ACUIA
May 16, 2011
Risky Business:
Risk Assessment at the Audit Level
Bryan W. Mogensen, CPA, Partner
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About Clifton Gunderson
• One of the nation’s largest certified public
accounting firms
• Founded in 1960
• More than
1,900 professionals
serving clients from
46 offices across the country
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Credit Union Expertise
• Nationwide leader in providing auditing, consulting,
tax, and valuation services for credit unions.
• Fifty-year track recorded of client success.
• Depth of experience – Credit Union clients range in asset
size from $10 million to more than $20 billion.
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Our Presenter
Bryan W. Mogensen, CPA, Assurance Partner
• Bryan has more than 15 years experience
auditing credit unions and he has
undertaken considerable continuing
education related to these areas.
• In addition, he has experience in auditing
credit unions and credit union related
organizations, community banks, not-forprofit organizations and other small
business’.
• On these engagements he is responsible for
planning, supervising the audit staff,
reviewing the work performed, and
attending client and exit conferences.
• He also makes several presentations and
attends various national credit union
conferences and League annual meetings
throughout the year.
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Agenda
• Why are some credit unions in trouble today?
– What were the common themes
– What to expect from examiners going forward
• Enterprise Risk Assessment – the process
• Enterprise Risk Assessment at the Individual
Audit Level, including:
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Loan review
Regulatory compliance
Internal audit
IT security matters
Industry
Recent Accounting Matters
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Why are some credit unions in
trouble?
• Some common themes we have experienced:
– Trends seem to be fairly consistent for many troubled
credit unions:
• Concentration in other commercial real estate and
acquisition, development and construction loans
• Concentration in indirect auto lending with high loan to
values (i.e. in excess of 125% upon issuance)
• Concentration in residential real estate lending in areas that
experienced large increases then decreases in values
coupled with economy
• Many experienced a period of tremendous growth fueled
with non-core funding sources
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Why are some credit unions in
trouble?
• Weak lending and credit administration
practices regarding MBLs:
– High level of technical exceptions in commercial and
CRE portfolios
– Policy exceptions – policies were adequate they just
didn’t follow them – overrides mainly for growth
– Lack of adequate documented site inspections
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Why are some credit unions in
trouble?
– Weak credit administration practices
• Inadequate appraisals:
– Use of “as completed” vs “as is” appraisals
• Inadequate analysis of borrower cash flows including failure
to properly calculate global debt service ratios
– Placed too much reliance on net worth of guarantors
– Net worth doesn’t make loan payments, cash does!
– Poorly designed incentive compensation systems.
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Why are some credit unions in
trouble?
• Weak lending and credit administration
practices regarding auto or real estate lending:
– Policy exceptions – policies were adequate they just
didn’t follow them – overrides mainly for growth
– Lack of or not following concentrations of portfolios
based on net worth or loan portfolio
– Significant reliance on members ability to pay and/or
collateral
• Economy, gas prices, too much reliance on overtime pay
• Collateral value declines well beyond expectations
– Poorly designed incentive compensation systems.
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Why are some credit unions in
trouble?
– Board failed to provide adequate oversight to
institution
– Ineffective risk management programs:
• Loan review function failed to identify deficiencies
in the institution’s underwriting policies and
procedures and individual credits until it was too
late
– Inadequate asset liability/concentration
policies and procedures
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Why are some credit unions in
trouble?
– Institutions failed to prepare allowance for
loan losses calculation in accordance with
GAAP and regulatory guidelines
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What to Expect From
Examiners Going Forward
• Expect examiners to be more critical!
– Loans acquired through participation:
• Need to perform your own independent site inspection and
analysis of borrower / guarantor cash flows
• Need to verify major assets and liabilities of guarantors
– Asset liability policy must include or require:
• Monthly preparation of cash flow projections analyzing
inflows and outflows of cash at various intervals (suggest
looking at 30, 60, 90 and 180 time periods)
– Projections should also include schedule of contingent funding
sources (available balances under lines of credit, FHLB
Advances, and federal funds).
