Risk-Based Exam Scheduling
On December 28, 2016, the NCUA released Letter to Credit Unions 16-CU-12, detailing their exam scheduling policy which goes into effect January 1, 2017.
For state-charted, federally insured credit unions, the Letter details that:
Credit unions meeting any one of the following three criteria will receive NCUA exams that will begin between 8 and 12 months from the prior examination completion date:
- Assets greater than $1 billion;
- Composite NCUA CAMEL code 4 or 5 with assets greater than $50 million; or
- Composite NCUA CAMEL code 3 with assets greater than $250 million.
All other federally insured state-chartered credit unions will receive an NCUA examination based on risk, but no less frequently than once every five years.
NCUA will make every effort to conduct examinations of federally insured state-chartered credit unions jointly with the appropriate state supervisory authority. Only when a joint examination cannot be coordinated would NCUA conduct an independent insurance review.
The changes do not limit NCUA’s authority to examine any federally insured credit union as frequently as the agency deems necessary. NCUA will continue to consider financial trends, risks and other facts or circumstances to determine if a more frequent examination or supervision contract is required on a case-by-case basis.
The Letter also includes the changes to examination procedures. NCUA plans on implementing the following improvements to examination procedures in 2017:
- Providing credit unions with at least four weeks advanced notice when scheduling the examination (unless concerns related to the credit union warrant shorter or no notice, which would require NCUA management prior approval to waive the four-week advance notice requirement);
- Improving coordination of document requests tailored to a credit union’s risk profile and product offerings; and
- Separating and emphasizing pre-examination planning and scoping from the beginning of onsite examination work.
The Letter also links to the NCUA Exam Flexibility Initiative Report which provides more insight on the justification for the changes.