Supervisory committees function well, but …

Just like CUs and their boards, supervisory committees must change with the times.

by: Michael G. Daigneault, CCD

We survey a lot of credit union board members. And generally most will say they are pretty satisfied with the job their supervisory committee is doing. In fact, of the five areas on which we survey (vision, mission and strategy; board structure and composition; fiduciary oversight; governance and leadership; and supervisory committee), fiduciary oversight and supervisory committee usually are the two highest-scoring areas.

But I’ve been troubled lately. Why? Because a good percentage of board members we interview admit that: (1) they don’t really know what their supervisory committee does; (2) if they do know what their committee does, the practices of their supervisory committee do not appear to have changed much in the last decade; and (3) almost 45 percent of board members think their supervisory committee’s analysis of the top operational and strategic risks facing their credit union are less than effective.

Notably, half of the board members at one CU client even described their supervisory committee’s oversight of the external auditor–traditionally one of the key functions of that committee–as either adequate or even ineffective.

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