Accounting/General Ledger

Effective accounting controls provide reasonable assurance staff is performing transactions according to management’s direction and their authorization level. In addition, staff should record transactions and prepare financial statements to comply with accounting principles as specified by NCUA regulations §§ 741.6(b), Consistency with GAAP, and 702.113, Full and fair disclosure of financial condition. Accounting controls may differ with the size and complexity of the credit union.

Examiners can review accounting and general ledger controls to determine whether the board of directors and management have established sufficient controls that allow for the preparation and maintenance of accurate financial statements.

To review accounting and general ledger controls, examiners:

• Review written accounting policies and procedures

• Determine if the accounting system includes the accounting operation in its entirety

• Determine whether staff are adequately trained before performing transactions affecting the general ledger and member accounts

• Verify that staff individually balance each general ledger account with its supporting subsidiary ledger, including zero balance accounts that have activity during the month

• Verify segregation of duties over transaction posting, reconciliation, and review of subsidiary records

• Determine if a documented internal review of the accounting process has been performed by the supervisory committee, internal auditor, or other designated third party

• Identify and follow-up on any red flags

Last Updated on May 01, 2023