• Quarterly preparation of sensitivity analysis on cash flow
projections
– Look at four to five scenarios ranging from best to worst case
• Contingency funding plan with information on what triggers
liquidity problems
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What to Expect From
Examiners Going Forward
– Need to provide segmentation information on any
concentration in your loan portfolio (> 250% to 300%
of the credit union’s total net worth):
• For example, assume you have a concentration in CRE loans:
– Break out total of loans first by collateral type (i.e. apartment
complex, office building owner occupied, office building held
for rental property, etc.) and then by loan to value ratio or
seasoning of the loans
– You may need 2 to 3 subcategories for each collateral type
– Will require more capital if you have concentration in
CRE loans above 250% to 300% of net worth:
• Meeting the definition for a well capitalized credit union
may not be sufficient in the future
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What to Expect From
Examiners Going Forward
– Regulators focused on loans modified because the
member is having financial difficulties (troubled debt
restructuring or TDRs)
• Need to calculate the net present value of future cash flows
• Need to consider re-default risk in FAS #5 calculations
• If TDR becomes re-delinquent need to evaluate based on
collateral value
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What to Expect From
Examiners Going Forward
• Examiners have received a lot of criticism for not
taking stringent enough action after identifying
weaknesses.
– Repeat violations, if significant, will almost certainly
lead to a 3 or 4 management rating
– Expect more DOR, LUA, Orders to be issued
• NCUA may take preemptive action even if your credit union
has enough capital to be considered “adequately capitalized”
• NCUA has also required net worth ratio to be higher than 7%
(i.e. 8%) if deemed higher risk
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What to Expect From
Examiners Going Forward
– Also expect examiners to require credit unions who
receive a 3 or 4 management rating be required to:
• Prepare a formal assessment of the number of,
compensation paid to, and qualifications of the institution’s
management team and/ or executive officers
• The examiners have assessed monetary
penalties against the board of director members
of failed banks
– In one bank, each board member was assessed a
penalty equal to 20 percent of their calculated net
worth
– Haven’t seen this in credit unions yet but it could
happen?
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What to Expect From
Examiners Going Forward
• More closely, looking at the independence and
quality of your risk management programs
– They expect the board of directors to be very involved
in this process
• Credit Unions falling under the Prompt
Corrective Action (PCA) regulations will be
more closely monitored
• Plan should include detailed action items
addressing how you will shrink the credit union,
reduce overhead, improve net interest margins
and improve risk management functions going
forward
• Too many credit unions waste time fighting
examiners vs. working with them to go forward
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Enterprise Risk Management
• Comprehensive analysis of the risk profile of a
Credit Union
– Should include a narrative explaining how
transactions are processed; who does it, what
approvals are needed, what controls are in place, etc.
– An analysis of the risks or the “what could go
wrong” question
– Description of the internal audit procedures to be
applied to monitor and evaluate the significant
internal controls
– Evaluation of the risks of the area and assignment of
an overall risk rating to the area, which in turn is
used to determine the frequency of testing to be
applied to the area
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Overall Risk Rating
Level of Turnover
Experience / Expertise
Culture
Control Activities
Operation
Legal / Compliance
Reputation
Financial
Technology
Risk Factors >>>
Strategic
Business Risk
Assessment Summary
Risk Rating
Lines of Business
Investment Securitites
Mod Low Mod Low Low Low High Mod Mod Low Mod
Lending
High Low High Mod Mod Mod Mod Mod Mod Mod High
Other Financial Services - insurance and brokerage Mod Mod Mod Mod High Low Mod Mod Mod Low Mod
Branch, Teller and Customer Service Operations
M=Mod
35-64
Mod Low Mod Mod High Low Mod Mod Low Mod Mod
Business Support Functions
L = Low
<35
Accounting and Financial Reporting
Low Mod High Low Mod Low High Mod Mod Mod Mod
ACH & Wire Transfers
Low Mod High Low Low Mod Mod Low Low Mod Mod
ATM & Debit Card Operations
Low Mod Low Low Mod Low Mod Mod Low Mod Low
Deposit Operations
Low Low Mod Low Mod Low Mod Low Low Low Low
Human Resources
Low Low Mod Mod High Low Mod Low Low Low Mod
Information Technology Security Matters
Mod Mod Mod Mod Mod Mod Mod Low Mod Low Mod
Item Processing
Low Mod Mod Low Low Low Mod Mod Mod Mod Mod
Asset Liability Management
High Low Mod Low Low Mod Mod Low Mod Low Mod
Loan Operations
Low Low Mod Mod Mod Low Mod Mod Mod Mod Mod
Safe Deposit Boxes, Money Orders, Travelers
Checks and Other Products & Services
H=High
65-100
Low Low Low Low Mod Mod Mod Low Mod Mod Mod
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Three Year Internal Audit Plan
Description
Accounting and Financial Reporting
ACH and Wire Transfers
Other Financial Services including insurance and
brokerage
ATM and Debit Card Operations
Investment Securities
Branch, Teller and CSR Operations
Deposit Operations
Lending
Lending Operations
Safe Deposit Boxes, Money Orders, Traveler Checks,
and Other Products and Services
Human Resources
Information Technology Security Matters
Item Processing
Asset Liability Management
Marketing
Regulatory Compliance Matters
Overall Risk
Assessment
Moderate
Moderate (1)
Moderate
Low
Moderate
Moderate (2)
Low
High
Moderate
Low
Moderate
Moderate (3)
Moderate
Moderate
Low
Moderate (4)
2010
2011
X
X
X
2012
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
1)
As required for the credit union to continue to offer ACH services, the ACH procedures set forth by the National Automated
Clearing House Association will be performed on an annual basis.
