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Washington
eBanking Letter To CUs Is Coming: NCUA
WASHINGTON (3/28/13)--During a National Credit Union Administration webinar Wednesday that, in part, focused on concerns about the operational risks triggered by new technology, the agency's deputy director of the Office of Examination and Insurance said credit unions can expect a Letter to Credit Unions within the next few months that will address "eBanking."

The agency's Tim Segerson also said the NCUA is training its examiners in coming weeks on an "eBanking area work program," and that credit unions should expect examiners to integrate this into their examinations starting in the second half of 2013.

In response to a question at the end of the program,  Segerson said that credit unions that have their exams before examiners receive training on the developing topic will not have a special supervisory contact; the eBanking questionnaire will be used during regular examinations.

Another operational risk Segerson focused on involved fraud.  He said that the vast majority of National Credit Union Share Insurance Fund losses in relationship to the size of a credit union have to do with fraud losses through traditional lines of businesses of the credit union.  He cited the following "fraud hot spots":

  • Poor accounting controls/un-reconciled books;
  • Fictitious and fraudulent loans;
  • Un-cleared overdrafts;
  • Dormant/inactive share accounts;
  • Unrecorded shares (money "deposited," but never recorded); and
  • False expenditures.
On another exam topic, the NCUA OEI deputy director warned credit unions to expect examiners this year to more closely scrutinize the credit union's audit process to make sure that there is a "quality audit."

He noted that when the NCUA moved to a risk-focused exam program about 10 years ago, the agency decided to rely on the outside audits.  Now the agency will be taking a closer look to assure a credit union is relying on, and that management is responding to, points raised in the audit, especially with any findings and comments on the credit union's internal controls.

For more on the NCUA webinar, CUNA-member credit unions can use the resource link below to access a report on CompBlog.
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