Automated Integrated Regulatory Examination System

95-CU-179 / September 1995
Automated Integrated Regulatory Examination System
To
Board of Directors
Subject
Examination Program
Status
Active
To
Board of Directors
Subj
AIRES Examination Program

DEAR BOARD OF DIRECTORS:

The National Credit Union Administration (NCUA) is modernizing its information processing and management systems in order to provide better quality products and services in a more efficient and effective manner. This letter explains one very important change you will see soon.

The new Automated Integrated Regulatory Examination System -- AIRES -- will be introduced to both Federal and state examiners this fall. It is a significant technological improvement in the way we conduct credit union examinations. While it does not affect the policy issues and program decisions that go into examining credit unions, AIRES will dramatically change the way examiners spend their time collecting, analyzing, and reporting examination information.

AIRES is a computer program developed to assist both Federal and state examiners in performing their credit union examinations. AIRES utilizes advanced computer hardware and software tools, improving the way we use our resources and producing a high-quality examination product. AIRES accomplishes these goals by:

  • minimizing routine clerical and administrative duties currently performed by examiners
  • providing electronic access to information from various sources using modern computer-assisted auditing techniques to review and evaluate credit union data
  • improving communications with credit union officials
  • providing a flexible examination system that can easily adapt to our dynamic industry

AIRES will have a significant impact on the examination process.

AIRES is capable of accepting electronic share and loan trial balance information from a credit union's data processing system. Credit unions can provide this data to examiners through standard data download routines made available by their information processing vendor or written in-house. AIRES loads this data directly into examination modules assisting the examiner in performing share and loan data analysis. This feature, combined with the ability to load historical examination and Call Report data into the examiner's computer, makes AIRES the most powerful examination tool ever introduced. Enclosed for your information are copies of the share and loan download file record layouts and the explanation of the data elements requested for input into AIRES.

AIRES benefits both credit unions and NCUA.

The electronic data download capabilities of AIRES will, when fully utilized, reduce credit union time and resources required to provide examination information. The chance for data input error is reduced through this download process. Examiners will make fewer requests for paper reports since they can now be generated, using the same credit union source data, on the examiner's computer. AIRES will produce an examination report that is easier to read and more professional in appearance than was previously possible. AIRES significantly improves the capability of examiners to collect, analyze, and report examination information. The download process allows examiners to spend more of their allotted examination time talking with credit union officials and less in the back room inputting data into their computers. AIRES reduces the amount of time required to move information throughout our organizations and it reduces our use, mailing, and storage of paper. These changes will benefit the entire credit union industry through better use of oversight resources.

AIRES provides for the security of credit union member data.

Examiners have always had access to member data for examination purposes. AIRES uses the same information examiners have always obtained from credit unions. However, instead of getting paper listings and reports, AIRES makes use of this information in electronic form. In order to ensure the control and confidentiality of member data, the following procedures and internal controls have been incorporated into the use of AIRES:

Access Data -- Examiners will always obtain data download files from the credit union, just as they now obtain paper files and other information. Examiners will not go directly to a data processing vendor to obtain electronic data without the knowledge and authorization of the credit union. Examiners will never enter a credit union computer system and extract data for examination use without the knowledge and permission of the credit union. AIRES does not, and will not, have this capability. In addition, examiner computers contain three levels of password protection and AIRES utilizes encrypted password protection, embedded in the program, to prevent unauthorized access or use.

Transform Data -- AIRES can, at the credit union's option, transform or scramble sensitive member data into unrecognizable characters, either during or after the download process. Transformation renders the data useless outside of the examination environment. This is a one-way process that cannot be reversed.

Destroy Data -- The downloaded share and loan data files are completely destroyed, and unrecoverable, at the end of the examination. No sensitive member data is uploaded to any host computer system at any time. We will actually keep less data in our files using AIRES than under the present examination system. Currently, examiners retain certain information on selected share and loan records to document the examination findings and perform comparative analysis to past year examination results. Under AIRES, the same types of information will be retained in our electronic records. However, less overall data and no sensitive member data will be kept.

As you can see, we have taken great care to incorporate into AIRES safeguards and controls to ensure the protection of credit union member data.

AIRES implementation is just around the corner.

NCUA began developing AIRES in January 1994. Many examiners and credit unions have participated in field testing and AIRES is now ready for release. Both NCUA and participating state examiners will begin using AIRES as the standard field examination program in October 1995. Full implementation will be completed by February 1996.

Changing the work environment of an organization is no small task. It requires cooperation, dedication, and a willingness to try new things. AIRES is a giant step toward improving our regulatory oversight process to better ensure the safety and soundness of all credit unions.

Norman E. D'Amours

Chairman of the Board