1. Connecticut Directors College and Executive Forum December 8, 2016
Regulatory Responsibilities of the Credit Union Board and Supervisory Committee
Connecticut Directors College and Executive Forum
December 8, 2016

2. DISCLAIMER
The information contained in this presentation does NOT represent legal advice. It in no way is intended to represent a formal determination made by any regulatory agency on any specific matter. Issues at your credit union are fact specific and you should seek legal counsel or formal supervisory determination to guide any course of action.
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7. Working together for a safe & sound credit union
Supervisory Committee
Board of Directors
Members
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8. The Board & the Supervisory Committee
Culture of Compliance
Sound Management
Policies/Procedures
The Supervisory Committee
Annual Audit
Reconciling
Board Functioning
Philosophical/abstract
CT Common Law
CT Law/Regulation
NCUA Regulation
© 2009 NASCUS. All rights reserved.

9. The Supervisory Committee
CT Sec. 36a-451a. Supervisory committee. Members. Powers. Duties.
“Oversee” Board/management
Annual audit
Evaluate internal controls/policies/procedures to ensure they safeguard against error, carelessness, conflict of interest, self dealing, and fraud
Removal of directors or management for cause
Membership (state law) – not less than 3 members, only 1 of which may be a director, and none may serve on credit committee, as an officer, or be regularly employed by the CU. Members appointed annually by Board. Note – While the Supervisory Committee retains the auditors or any other outside help, the Credit Union Board controls purse strings.
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10. The Supervisory Committee: NCUA Part 741.202 & Part 715 **
Supervisory Committee responsible for ensuring that the board of directors and management of the credit union meet required financial reporting objectives & establish practices and procedures sufficient to safeguard members' assets.
Internal controls are established and effectively maintained
Accounting records and financial reports are promptly prepared and accurately reflect operations and results
Relevant plans, policies, & control procedures properly administered & sufficient to safeguard against error, conflict of interest, self-dealing and fraud.
Audit+
Verification
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11. The Supervisory Committee: The Audit
CU w/$300m+ assets must have annual financial statement opinion audit by an independent licensed public or certified public accountant
CU w/-$300m assets shall have:
An opinion audit of its financial statements ; or
A procedures engagement performed by a qualified person; or
comprehensive Supervisory Committee audit or internal audit
NCUA Part & Part 715
CU w/$500m+ assets must obtain an annual audit of its financial statements performed in accordance with GAAS by an independent person licensed by the CU’s State or jurisdiction
CU w/-$500m assets shall have:
Annual supervisory committee audit; or
audit as prescribed by the State or jurisdiction in which the credit union is principally located
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12. It’s Not Just Getting the Audit!!!
File a written report at the CU HQ
Present the report to the governing board at its next meeting
Present a summary of the report to the members at the next annual meeting (or have outside auditor present)
File a copy of the written report with the commissioner
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13. And….There is More!
Monitoring internal controls and policies & procedures
Verification of member accounts once/2 years
Complete minutes of all of your meetings
Obligation to inform members of unsafe operating practices that board refuses to correct
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14. The Board of Directors: Responsabilities
Part declaration of the Statement of Financial Condition
Part – transfer from regular reserves to undivided earnings to pat dividends
Part 741 Appendix B – approve IRR policy/implementation/controls/limits/nature and scope of risk at CU
Part – approve capital policy
Part approve capital plan
Part Criteria
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15. The Board of Directors: Responsibilities
$50million – board approved framework for managing liquidity
$50m+ board approved funding plan (aka contingency funding plan or “CFP”)**
$250m+ board approved CLF funding (Part 725) or access to Federal Reserve Discount Window**
** See LTCU 13-CU-10 (October 2013)
Part Liquidity and Contingency Funding Plans
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16. The Board of Directors: Responsibilities
Part Minimum Fidelity Bond Requirements
Part 713 Minimum Fidelity Bond Coverage
The Board must annually review bond and other insurance coverage to ensure it is adequate
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17. The Board of Directors: Responsibilities
Part (d)(5) – no preferential loans to, guaranteed by, or endorsed by Director
Part Commercial Loans
Establish commercial loan policy
Review it annually
Be briefed periodically
Ensure proper staffing
Part Loan Policies
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18. The Commercial Loan Policy: More Detail
Type(s) of CLs * Trade area * Maximum amount of assets, in relation to net worth, allowed in secured, unsecured, and unguaranteed CLs of any type * Limit aggregate $ amount of CLs to any 1 borrower(s) to greater of 15% NW or $100k * Loan approval processes * Approval authority * Underwriting standards * Level and depth of financial analysis necessary * Methods to be used in collateral evaluation, for all types of collateral authorized, including loan-to value ratio limits * Risk management processes * Use of loan covenants * Frequency of borrower and guarantor financial reporting * Periodic loan review * Use of a credit risk rating system * Process to identify, report, and monitor loans approved as exceptions to the credit union’s loan policy
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19. The Board of Directors: Responsibilities
Part Payment on Shares by Public Units & Non Members
CU Board must approve plan if CU intends to apply for waiver of the 20% of total shares limit on public/non-member deposits
Part Public Deposits
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20. The Board of Directors: Responsibilities
For conversion or termination of share insurance (ie going to private insurance) must comply with the detailed disclosure/notice/ballot and member vote rules prescribe by NCUA
For merger with another FICU must certify member vote
Part Mergers of Federally Insured Credit Unions: Voluntary Termination or Conversion of Insured Status.
© 2009 NASCUS. All rights reserved.

21. The Board of Directors: Responsibilities
Part 748 Appendix A requires CU Board to oversee the 748 security program
Part requires CU Board to accept SAR reports from management
Part BSA obligations
Approve written policy
Review CU BSA risk assessment
Obtain annual training in BSA
Part Report of Crime or Catastrophic Act and Bank Secrecy Act Compliance.
© 2009 NASCUS. All rights reserved.

22. The Board of Directors: Responsibilities
Part The CU Board is responsible for establishing a vital records preservation program within 6 months after the CU receives its share insurance certificate. *** OK so that was long time ago and your CU did that…but have you reviewed it lately?
§ Records Preservation Program
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23. Contact Me
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