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Washington
Feb. NCUA Report features fraud avoidance tips
WASHINGTON (2/13/12)--A watchful eye and strong internal controls are credit unions' best defense against fraudulent activity, "while weak internal controls provide a breeding ground for substantial losses or even failure," the National Credit Union Administration (NCUA) said in a Region IV Report released last week.

The Region IV Report was released as part of the February edition of the agency's NCUA Report.

Financial fraud schemes can be particularly damaging to credit unions due to their member-owner structure, the agency noted. In the report, the NCUA warned that "recordkeeping problems, out of balance conditions, overdue audits or member account verifications, and manipulated records create a situation where fraud can "take root and go undiscovered."

A weak and/or uninvolved supervisory committee, limited staff, recordkeeping issues, and manipulated records are all common threads in fraud schemes, and many of these fraud schemes are perpetrated by trusted staff members, the NCUA said.

"Accurate and up-to-date records and audit trails" are fraud deterrents, and the agency also recommended that credit unions frequently evaluate and update their own internal controls to keep up with growth or incorporate new technology. "Once the internal control environment is assessed, then weakness can be determined and policies can be put in place for improvement," the NCUA said.

For more of this month's NCUA Report, use the resource link.
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