Regulators aim to simplify audits for small credit unions

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The National Credit Union Administration’s board approved publication of a proposed rule that promises to simplify supervisory audit requirements for smaller credit unions during a brief meeting Thursday at its Alexandria, Va., headquarters.

The board was also briefed during its regular monthly meeting about a final interagency rule that requires federally insured credit unions to accept certain private flood insurance policies, in addition to those issued by the National Flood Insurance Program.

Thursday’s action gives parties interested in the supervisory audit rule 60 days from its publication in the Federal Register to comment. Briefly put, the proposed rule creates a streamlined appendix outlining the minimum procedures small credit unions must follow in conducting annual audits.

Current audit standards are included in a supervisory committee guide, which is more than 350 pages long. In 2017, NCUA’s Regulatory Reform Task Force identified the guide as “overly specific, burdensome and outdated,” according to the proposed rule. Per the new appendix, small credit unions would be required to test and confirm material asset and liability accounts, review key internal controls, and test the accuracy of its allowance for loan and lease losses, delinquency reporting and charge-offs.

Credit unions with assets of $500 million or more are required to obtain an annual independent audit performed in accordance with generally accepted auditing standards.

The interagency flood insurance rule, which was also approved by the Office of the Comptroller of the Currency, Federal Reserve, Federal Deposit Insurance Corp. and Farm Credit Agency, requires federally insured credit unions to accept private flood insurance policies that meet the standards imposed by the 2012 Biggert-Waters Act. It also provides institutions with the discretion to accept some policies issued by mutual aid societies that don’t meet statutory minimum standards.

Neither Chairman J. Mark McWatters nor board member Rick Metsger commented on either agenda item. McWatters, however, said he was optimistic the Senate would act promptly on the nominations of Rodney Hood and Todd M. Harper to the board, adding he “looked forward to serving” with both. Harper and Hood appeared before the Senate for a confirmation hearing on Thursday.

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Audits Flood insurance Regulatory reform Mark McWatters NCUA
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