ALEXANDRIA, Va. (11/4/13)--The National Credit Union Administration could strengthen its documenting of National Credit Union Share Insurance Fund (NCUSIF) estimated losses for specific credit union failures, according to a new report from the NCUA Office of the Inspector General (OIG).
OIG initiated the review to determine the agency's methodology for identifying and tracking credit union failures and losses to the NCUSIF. OIG analyzed losses and failures at the time of occurrence, at year-end, and for the period ending July 31, 2012. The scope of the review covered all failures occurring during calendar year 2011 and from Jan. 1 through July 31, 2012.
According to the report, the NCUA's offices of Examination and Insurance, Chief Financial Officer and Asset Management and Assistance Center each documented different estimated NCUSIF loss amounts throughout the year. OIG, however, determined these differences are mostly attributable to timing differences and new information that is continually received, which causes the estimated NCUSIF loss amounts to frequently change.
OIG also found that various NCUA offices do not always document NCUSIF loss activity in a timely manner. Regional and central offices document losses into independent, nonintegrated systems. Ultimately, the various offices ensure that the estimated NCUSIF loss amounts agree at year-end for financial statement reporting, OIG said.
The OIG made several suggestions, including strengthening the NCUA's ability to capture basic credit union failure data. This should help eliminate discrepancies between NCUA's regional and central offices, OIG said.
Three specific recommendation made by the report are:
- Revise internal procedures;
- Conduct a feasibility study; and
- Develop an agency-wide definition for credit union failure.
"Although the report does not contain any egregious problems in NCUA's accounting and reporting for failures, we urge the agency to adopt the measures outlined in the report," CUNA Deputy General Counsel Mary Dunn said. "We do remain concerned whenever the agency uses different standards and definitions for any process or requirement," she added.
For the full NCUA OIG report, use the resource link.