2) The main location of the credit union will be tested every other year while at least two other branch locations will be subject to
testing on an annual basis. During the three year cycle all branch locations should be subject to testing at least once.
3) To comply with industry best practices and comply with Federal Financial Institution Examination Council recommendations a
general controls review and intrusion test on the credit union’s Internet connection will be performed on an annual basis and a
network penetration test once every three years or any time there is a major change in the credit union’s local area network
configuration.
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Effective Loan Review Program
• Loan review function must be independent of
the lending function:
– Loan review staff should not report to the senior
lending officer if this individual is also responsible for
managing a portfolio of their own (i.e. loan quality
control)
– Most credit unions have loan review staff report to
the board, supervisory/audit committee, internal
auditor, and/or the credit union’s chief lending
officer or president
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Effective Loan Review Program
• Select a sample of loans to determine whether:
– Sample should be in proportion to number and
balance of loans granted along with related risk
• Annually should review at least 35% to 50% of the total
dollar amount of higher risk commercial and CRE loans
• Annually should review a sample of consumer loans (i.e. 50
to 100 loans)
– The related loan files contain the documentation
required by credit union policy
– The loan documentation and note comply with credit
union laws and regulations
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Effective Loan Review Program
– The loan is being administrated in accordance with
the credit union’s loan policy and standard industry
practices, for example:
• Loans granted do not exceed policy concentrations
• Site inspections and review of personal tax returns/financial
statements are performed on an annual basis as required by
credit union policy for MBLs
– The risk rating assigned to the relationship is
appropriate (MBL)
• The review of consumer loans is focused on whether the
documentation in the loan file and the terms of the loan
comply with the credit union’s loan policy.
– If evident, determine if the credit union’s
underwriting policies and procedures are appropriate
for risk
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Indirect Lending
• Risks
– Controls over auto system approvals
• Are parameters set too low and allow for ease of
approvals by unqualified borrowers
• Income verification requirements
• No or limited credit score data
– Controls over override controls
• What is percentage of booked loans approved by
management
• Is management approving all/most initial loan
cautions/denials – growth goals
• Do you require dual approvals
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Indirect Lending
• Risks
– Concentrations
• With one/few dealers – kick-backs?
• Approvals by one/few employees (over-rides)
– Qualifications for membership
• Do these people qualify as members
– 100%+ financing and impact on equity
• Do policies set limits for exposure on equity or
percentage of loans/assets
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Indirect Lending
• Impact on audit plan
– Do not test just for compliance with policies and
procedures
– Concentrate on system or override flaws
– Review charge-off/repossession files
• Evidence of power-booking
– Are all items on invoice actually on auto
• Evidence of stated income over-statement
– Test for compliance for:
• Concentrations
• Qualifications
• Exposures
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Member Business Loans
Fundamentals are similar to other
types of lending but:
– More difficult financial analysis
– More documentation is required
– Higher risks to lender
– Higher rewards to lender
– Significant regulatory requirements
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Member Business Loans
What Makes Business/Commercial
Lending Different?
– Underwriting/Loan officer knowledge
• The business is the applicant
• The loan officer must understand the business
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Understanding source of repayment
Trend analysis, cash-flow projections, etc
Credit Risk much greater
Documentation requirements vastly different
Follow-up and tracking
Regulations
Marketing
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Member Business Loans
Is management monitoring the
business lending program adequately?
Key considerations:
– Is the monitoring of the business lending
program formalized?
