Staffing the Exam
Depending on the size and complexity of the credit union, examinations may be performed by an individual examiner or by a team of examiners. Whether an examination is performed by an individual or as a team job, it typically follows a certain process.
Planning the Exam
The EIC is responsible for planning the exam, a process that prepares both the examiner or exam team and the credit union for the onsite examination. This process helps ensure that the examination proceeds efficiently and adequately covers areas of risk as identified in the preliminary risk assessment. Planning the exam involves the following broad steps:
- Determine what resources (examiners, specialists, and time) will be needed. Examiners can make this determination by reviewing the credit union’s prior exam or supervision contact report, FPRs, Risk Reports, and RATE dashboard to assess the risk present. Examiners should also review the Plans and Budget tab in the most recent examination or contact Scope Module. The resources available for each exam will also be impacted by the approved budget, which is established by regional leadership.
Examiners will need to determine whether any specialists (for example, regional lending specialists, regional capital markets specialists, and regional information system officers) or SMEs (for example, information systems and technology SMEs, recordkeeping and internal control SMEs, capital markets SMEs, consumer compliance SMEs, specialized lending SMEs, and electronic payment systems SMEs) are needed for the examination. Specialists are available through the DSA. Specialists may not be available to participate in every examination and are typically assigned to examinations of credit unions with high risk exposures. SMEs are assigned to an SE group and generally are more readily available to participate in exams. If an examiner determines that a specialist or SME is needed for an upcoming examination, they should contact their supervisor as soon as possible. - Contact the credit union. The credit union's CEO should be contacted a minimum of five working days before the examination. The EIC should provide information about the proposed dates and duration of the examination, the number of examiners that will be coming on site, and the effective date of the examination, and should obtain information about any security protocols that examiners will need to follow, the credit union’s hours of operation, and availability of key staff. It is important that the examiner request that relevant staff be present and available during the examination. For example, if an examiner knows that the exam will be focusing on the credit union’s investment portfolio, he or she should request that the person responsible for investment decisions be present and available to answer questions throughout the course of the exam.
In some cases, examiners may plan to perform a “surprise” examination and would not give advance notice to the credit union. Surprise examinations are typically used when a credit union’s system of internal controls is weak. Procedures for contacting the credit union are discussed in greater detail in the NSPM. - Provide the credit union with an Examination Notification and Items Requested letter. The template letter provides a baseline for notifying the credit union of a pending examination, and is modified to reflect the specifics of the credit union being examined. The letter is addressed to the credit union CEO or manager and documents much of the information conveyed to the credit union in the phone contact. The letter must be sent to the credit union at least five working days before the start of the examination. The letter includes a comprehensive list of credit union documentation; the examiner should identify which items from the list the credit union should have available when the examiner or exam team is on site. The examiner can also request that the credit union provide certain information in advance, so that the examiner can review this information before the start of the onsite examination.
Examiners should be familiar and in compliance with NCUA Instruction 13500.09, - Develop and distribute the team memo. For team examinations, which include three or more team members including the EIC, the EIC will write a memo or email that outlines important information about the upcoming exam, and will distribute this to the members of the examination team and the appropriate SE. The information included in the memo should include logistical information (for example, hotel, credit union hours and location, and dress code), information about what will be reviewed during the examination and budgeted hours, and assignment of duties to team members. A template memo is provided in the NSPM.
- Stay flexible. While it is important that examiners be prepared and have a plan of action for each examination, plans may change as the process proceeds. The steps outlined above are not necessarily to be performed linearly; examiners may perform them in any logical order as long as relevant deadlines and time limits imposed by the NSPM are met.
Last updated October 11, 2016