Did You See This at the End of NCUA's Supervisory Priorities Letter?



NCUA's Exam Priorities Letter was published last week. In addition to stating the supervisory priorities, the Letters some times morph into an update on other issues.


I found it very interesting to see this slipped into the text at the end of the letter:


"NCUA to Pilot New Exam Planning Questionnaire


The NCUA is incorporating the use of an Exam Planning Questionnaire into the examination planning process. The questionnaire will provide NCUA examiners with information on certain products and services, significant events, insider activities, and fraud awareness. NCUA examiners will provide the questionnaire to credit unions in advance of a scheduled exam, and will use the responses to refine the exam scope, increase offsite-monitoring capabilities, and incorporate efficiencies to the exam.


More information on the pilot of the Exam Planning Questionnaire will be forthcoming."


Full Text of the 21-CU-02 Letter to Credit Unions - 2021 Supervisory Priorities can be found here:


https://www.ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/ncuas-2021-supervisory-priorities


I could not find any other public reference to this - so your examiners may not yet be aware of what is coming either...


Perhaps it will be linked to the rollout out of MERIT - which is scheduled to replace AIRES later this year?


While we wait to hear more from NCUA you may find this link to NCUA public Examiner's Guide Section - Pre-Exam Planning, helpful:


https://publishedguides.ncua.gov/examiner/Pages/Content/ExaminersGuide/InteractingCU/3PreExamPlan.htm


Full Text of the Pre-Exam Planning link above - can be found below:


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Pre-Exam Planning


Planning is an integral component of the NCUA’s examination program. Examiners should coordinate with specialists, SMEs, and other examiners who are scheduled to participate on a contact as early in the process as possible.

For risk-focused examinations, examiners should develop a risk-focused exam scope by reviewing pertinent information about the credit union as part of the pre-exam planning process. An appropriate assessment of the level and type of risk present will result in an effective allocation of resources. The exam scope should focus on any adverse financial trends in key areas, significant changes in the balance sheet, significant growth patterns, changes in key staff or officials, and significant changes in loan, investment, or share products (see NCUA Instruction 5000.20, Examination Scope, for current scope requirements for each type of examination).

As outlined in the NSPM, examiners will document their pre-planning reviews and activities in the AIRES Pre-Exam Planning Procedures Checklist for all exams (see FCUs > Examination Planning > Pre-Exam Planning Hours). The checklist requires examiners to review:

  • Previous exam report and supervision contacts since the last exam

  • Most recent Financial Performance Report, RATE review, and Profile

  • Areas of risk triggered by the most recent national/regional risk reports

  • Moody’s Economic Report in the AIRES Exam Directory (RFE only)

  • Field of Membership (FOM) changes since last exam (FCU RFE only)

  • Consumer complaint log history

  • Regulatory waivers

  • Correspondence to or from the credit union since the last exam (RFE only)

  • Outstanding administrative actions

  • Mergers since the last exam (RFE only)

  • External audit reports, if available

  • Reports for any internal or external review conducted since the last exam

  • Board minutes for the past year (if available)

  • Credit union’s strategic plan (if available) (RFE only)

Communication between the EIC and the credit union CEO (or the CEO’s designated point of contact) as part of pre-exam planning is important. Not only does the EIC need to confirm the date examiners will be on site, but he/she should also ask about what the credit union is doing that is new or different that may be relevant to the exam. The EIC should ask about any emerging issues or challenges facing the credit union and if applicable, discuss any outstanding issues or areas of concern. This conversation allows the CEO an early opportunity to advise the examiner of any recent developments or issues as viewed from the credit union’s perspective and it promotes a more open and productive dialogue during the exam. Information gathered in this conversation can impact the focus of the exam, the files and documentation NCUA requests, and the types of SMEs and specialists necessary for the exam team. The examiner should also contact the board chairperson and supervisory committee chairperson as described in the Pre-Exam Planning Procedures Checklist.

As outlined in the NSPM, the EIC will provide the credit union with a customized Examination Notification and Items Requested letter from AIRES at least four weeks prior to the examination start date (see District Management > Administrative Items > Notifying a Credit Union of a Contact). This letter will identify:

  • The examiner or exam team members, and their contact information

  • The effective date of the exam

  • Important dates such as expected first and last days on site

  • Specific documents and/or files the credit union should have available for the exam

Examiners may also request, but should not demand, the credit union provide files in a specific format (for example, electronic files versus physical files), with the understanding that not all credit unions have the capability to provide some files electronically.

Examiners may also request auditor/view only access to applicable credit union systems. Information provided to the examiner ahead of time should be sent via the secure NCUA portal. The Examination Notification and Items Requested Letter template in AIRES establishes how examiners may receive sensitive credit union and member data in a secure manner.

For FISCU exams, examiners should coordinate as early as possible with the SSA when developing the Examination Notification and Items Requested letter, following regional guidance. Doing so can minimize duplication of work.

All communication with credit union staff (and any authorized third parties), including the contents of exam reports, CAMEL ratings, and risk ratings, are strictly confidential. NCUA staff are prohibited from sharing the contents of any report or conversation with anyone except relevant agency staff, assigned SSA representatives, and appropriate credit union officials and staff. EICs may remind credit union management of the confidentiality of all exam-related material and conversations at the start of the examination. (See § 1782(a)(7)(A) and § 1782(a)(8) of the FCU Act.)