• Written policy/procedures for performing the
oversight of the business lending program
– Do the employees assigned to the business
lending program meet NCUA requirements
with regard to skill and knowledge?
– What business lending reports are being
monitored and by whom?
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Member Business Loans
Key considerations:
– Has a “watch list” process been established?
• Is it a formalized watch list program?
• How were the watch list criteria determined?
• Who is performing and who is monitoring and
challenging
– Ongoing review and analysis of the financial
condition of the businesses for business loans
• How is this being monitored?
– Audit work papers: Do they cover all pertinent
audit criteria? (NCUA Examiners Guide)
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Loan Participations
• Most loan participations are business
loans
• Management should be monitoring
these loans in similar fashion as their
own business loans
• Many do not monitor as they should
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Loan Participations
• Risks
– Same risks typically like business loans
– Must monitor and document same as
business loans
•Watch list
– Do not rely just on servicer as must do own
independent analysis
•Financial analysis
– Either do internally or evaluate servicers analysis
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Allowance For Loan
Losses Calculation
• The credit union’s methodology for calculating
the allowance for loan losses is in accordance
with GAAP, is appropriate, considers all
required elements, and follows policies and
procedures
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Allowance For Loan
Losses Calculation
• We normally expect to see FAS 5 reserves for:
– CRE loans - 1% to 3%
– Residential RE loans – 0.5 to 2%
– Adjust upwards or downwards (i.e. +/– 50 basis
points) for economic trends:
• Quality of underwriting standards
• Experience of lending staff
• Local economic and real estate market conditions
• Local unemployment
• Etc
– Indirect auto loan portfolio to have higher loss ratio
than direct auto programs
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Allowance For Loan
Losses Calculation
• For FAS 114 reserves we expect to see:
– Specific reserves for all MBLs rated at substandard or
below
– Residential RE loans specifically identified
• Delinquent
• Modified
• Those where LTV significantly above 100% and borrowers
credit score significantly dropped
– Troubled debt restructured loans (TDRs)
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ALLL
• Fundamental computation issues
– Timeliness of loan charge-offs
– Additional segmentation may be needed
– Need for consideration and
documentation of Q&E factors
– Reserving for TDRs
– Business loan risk rating downgrades
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Recent Issues w/ALLL
• Consumer loans
– Still using short-term historical loss rate
•i.e. 12 months is standard
•Consideration for some to go to 6 or 9 month
based on recent trends
– Be cautious
– No economic factor(s) addressed with
rising loan delinquencies and/or chargeoffs
•Should have this documented to show why
you have or do not have present
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Recent Issues w/ALLL
• Real estate loans
– Examiners want to see maximum
exposure in your portfolio
•However cannot allow for all of this
exposure
– Consider identifying where risk is in
portfolio and providing for those with
high risk (i.e. LTV > 125%, current credit
score declines by 100 or more, etc)
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Recent Issues w/ALLL
• Member business loans
– No general reserves for performing
portfolio
•Banks generally have 2-5%
– Inappropriate risk ratings
•Expectation are to downgrade faster
•Evaluate global debt service ratio
•Evaluate expiring and remaining lease
terms/vacancy
•Annual inspections
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Recent Issues w/ALLL
• Don’t forgot to prepare separate calculation for
troubled debt restructured (TDR) loans:
– Applies to all loans modified because the borrower is
experiencing financial hardship versus loans modified
for competitive reasons
– Prepare a calculation of the net present value of the
future cash flows due on the loans discounted using the
loans original interest rate
• Compare this net present value calculated amount to the
current unpaid balance of the loan to determine whether a TDR
adjustment is needed
• Need to also apply an additional reserve to these TDR loans to
account for risk that the borrower will default on the modified
loan in the future
– Most common missed element of the allowance for loan
losses calculation
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Troubled Debt Restructurings
(TDR)
• In April 2011, the Financial Accounting Standards
Board (FASB) issued Accounting Standards Update
(ASU) No. 2011-02, Receivables (Topic 310): A
Creditor's Determination of Whether a Restructuring Is
a Troubled Debt Restructuring
• The ASU is effective for nonpublic entities,
(including credit unions) for annual periods ending
on or after December 15, 2012, and should be
applied retrospectively to the beginning of the
annual period of adoption
• The ASU was issued to help clarify what
constitutes a concession and financial difficulty, in
determining whether a restructuring is considered
to be a Troubled Debt Restructuring (TDR)
