs to look out for in the event of potential fraud include employee attitude changes and lifestyle, and spending and borrowing changes.

Credit unions can also inadvertently aid fraudsters by having inactive supervisory committees and internal auditors, performing inadequate background checks and maintaining lax internal controls.

An inactive and/or poorly trained supervisory committee, a weak internal control culture, and poor follow up of past audit findings are among the common internal control weaknesses cited by Butterfield. To remedy these issues, Butterfield suggested credit unions can:
  • Establish clear expectations for the supervisory committee and clarify the committee's audit framework, policies, protocol and audit specifications;
  • Provide risk, control and compliance training; and
  • Create an audit calendar that includes review and reporting for past audit findings.
Accountability and a system of checks and balances also can defend credit unions against employee dishonesty, Lovingood said. Surprise cash audits, loan reviews and file maintenance report reviews are among other steps credit unions can take to detect instances of fraud. And, Lovingood noted, insurance should not be a substitute for effective internal controls. The cost of insuring predictable losses will usually be more than the cost of retaining them, she emphasized.

Other tips to avoid fraud included:
  • Comprehensive audits;
  • Dual control of vaults; and
  • Frequent cash counts.
Stated credit union fraud policies can set the tone for the entire organization. CUNA Mutual Group has a sample fraud policy that can be made available to its policyholders, Lovingood said.


RSS print
News Now LiveWire
Today's #NewsNow preview of @CUNA board chair Dennis Pierce's testimony before @SenateBanking http://t.co/XgQ81Fn7wR
35 minutes ago
Fazio: @TheNCUA supports Privacy Notice Modernization Act, which allows FIs to send privacy policy notifications only when policy is changed
40 minutes ago
Fazio: Hard to give timeline for when NCUA risk-based capital rule will be finalized...I can say it's the agency's top reg. priority
43 minutes ago
(2of2) NCUA is aware of importance of scaling regulatory, supervisory and assistance prgrms to address unique circumstances of small CUs.
54 minutes ago
.@TheNCUA's Larry Fazio: W/ 1/3 of CUs having less than $10M in assets and 2/3 of CUs having less than $50M in assets...(1of2)
55 minutes ago