The NCUA promised enhanced examination planning procedures and scheduling changes for 2017, and outlined those changes in a letter to credit unions (16-CU-12) sent in the final days of 2016. The extended examination cycle applies to federal credit unions and federally insured state-chartered credit unions that meet certain eligibility requirements.
For federal credit unions, an extended examination cycle will begin between 14 and 20 months from the prior examination completion date, as long as the credit union meets all 5 five eligibility requirements.
Those requirements are:
- Assets less than $1 billion;
- CAMEL code 1 or 2, in both the composite rating and the management component rating;
- “Well capitalized” under prompt corrective action (PCA) regulations;
- No outstanding documents of resolution (DOR) items related to significant record keeping deficiencies; and
- Not operating under a formal or informal enforcement or administrative order, such as a cease and desist order, letter of understanding and agreement, preliminary warning letter, or a PCA directive.
Examinations will occur between 8 and 12 months from the prior examination completion date for federal credit unions that do not meet all of the requirements.
According to the NCUA, it anticipates a full transition to the extended examination cycle within the next 2 years.
Federally insured state-chartered credit unions meeting any one of the following criteria will receive NCUA exams that will begin between 8 and 12 months from the prior examination completion date:
- Assets greater than $1 billion;
- Composite NCUA CAMEL code 4 or 5 with assets greater than $50 million; or
- Composite NCUA CAMEL code 3 with assets greater than $250 million.
All other federally insured state-chartered credit unions will receive an NCUA examination based on risk, but no less frequently than once every five years.
The NCUA will implement the following improvements to examination procedures in 2017:
- Providing credit unions with at least 4 weeks advanced notice when scheduling the examination (unless concerns related to the credit union warrant shorter or no notice, which would require NCUA management prior approval to waive the 4-week advance notice requirement);
- Improving coordination of document requests tailored to a credit union’s risk profile and product offerings; and
- Separating and emphasizing pre-examination planning and scoping from the beginning of onsite examination work.
In addition to CompBlog, CUNA’s Compliance Community contains discussion boards and a number of other resources for credit union compliance professionals around the country.
Source: CUNA News Now
