Changes for Supervisory Committee Audits and Verifications – 12 CFR 715

NCUA’s Proposed Changes to Supervisory Committee Audits (Part 715)

NCUA has proposed a set of changes to Part 715 that would streamline supervisory committee audit rules and remove outdated or overly prescriptive requirements. While the proposal does not change the core audit responsibilities required by law, it does modernize the framework credit unions use to fulfill those obligations.

This blog takes a deeper look at the proposal, why it matters, and what credit unions should be watching for.

Understanding the Proposed Rule

Part 715 governs supervisory committee audits and the required verification of member accounts. The proposed rule would not alter what credit unions must accomplish, but it would simplify how those obligations are described in regulation.

Key areas of change include refinements to definitions, simplified expectations for engagement letters, updates to verification language, the removal of redundant reporting requirements, and cleanup of provisions related to compelled audits.

The proposal also restates — but does not modify — the statutory thresholds that drive audit expectations. Credit unions with $500 million or more in assets must continue to obtain an annual independent CPA financial statement audit conducted under GAAS. Institutions with $10 million or more in assets must continue using GAAP when filing required NCUA reports.

Why NCUA Is Making This Change

NCUA’s stated goal is clarity and modernization. Over the years, Part 715 accumulated language that reflected specific auditing practices or frameworks that may change over time. By simplifying these details, NCUA intends to:

• Reduce unnecessary rigidity

• Align the rule with current professional practice

• Eliminate duplicative wording

• Separate statutory requirements from procedural expectations

The proposal also removes references that suggest certain engagement-letter formalities are required by regulation when they are better governed by standard professional practice.

What This Means for Credit Unions

Supervisory committees remain responsible for ensuring a credible annual audit and maintaining strong oversight of financial reporting processes. The proposed rule does not lessen those expectations.

Instead, credit unions should expect:

• A cleaner rule that is easier to interpret

• More flexibility in how supervisory committees structure engagement letters

• Fewer instances where examiners point to procedural language that is not actually tied to safety and soundness

• Continued focus on strong internal controls and member account verification

Practical Steps to Consider

Credit unions should begin thinking about:

1. Whether internal audit documentation mirrors Part 715’s new structure

2. Whether engagement letters include clear statements of scope, timing, and access to working papers

3. Whether supervisory committees have appropriate training on their responsibilities

4. How internal control frameworks are documented, especially as outdated references are removed from regulation

NCUA’s proposal does not require immediate action, but a forward-looking review may help supervisory committees avoid future exam findings.

Final Thoughts

The proposal refines process language, not the underlying responsibilities. Credit unions must still maintain strong audit programs, high-quality financial reporting, and diligent member account verification. The modernization of Part 715 simply makes the expectations clearer and reduces procedural clutter.

If your credit union would like assistance reviewing your supervisory committee processes or preparing for an NCUA examination, I can help.