Exam Flexibility Initiative Makes 10 Recommendations to Improve Exam Process

In October, the agency’s Exam Flexibility Initiative working group, led by Region IV Director C. Keith Morton, released its recommendations for improving NCUA’s exam program.

This internal working group included representatives of all five of NCUA’s regions and major offices, and it solicited advice from a wide range of stakeholders across the country.

After reviewing 79 stakeholder comments, the working group recommended an extended examination cycle for well-managed, low-risk federal credit unions with assets of less than $1 billion beginning next year, pending the adoption of a new budget. The working group also recommended another nine improvements to the agency’s examination and supervision program, including:

  • Adjusting the examination cycle for all other federal credit unions;
  • Continuing targeted examinations under the Small Credit Union Examination Program;
  • Enhancing coordination of federally insured, state-chartered credit union examinations;
  • Establishing a joint NCUA-state supervisor working group;
  • Establishing applicable provisions for all federally insured credit unions, such as random sampling examinations and examination cycle measurement;
  • Enhancing planning and notice procedures;
  • Reinstituting an optional credit union survey;
  • Reducing NCUA’s onsite presence; and
  • Improving consistency of examiner training.

The NCUA Board will consider the working group’s recommendations as part of the agency’s 2017–2018 budget.

The four recommendations scheduled to become effective at the start of 2017 are:

  • An extended exam cycle for well-managed, lower risk federal credit unions;
  • Targeted examinations of certain small credit unions that lack internal controls and which have not been examined in at least five years;
  • Enhanced coordination of exams for federally insured, state-chartered credit unions; and
  • Establishment of an NCUA and state supervisor working group.

NCUA currently has plans to make the other changes as of July 1, 2017, including improvements in examination planning and the issuance of a post-exam survey.


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