Compliance Blog

NCUA’s Exam Modernization Efforts

Happy Friday, compliance friends! Enjoy the last official weekend of summer, and get ready for the leaves to signal the new season. 

fall leaves

With the change in weather, NCUA is also ushering in a new season of exam procedures. Last week, NCUA hosted a webinar on the ongoing efforts to modernize examination procedures and introduce new online tools, or applications. The agency has been discussing its efforts to provide centralized access to credit union data and information and to streamline processes for both examiners and credit union professionals. In fact, the agency issued a letter to credit unions in August 2021 explaining that training would soon be offered in order to prepare examiners and credit union staff for the transition to these systems.

Each of the following tools are accessible through NCUA Connect, the agency’s log-in page and central access point for all of its online applications. NCUA Connect is currently the access point for MERIT, DEXA, CAPRIS, and the Admin Portal, but the agency anticipates adding more online applications for which NCUA Connect will also be the access point.

During the webinar, NCUA explained that beside streamlining processes, these new applications would increase the agency’s capacity for offsite work. This is especially true now that the industry is more open to the idea of offsite examinations, as evidenced by the adjustments made during the pandemic. The webinar focused on the use and features of three applications, the Admin Portal, the Data Exchange Application (DEXA), and the Modern Examination & Risk Identification Tool (MERIT).

The Admin Portal

The Admin Portal allows a credit union to delegate an administrator responsible for adding and removing users from NCUA applications, resetting passwords, and ensuring the credit union’s online accounts are up to date. In the webinar, it was explained that this would reduce the wait-time for credit union professionals attempting to gain access to the new online systems because they won’t need to wait for NCUA action every time a credit union needs to add someone. Credit union administrators can control the level of access available to different users. For example, one credit union employee may need access to all of the NCUA applications, while another employee only needs to update loan and share data to DEXA. Additionally, the administrator can remove employee access once they no longer need it, or if they leave the credit union.

The Admin Portal connects to the other applications, so the administrator can upload or download information from any of the applications, respond to or forward requests from NCUA, and complete other tasks on behalf of the credit union.

The Data Exchange Application (DEXA)

DEXA will be used by credit unions and examiners to upload, download, and review loan and share account data. Credit unions will update this data in a manner similar to updating it for purposes of completing  a call report.

NCUA has explained that DEXA’s features will allow credit union professionals to import loan and share data files, upload a mapping schema for credit union loan and share type codes, validate data prior to submitting files, and view the status of submitted files. NCUA has published a FAQ page addressing DEXA use and the switch from AIRES, which clarifies, “member loan and share download requirements remain unchanged at this time. Files that follow the schema in NCUA Letter to Credit Unions 03-CU-05 can be imported into DEXA.” NCUA also clarified that credit unions can identify their own type codes for loans and share accounts; however, they will be required to use the mapping document in DEXA, which will map that credit union’s codes to the standardized codes within DEXA.

During the webinar, NCUA explained that DEXA includes a validation process to ensure the data uploaded is complete, and shows a history of uploads so credit union professionals can determine when the data was last updated. The agency has published information about properly uploading data, including a DEXA user guide, a FAQ page on loan and share layout specifications, and a quick reference troubleshooting guide.

The Modern Examination & Risk Identification Tool (MERIT)

MERIT is replacing AIRES as the main examination platform for credit union professionals and examiners. The goal is for MERIT to be a user-friendly, secure method of sharing information, and will be a place for credit unions to “transfer files within the context of an examination, provide status updates and request due date changes on examination findings and action items, and retrieve completed examination reports.”

During the webinar, NCUA explained that examiners will request documents and information from credit unions through “surveys.” The survey tab in MERIT allows NCUA to send a questionnaire or request list and allow credit union users to complete the surveys online or upload documents requested. Credit union users assigned to complete a survey can also add other contributors to aide in completing it.

NCUA has explained that communication through MERIT will streamline and clarify the exam process and allow credit unions to stay organized when it comes to completing surveys and reviewing reports. Through MERIT, users can expect to receive a notification when exam reports are ready, and then be able to log in and download it. NCUA explained that during the exam process, credit unions will be able to delegate who should receive the notifications, and examiners will ensure these preferences are updated in the MERIT system.

NCUA has also clarified that use of MERIT may streamline dual exam processes and be used by state-level examiners. The agency noted state examiners are currently being trained to use MERIT in order to work together with NCUA examiners. This may allow for sharing of files and information and reduce the work at the credit union in completing redundant tasks for different examiners.

For credit unions that cannot or do not wish to respond to requests through MERIT, there may be flexibility in responding through traditional channels, such as calling or emailing an examiner if this is agreed to by the examiner. NCUA explains that examiners will have the ability to update tasks in MERIT to reflect that they have been completed or responded to by credit union staff, even if staff do not respond through the MERIT system.

There were plenty of things discussed in the webinar, but the final point made was that credit union professionals can anticipate more time to complete exams in MERIT. Patience and flexibility will be key as examiners and credit union staff learn how to use the new tools. Like with DEXA, the agency has published information and tools for credit union professionals looking to start using MERIT. These include a user guide, a MERIT FAQ page, and a training video.

About the Author

Loran Jackson, NCCO, Senior Regulatory Compliance Counsel, NAFCU

Loran Jackson, Regulatory Compliance Counsel

Loran Jackson joined NAFCU as Regulatory Compliance Counsel in April 2019 and was named Senior Regulatory Compliance Counsel in February 2021. In her role, she provides daily compliance assistance to member credit unions on a variety of topics. She also writes articles for NAFCU publications and presents at NAFCU conferences

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