Anticipating Your Next Exam June 7, 2013 Matthew J. Biliouris, Director of Supervision Office of Examination and Insurance

Part of an Ongoing Process Anticipating Your Next Exam 2 Annual Exam Call Report Review Follow- Up Periodic Phone Calls Policy Changes

Before the Exam Anticipating Your Next Exam 3 Scheduling the Exam – EIC will call to schedule the examination Information and Request Letter – Information on Examination (i.e., Examiner-in-Charge (EIC), start date, list of participants, etc.) – List of Information Needed for the Examination Items Needed for Examination – Be complete – Have the items ready when the examiners arrive – Label the items with corresponding numbers as requested – If you have questions, call the EIC. Don’t wait.

Day One Anticipating Your Next Exam 4 Entrance Meeting – Schedule time to meet with the EIC/Exam Team – Discuss changes since the preceding exam Introductions Working Space – Provide adequate space, privacy, conditions, and seating for the exam team. Set Expectations

Day One Anticipating Your Next Exam 5 Other Helpful Suggestions – Organizational Chart – List of credit union contacts – Management’s schedule – Passcodes or badges – Building map – Power strips, if available – Food recommendations

Communication Anticipating Your Next Exam 6 Try to be open and honest when communicating with your examiner. Be responsive to examiner requests. Be prepared to discuss new products and services – Advance Strategic Planning – Internal Controls that have been implemented – Ongoing Risk Mitigation Efforts – Board Reporting

Communication Anticipating Your Next Exam 7 Preceding Examination Concerns – Be prepared to discuss the corrective actions taken in response to the findings at the preceding examination. Exit Conference – Open Dialogue – Agreements and Commitments Joint Conference – Options for credit unions

Communication Anticipating Your Next Exam 8 Examination Report – Examiners are encouraged to provide the credit union with a draft copy of the exam report so it can be reviewed before the exit interview. – The report should be received by the credit union as early as the Exit Conference or the examiner has up to six business days after the Exit Conference to mail the report. – The report should be read by the Manager/CEO, all Board Members, and the Supervisory committee, regardless of the CAMEL rating. – Any questions about the content of the report, should be directed to the examiner. – If you have issues with or disagree with the report: Contact the examiner or Supervisory Examiner Instructions on filing an appeal are contained in the cover letter to the report.

Following the Exam Anticipating Your Next Exam 9 Monitor status update on items needing corrective action Inquiry about local or regional economy or news items Perform quarterly financial performance analysis Respond to inquiries from credit union – Strategic vision – New products or services

What Should the Supervisory Committee Expect? 10 Be prepared to discuss/present information about your periodic reviews & Verification of Member Accounts Examiners want to: – Review work papers – Ensure your work papers are organized

What Should the Supervisory Committee Expect? (continued) 11 NCUA’s examiner determines if the Supervisory Committee: – Fulfills obligation as an independent watchdog of the credit union – Ensures an annual audit is made – Ensures a report of that audit gets submitted to the board of directors – Provides a summary of the report to the members at the credit union’s next annual meeting

Annual Audit Schedule 12 Create an annual audit schedule identifying: – Review Areas – Frequency of Reviews (Monthly/Quarterly) – What is specifically reviewed ( example: all paid ahead loans) – Identify Party Responsible for each review area

Annual Audit Schedule 13 Sample Audit Schedule Audit/ReviewRecommended # of times per year What to review each time Follow up on prior audit or examination report MonthlyAll Items from the previous audit/exam outstanding File Maintenance ReviewMonthly or as often as possibleAll reports for the month Review shares under a specified $ amount 2 times per yearRandomly select at least 10 days throughout the month other than month end Paid ahead loan report2 times per yearLoans paid ahead 3 months Loans by Interest Rate Report2 times per yearAll loans Dormant Account Report2 times per yearAll new dormant accounts on report Delinquency Review2 times per yearAll accounts for the month

How to Review and Comment on Proposed NCUA Regulations 14 NCUA proposes regulations for federally insured credit unions NCUA encourages comments on proposed rules because it enhances the rulemaking process Officials are encouraged to review and send comments on proposed regulations

How to Review and Comment on Proposed NCUA Regulations 15 The public can visit NCUA.GOV to review regulatory proposals and view other proposed rule comment letters before writing a comment letter All proposed rule comments are categorized by content and reviewed internally prior to NCUA drafting final regulations

How to Review and Comment on Proposed NCUA Regulations 16 Tips for commenting on proposed regulations continued: Comments should specify unintended consequences to proposed rules Comments should propose reasonable alternatives to new rules if proposed rules are burdensome

Questions?? Anticipating Your Next Exam 17

Office Contact Page Anticipating Your Next Exam 18 Feel free to contact our office with questions or comments. Staff:Matthew J. Biliouris Director of Supervision Office of Examination & Insurance Amanda Parkhill Loss Risk Analysis Officer Office of Examination & Insurance Maggie Miller Program Officer Office of Examination & Insurance