Press
NAFCU Letter to NCUA on Examination Notification
January 31, 2013
The Honorable Deborah Matz, Chairman
The Honorable Michael Fryzel, Board Member
National Credit Union Administration
1775 Duke Street
Alexandria, VA 22314
RE: NCUA’s Examination Notification
Dear Chairman Matz and Board Member Fryzel:
On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association that exclusively represents federal credit unions, I am writing to thank you for the Supervisory Focus for 2013 letter (13-CU-01) you sent out to credit unions today. We appreciate the National Credit Union Association’s (NCUA’s) efforts on several fronts to improve transparency and clarity for examiners and credit unions. We have some additional suggestions that will help the NCUA in its stated goals to provide more clarity in guidance to examiners and credit unions and consistency in agency practices.
The first suggestion is in regard to the NCUA’s notification to credit unions prior to examination. According to the NCUA Supervision Manual, examiners are directed to “give credit union officials a minimum of five working days notice prior to starting an examination/supervision contact.” We believe this does not give credit unions enough time to properly prepare for the exam and lengthening the advanced notice would benefit both the credit union and NCUA examiners.
The Federal Deposit Insurance Corporation (FDIC) currently contacts institutions “approximately two months prior to the scheduled on-site date for the examination” for the purpose of allowing the institutions to free up staff schedules to work with examiners and collect as much information as possible prior to the in-person portion of the exam. We feel that this approach would benefit both the NCUA examiners and credit unions by giving the credit union the necessary time to prepare.
The NCUA has acknowledged that advanced notice is important when it stated in the Supervision Manual “examiners should provide as much advance notice as possible” when notifying the credit union of examination. We understand your goal of having a strong and safe credit union system given your role as regulators and insurers. With that in mind, we are not advocating for elimination of surprise exams when the Examiner-in-Charge sees fit for institutions with weak internal controls. We are asking that like the FDIC, the NCUA also require examiners to contact credit union officials two months prior to routine exams in order to minimize disruption to the credit unions and to help facilitate efficient examinations. This can be done in the pre-examination letter that examiners send through the AIRES program.
In addition, we applaud the NCUA for its commitment to provide more clarity in guidance to examiners and credit unions. To that end, the NCUA could help to clarify guidance in exams by providing a more specific checklist of things that examiners are looking for in the exam. Specificity in this area will undoubtedly lead to more efficient and better prepared credit unions before, during, and throughout the exam process.
Thank you for your continued commitment to listen to feedback and look for ways to further enhance your approach to examining and supervising federal credit unions. I look forward to hearing from you regarding this important matter. Should you have any questions or would like to discuss these issues further, Should you have any questions or concerns, please feel free to contact me at fbecker@nafcu.org or (703) 842-2215.
Sincerely,
Fred Becker, Jr.
President and CEO