‘Trust, but verify’ in your watchdog role

It’s not enough to know employees are doing their jobs. Follow that up by documenting how they’re doing their jobs and how they’re following policies and procedures.

“The mantra for credit unions and the goal for supervisory committees is ‘we trust, but verify,’” says Stacie VanDenBerghe, CEO of the consulting firm CU Innovate.

Think about what’s in the credit union’s best interests and treat it as though it were your own business, VanDenBerghe says. Ensure the credit union has implemented appropriate policies, procedures, and internal controls, and provide oversight to ensure staff follow these to safeguard the credit union and members’ assets.

“Supervisory committees are meant to be the watchdog of the credit union,” VanDenBerghe says. Performing this role requires carrying out four key responsibilities, says Sue Landauer, a certified public accountant with Forensic Accounting Services Group LLC. 

These responsibilities are:

1. Establish and maintain internal controls to meet the credit union’s financial reporting objectives. Oversee and review the internal control system and the internal audit program and ensure your insurance coverage is adequate. Landauer also suggests performing surprise cash counts.
2. Prepare the credit union’s accounting records and financial reports to make sure they accurately reflect operations and results. Perform audits and verifications, review financial statements and reports, and analyze financial trends, Landauer says. Then, discuss the findings.
3. Ensure plans, policies, and control procedures the board establishes are properly administered. Attend monthly board meetings or review the minutes, and learn about board decisions and actions, Landauer says. Monitor the credit union’s progress on strategic goals and the board’s response to exams and audits.
4. Ensure policies and control procedures safeguard against error, conflict of interest, self-dealing, and fraud. Perform audits of employee and official accounts, and verify new loans, new accounts, and closed accounts.

Make sure the credit union implements and follows ethics and fraud policies.  Handle complaints from employees and members.

Supervisory committee members must be assertive in carrying out their role, says VanDenBerghe. They must take the initiative and educate themselves on their role and industry trends and collaborate with other parties to accomplish their tasks.

“Don’t be caught sleeping behind the wheel,” she says.

VanDenBerghe and Landauer spoke at the 2019 CUNA Supervisory Committee & Internal Audit Conference in December.

This article initially appeared in Credit Union Directors Newsletter, which provides strategic insights for board & committee members. Subscribe now to the print or PDF versions.