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Troubled Debt Restructurings
(TDR)
• Clarification of Concessions:
• Indicators that CU granted concession:
– Borrower does not otherwise have access to
funds at a market rate for debt with similar
risk characteristics as the restructured debt
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Troubled Debt Restructurings
(TDR)
– More than insignificant payment delays,
insignificant payment delays that do not
constitute a TDR:
•Amount of the restructured payments
subject to the delay is insignificant relative to
the unpaid principal or collateral value of the
debt and will result in an insignificant
shortfall in the contractual amount due
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Troubled Debt Restructurings
(TDR)
•Delay of restructured payment period is
insignificant relative to any one of the
following:
– Frequency of payments due under the debt
– Debt's original contractual maturity
– Debt's original expected duration
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Troubled Debt Restructurings
(TDR)
• Clarification of Financial Difficulty:
• Indications of borrower financial difficulty:
– Borrower may have financial difficulty even though
not currently in payment default with the CU
– Borrower is currently delinquent on any of its debt
(with or outside of the CU)
– Borrower has declared/declaring bankruptcy
– Substantial doubt as to whether the borrower will
continue to be a going concern (MBL)
– CU forecasts cash flows will be insufficient to service
existing debt for foreseeable future
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Troubled Debt Restructurings
(TDR)
– Without modification, borrower cannot obtain funds
from other sources at the same rate as a non-troubled
borrower
• ASU also clarifies that a CU can no longer use
the effective interest rate test as defined in
Accounting Standards Codification (ASC) 47060-55-10 in determining whether a restructuring
constitutes a TDR
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Troubled Debt Restructurings
(TDR)
• All loans that are part of a TDR are considered
“impaired loans”
– It is probable that the CU will be unable to
collect all principal and interest payments as
scheduled in the original contractual terms
• Therefore to be allowed for under FAS 114
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Troubled Debt Restructurings
(TDR)
• Regulatory Reporting on TDR
– Delinquency on TDRs will normally be
reported on the Call Report consistent with
the original loan contract terms
– Return the restructured debt to full payment
status after 6-month period of demonstrated
ability to repay consistent with the
restructured terms
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Troubled Debt Restructurings
(TDR)
• Risks
– Lending and accounting do not talk therefore
could have many TDRs not identified
– TDRs not reserved for properly
• Reserve for difference between cash flows based on
discounted present value of original vs modified
terms
• Additional reserves for re-default
• Collateral based loans reserve for difference between
estimated value of collateral less costs to sell
compared to the loan balance
– Not reported properly as delinquent loans
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Regulatory Compliance Matters
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Compliance Hot Topics
• Fair and Accurate Credit Transactions Act
(FACTA) – Red Flag Rules
• Credit Card Act Changes
• Reg E – Opt-In Rules for Overdrafts
• Courtesy Pay Programs
• Reg Z - Open End Lending Rules
• BSA/OFAC/AML
• Secondary Mortgagee HUD Audit
Requirements
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Thoughts on Internal Audit
• Ensure that tickler system is used to track
resolution of findings and recommendations:
– Did management implement the recommendations
by the dates they committed to?
– The board of directors should review all reports
issued by internal audit and the tickler report (at least
quarterly for the tickler report)
– Ensure that your internal auditor is looking at both
the design of the control is adequate and whether the
control in place is operating as intended
• Is there an alternative control which would be more effective
(more likely to detect the error) or more efficient (less costly)
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Thoughts on Internal Audit
– Internal audit should also periodically perform
studies to look for profit improvement opportunities
for the institution (i.e. staffing levels, the process used
to price products and services, and performing a
comparison of the credit union’s interest rates and
fees to its competitors and peer group)
• Effective internal audit programs can and should bring value
to you credit union!
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IT Risk Assessment
• High Risk
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Remote Deposit Capture
ACH
Social Media Sites
Insider Threats
• Medium Risk
– Vendor Management, Network Support
– Email/Internet
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Examiner Hot Buttons
• Weak IT Audit Schedule
– IT policies not tied to IT risk assessment
• Facebook/LinkedIn
• Remote Deposit Capture
– Benefit to member but higher risk if controls
not in place
• Vendor Controls
• Not Enough BCP Testing
• Repeat Recommendations
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External IT Review
• What’s Included?
