Negative Shares

An overdrawn account may result in the use of credit union funds without paying interest. Negative share accounts may indicate that an insider has overdrawn a regular share or share draft account with no intention of repaying the overdrawn amount. Sound credit unions have policies or procedures that address the handling of negative share balances.

This section does not address accounts overdrawn as part of a credit union’s overdraft/courtesy pay program. Refer to the Consumer Lending section for exam procedures relating to overdraft/courtesy pay program.

Examiners review negative share operations to determine if procedures and controls are in place to prevent staff from manipulating overdrawn accounts.

To review negative shares controls, examiners:

• Review written policies or procedures for negative shares and share draft accounts—specifically as it relates to employee, official, and related party accounts

• Obtain the Negative Share Report/Share Draft Report and determine if it includes accounts for any employees, officials, or related parties

  • Consider selecting a date that differs from the month end

  • If the report contains accounts for employees, officials, or related parties, obtain the account history to determine the cause of the overdraft

  • The examiner may determine additional testing is necessary based on the results of this review

• Identify and follow-up on red flags

Last Updated on October 14, 2021