In this issue…
- Forum’20 Sneak Peek
- Ready. Set. PRINT!
- New NCUA Audit Rule Clarifies and Simplifies the Audit Process
- Business Lending Bootcamp at VolCorp
New NCUA Audit Rule Clarifies and Simplifies the Audit Process
By Phil Reynolds, CPA, CIA, CISA, (Internal Auditor at VolCorp)
As you may know, in September 2019 the National Credit Union Administration approved a rule amending Part 715 of its regulations that govern the audit responsibilities of a federally insured credit union. The new rule makes three major changes:
- Modifies the audit engagement alternatives for those credit unions that don’t have to obtain a financial statement audit. A credit union which is not required to obtain a financial statement audit may fulfill its supervisory committee audit requirements by utilizing the Other Supervisory Committee Audit option. Such an audit is now one that satisfies the minimum requirements prescribed in the newly simplified Appendix A of §715.7 of NCUA’s regulations.
- Replaces the NCUA Supervisory Committee Audit Guide with Appendix A as referenced above. Under this new rule, credit unions and their auditors will now only need to refer to the new Appendix A in determining their minimum audit procedure requirements. The previous, now decommissioned NCUA Supervisory Committee Audit Guide was over 350 pages, overly specific, burdensome, and outdated. The new audit guide can be found on the NCUA’s website here.
- Eliminates the 120-day written audit report timeline delivery date and now provides the credit union with the ability to negotiate that date with the person or firm it contracts with, and still meet the audit requirements as articulated in §715.4 of the NCUA’s regulations:
|Type of charter||Asset size||Minimum audit required to fulfill supervisory committee audit responsibility 1||Part 715 section|
|Federal Charter||$500 Million or more||Financial statement audit per GAAS by independent, State-licensed person||715.5|
|Less than $500 Million but greater than $10 Million||Either financial statement audit or other supervisory committee audit|
|$10 Million or less||Supervisory committee audit.|
|State Charter||$500 Million or more||Financial statement audit per GAAS by independent, State licensed person||715.6|
|Less than $500 Million||Supervisory committee audit unless audit prescribed by State law is more stringent|
|1 The Supervisory Committee audit responsibility under this part can always be fulfilled by obtaining a financial statement audit.|