– General Controls
Review
– Internal Vulnerability
Testing
– External Vulnerability/
Penetration Testing
– Ongoing Support
• Do IT Right
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Industry Issues
• ALM – interest rate risk
– Currently CUs are generally very liquid
• Deposit growth far outpaced loan growth
leading to increased liquidity
• Have open LOC, however many have been
reduced
57
Industry Issues
• ALM – interest rate risk
– Future ALM concerns
• Those with long-term assets coupled with shortterm liabilities will be high risk
• Future rising rate environment
• Decrease in net interest margins
• If margins decrease:
– Where will earnings come from?
– Industry already performed severe operating cost cutbacks over past year(s)
58
Industry Issues
• ALM – interest rate risk
– Does your credit union have a formal
established ALCO and is it meeting
– Is management monitoring and reporting
this risk on at least quarterly basis
• Shock balance sheet +/- 300, 400, 500 basis
points
– Should be used to measure:
• Interest rates offered
• Concentrations of assets (long vs short term)
• Establish limits to reduce exposure
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Industry Issues
• ALM – interest rate risk
– Should have established policies and
procedures
– Is management maintaining balance sheet
in according with these policies and
procedures
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REO
• Definition
– Real estate acquired by a lender in whole or
partial satisfaction of debt owed
• Typically through foreclosure or deed in lieu of
foreclosure, and
• Held in inventory until sold
– REO does not include real property held for
own business use or expansion
– Foreclosure means termination of all rights of a
mortgagor or grantee in the property
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REO
• How reported under GAAP:
– Recorded at fair value less costs to sell at
the time of foreclosure
•Typically current appraisal less 10% costs to
sell
•Costs to sell are: broker commissions, legal
and title transfer fees, and closing costs
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REO
• How reported under GAAP:
– Initial write down (loss) posted through
the ALLL – loan charge-off
– Reclassified from loans to foreclosed
(other) assets
– After foreclosure each property must be
carried at the lower of (1) fair value less
costs to sell or (2) cost
63
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REO
• How reported under GAAP:
– Management must evaluate the unsold
properties and determine if further write down
to occur (further deterioration of properties
value)
– Costs to retain (holding costs) – must be
expensed as incurred
• Property taxes
• Utilities
• HOA fees
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REO
• How reported under GAAP:
– Costs to improve property
• Capitalize only if increase sales value (new roof)
– Costs to finish construction
• Capitalize up to fair value less costs to sell
• Any costs above that must be expensed
– If rented during holding period
• Recognize income on rental as operating income
(similar to renting own building)
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REO
• How reported under GAAP:
– Selling of foreclosures
•If loss report as non-operating loss
•If gain – 5 possibilities for treatment
dependant on type of sales contract
– Full accrual, installment, cost recovery, reduced
profit, and deposit
– Most gains will be recognized immediately as
non-operating gain
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REO
• Financial Statement Risk
– Valuation
•Not written down to proper value
•Overstating assets and understating losses
•Appraisal/BPO should not be more than 90
days old
•Subsequent measurement if property not sold
– New appraisals or BPO needed
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REO
• Financial Statement Risk
– Classification
•Not reclassified to foreclosed assets
– Overstating loans and understating other assets/
foreclosed assets
•Subsequent gains/losses posted through ALLL
vs. operations
– Improper classification on income statement
•All expenses posted as operating expenses
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REO
• Other Risks
– Protection of Assets
•Segregation of duties
– Approval of foreclosures
– Tracking of REOs
» Are all REOs identified and listed
– Maintenance of REOs and contracts
– Sales of REOs
» Who sets and approves prices
» Arms length transactions
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REO
• Other Risks
– Protection of Assets
•Additional loss when not warranted
– Damage to property when holding
– Selling at lower than market rates – fraud?
– Contract approvals – to family/friends – fraud?
– Did CU file insurance claim for PMI for losses
•Title in CUs name
•Property taxes and imsurance current
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REO
• Internal Controls
– Policy and/or procedures in place
– Proper accounting in place
– Proper tracking/monitoring of status
– Marketing efforts to sell
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REO
• Internal Controls
– Proper segregation of duties over:
•Approval of foreclosure
•Tracking and reporting of assets
•Monitoring of title, taxes, insurance
•Contracts going to bid
•Acceptance of sales price
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Questions
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Thank You!
Bryan W. Mogensen, CPA
Clifton Gunderson LLP
602-604-3551
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