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May 15, 2017

NCUA updates policy on audit report access for examiners

The NCUA has updated its policies on how and when examiners will review a credit union's audit reports that are prepared by an external auditor, specifying that newly completed audits be sent directly to the examiner from the auditor.

This change affects all federally-insured credit unions.

The NCUA states that in addition to obtaining the audit report directly from the external auditor, an examiner can also obtain the information by using a secure portal or by conducting a physical inspection of the audit report at an agreed upon time and place.

During a NAFCU webcast in February, NCUA Deputy Director of the agency's Office of Examination and Insurance Tim Segerson provided credit union viewers with an in-depth analysis of what credit unions should expect during an examination and said the agency would be providing additional guidance on this process. A NAFCU Compliance Blog post in February also addressed this topic.

The NCUA noted that due to the extended examination cycles now in effect for some credit unions, examinations will no longer occur on an annual basis and so this new policy requires examiners to review a newly completed audit report as part of their offsite monitoring processes.

This new policy is also in response to a recommendation made by the NCUA's Office of Inspector General during a material loss review. The report recommended that examiners get audit reports directly from the auditors instead of credit union management "to avoid any potential manipulation."