Risk-Focused Examinations

What is a RFE?

An RFE allows the examiner to identify the areas of a credit union's operations that pose the greatest risk to the NCUSIF. Examiners will use a combination of procedures required by the agency (NCUA Instruction 5000.20, Examination Scope) and their own professional judgment to determine the scope of the exam.

The NCUA developed and implemented the RFE program in 2002 to focus field staff attention and resources on areas of elevated risk. Over time, the RFE program has evolved to address new and emerging risks in the industry and to respond to the NCUA’s annual supervisory focus.

A comprehensive RFE scope includes required, baseline, and optional/expanded review areas, as well as the sound, reasoned judgment of field staff in determining which baseline and optional/expanded review areas are relevant and necessary.

How is NCUA authorized to perform RFEs?

Part 204 of the FCU Act gives the NCUA the authority to conduct examinations of any insured credit union. Specifically, the act states:

"The [NCUA] Board shall appoint examiners who shall have power, on its behalf, to examine any insured credit union, any credit union making application for insurance of its member accounts, or any closed insured credit union whenever in the judgment of the Board an examination is necessary to determine the condition of any such credit union for insurance purposes. Each examiner shall have power to make a thorough examination of all of the affairs of the credit union and shall make a full and detailed report of the condition of the credit union to the Board."

Why does NCUA perform RFEs?

The NCUA implemented the RFE program in an effort to better allocate agency resources and assist in meeting the agency’s strategic goals. Under this approach, the agency's resources are focused on the credit unions that pose the greatest risk to the NCUSIF. In addition, examiners are able to allocate time and apply the most scrutiny to activities posing the highest risk.

Which credit unions receive an RFE?

NCUA Instruction 5000.20, Examination Scope outlines the eligibility requirements for defined-scope and risk-focused examinations for all federally insured credit unions. The instruction is updated annually and eligibility requirements may change from year to year.

The current exam requirements are as follows:

Asset Size CAMEL Rating Type of Exam
Less than $30 million 1, 2, and 3 Defined-scope examination
4 and 5 Defined-scope examination, at a minimum, plus additional reviews as necessary to appropriately supervise the risk
$30–50 million 1, 2, and 3 Region has discretion to choose a defined-scope examination or an RFE (However, newer examiners will be limited to conducting only defined-scope examinations for FCUs in this asset size range.)
4 and 5 RFE
More than $50 million All RFE, ensuring examination scope requirements are met

How does a risk-focused exam differ from a defined-scope exam?

The primary difference between the two types of exams is that in a defined-scope exam the risk areas have already been identified and the scope is pre-determined. This means that an examiner will not perform a preliminary risk assessment or develop an individualized exam scope.

Defined-Scope Examination Risk-Focused Examination
  • Scope is predetermined and primarily focuses on internal controls, recordkeeping, and lending (no preliminary risk assessment is performed)
  • Required procedures are outlined in the SCUEP workbook (there is no opt-out provision)

    • Tier 1 (always required unless the credit union does not offer the product or service)
    • Tier 2 (if triggered)
    • Tier 3 (if triggered)
  • To expand the scope, an examiner must obtain SE approval
  • Scope is determined by the examiner who conducts a preliminary risk assessment to identify specific risks at the credit union
  • Review areas are dictated by the annual NCUA Instruction 5000.20, Examination Scope, which includes:

    • Required
    • Baseline (can opt out based on examiner judgment)
    • Optional/ Expanded (can opt in based on examiner judgment)

How does NCUA conduct RFEs?

RFEs, which are performed onsite, are complemented by ongoing offsite supervision, which may include a review of board meeting minutes, financial statements, Call Reports, FPR, policy revisions, and RATE. Additional onsite supervision may be required for certain credit unions as discussed in the NSPM.

Each examination results in a report and CAMEL rating that:

The examination process involves the following broad steps:

Workpapers & Resources

Last updated October 11, 2016