Once the preliminary risk assessment has been completed, examiners should develop the exam scope. The scope outlines the specific areas of review and steps the examiner plans to perform during the onsite examination. The scope will include steps that are required by NCUA Instruction 5000.20,
- Required areas of review must be performed during every examination of every credit union. The Exam Scope will be automatically populated with any required review areas.
- Baseline areas of review include certain credit union operations, programs and services, concentrations of risk, policies and procedures, and other areas of elevated risk based on an industry-wide risk assessment performed by NCUA. (Periodically, NCUA will revise baseline review areas in accordance with industry risk, new guidance, or regulations.) Examiners do not have to review every baseline area in every examination of every credit union; they can opt out of certain review areas depending on the unique circumstances and operations of a credit union.
Examiners should determine which baseline areas to review based on the results of the preliminary risk assessment. This allows examiners to allocate their time and resources appropriately to the areas and operations that pose the greatest risk. The Exam Scope will be automatically populated with all baseline review areas; if an examiner opts out of a baseline review area, they must document their reason for doing so in the Exam Scope. - Optional/expanded areas of review are based on exam staff judgment and depend upon the risk profile of the credit union. (For example, exam staff may determine they need to further evaluate a credit union’s relationship with credit union service organizations (CUSOs) and opt in to complete a review of those CUSO relationships.) Optional/expanded areas of review must be manually entered into the Exam Scope. Examiners will document their reason for expanding the scope beyond the required and baseline reviews in the Exam Scope.
The Exam Scope should be developed before going on site for the examination. However, examiners should be flexible and willing to expand or revise the scope of their review as necessary.
Examiners’ prior experience with, and knowledge of, a particular credit union will affect the amount of time necessary in the scoping and planning phase. In addition, examiners generally will spend more time and effort planning examinations for more complex credit unions. Examiners must consider the nature of the credit union’s services, compliance history, changes in the regulatory environment, new strategies/programs, and safety and soundness implications.
Scope Module
The Scope Module is the tool used to document the scope and risk assessments. This module serves as the examiner’s documentation for:
- Preliminary risk assessments and supporting factors
- Areas reviewed, depth of review, and results of review
- Final risk assessments and supporting factors
- Anticipated direction of risk over the next examination cycle
- Estimates for resource needs over the next examination cycle, and
- Recommendations for future areas of review and supervision plans
The examination workpapers lay the groundwork for building an administrative record. See theNSPM for sufficient scoping samples and more discussion about the administrative record.
Workpapers & Resources
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5000.20,
Last updated October 11, 2016
