NCUA Office of Inspector General Reports
Posted by Anthony Demangone
The Office of Inspector General (OIG) promotes the economy, efficiency and effectiveness of NCUA programs and operations, and detects and deters fraud, waste and abuse, thereby supporting NCUAâÂÂs mission of monitoring and promoting safe and sound federally insured credit unions. The OIG conducts independent audits, investigations and other activities, and keeps the NCUA Board and U.S. Congress fully and currently informed of their work.
The office does a number of things, but what has caught my attention recently, are their Material Loss Reviews. After a credit union goes down, the office sometimes writes a report detailing what went wrong.  The report addresses perceived weaknesses at the credit union and NCUA.Â
- Learn from the mistakes of others. Â These reports generally show that the affected credit union didn't have a strong handle on risk management. Â Concentration risk. Â Credit risk. Â Liquidity risk. Â And in each case, the report alleges inadequate internal controls. Â I'd glance through the executive summary (at least) of each to see if the failed credit union had characteristics or products similar to your credit union. Â For example, Cal State 9 got into hot water with HELOCs and loan participations. Center Valley FCU had weak internal controls that did not find embezzlement.Â
- Review the criticisms of NCUA.  Each report looks at what NCUA did wrong as well.  Go to school on this.  If someone issued a public report highlighting what your credit union employees did wrong, what would happen next?  I bet most of you would have a meeting where someone (high up) would as the following question:: What are we going to do to make sure this does not happen again?  I would expect NCUA to do the same.  So, if NCUA misjudged a credit union's internal controls or risk management capabilities, I bet they instruct those examiners to turn up the heat the next time out.  That's just my hunch. That's what I would do.
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