OIG suggests audit changes in G.I.C. FCU review

  • Bookmark and Share
  • RSS Feed
  • Email a friend
  • Print this page
Dec. 9, 2013 – The NCUA Office of Inspector General issued a material loss review that says the agency could have done more to prevent the 2012 failure of G.I.C. FCU in Euclid, Ohio, and suggests going to Congress if needed to get additional authority to access credit union audit papers.

The OIG attributes the G.I.C. FCU’s failure to “questionable” integrity on the part of the credit union’s senior management, which it said overstated total assets by $8.1 million in a potential case of fraud. The OIG also faulted the lack of oversight from the credit union’s supervisory committee and board of directors, which led to three audits going uncompleted. As a result, the OIG made recommendations to NCUA about how such auditing oversights can be avoided in the future through more aggressive supervision.

The OIG recommended the agency “reinforce documentation, communication, and follow up procedures required for incomplete or otherwise unacceptable external auditor reports to ensure appropriate visibility for follow up and escalation of administrative remedies if the issues are not resolved.” NCUA management responded that corrective action had already been taken through the implementation of Chapter 5 of the National Supervision Policy Manual dealing with audits, recordkeeping and fraud.

The OIG reiterated that the policies should be reinforced, and it recommended requiring examiners to get audit reports directly from independent auditors rather than through credit union management. NCUA management responded that it “does not believe the auditor has a legal obligation to share their audit report with NCUA as a condition of share insurance, and therefore cannot compel the auditor to provide NCUA with a copy of the report directly.”

The OIG approved of management’s suggestion of consulting with the agency’s Office of General Counsel on the matter. It also suggested that if obtaining the report directly is not within the agency’s legal authority, it should seek to change the situation through NCUA Board action or by asking Congress to alter the Federal Credit Union Act.

Related Links:
NCUA OIG material loss review