Ask Chuck: Small Credit Union Advice from the CUinsight Community #6

Chuck Cockburn travels across the United States coaching small and mid-size credit union CEOs on how to create a foundation for long-term success. Submit your confidential question to Chuck by emailing AskChuck@CUinsight.com.

Dear Chuck:

We’ve uncovered a potential fraud at our credit union and don’t yet know the extent of the fraud. Who should I inform? What information do I share? What do I say to the employee?

Signed,

CEO and Potential Fraud Victim ($10 million in assets)

Dear CEO and Potential Fraud Victim,

When there is evidence of potential fraud there needs to be an immediate investigation conducted by the internal auditor or the most knowledgeable manager of that area of operation.

Whoever is assigned as the investigator must be competent, independent and not involved in the potential fraud. Throughout the investigation and afterwards, as few employees as possible should be informed or involved. The investigation should be thorough but completed as soon as possible.

In some situations, it is important to remove the person suspected of fraud from their responsibilities until the investigation is completed. At some point during the investigation the employee involved should be interviewed. Nothing should be shared with them unless it is critical to the investigation.

If you determine a fraud has been committed, all aspects of the situation and investigation should be reported to the supervisory committee, board of directors and bonding company. Also, the examiners should be informed when the fraud is of a significant nature to your credit union.

Chuck is the President of Credit Union Strategic Planning, leading the Net Worth Restoration, Field of Membership Expansion, Board Governance and Small Credit Union CEO Mentorship Programs. Chuck’s 25-year CEO track record (and 40 in the business) has been to profitably grow credit unions while significantly improving service and morale. Chuck’s coaching resulted in eight prior direct reports becoming credit union CEOs.