Supervisory Committee

The supervisory committee safeguards member assets by ensuring a credit union is operating properly. It has broad oversight authority to hold a credit union’s board of directors and senior management accountable for fulfilling their responsibilities in the interests of the credit union’s members, and for operating according to sound business, ethical, and regulatory standards.

The FCUA § 1761b, Board of directors; meetings; powers and duties; executive committee; membership officers; membership application, requires FCUs to have a supervisory committee comprised of three to five individuals appointed by the board of directors. To serve on the committee, the individual must be a member of the credit union and bondable by the credit union’s surety bond company.

The supervisory committee members select a chair and a secretary. The chair is responsible for:

• Full participation of the committee members

• Discussion of all relevant matters

• Effective decision-making

• Overall function of the committee

The secretary prepares, maintains, and has custody of the records of all actions the committee takes. These offices may be held by the same person.

Individual state laws may have different composition and appointment requirements for FISCUs. For example, state law may require supervisory committee members to be elected by the membership or may designate an audit committee to fulfill the basic supervisory committee functions.

Article IX, § 1 of the FCU Bylaws prohibit credit unions from including credit committee members, the financial officer, or any credit union employees in a supervisory committee role. The FCUA, § 1761b, Board of directors; meetings; powers and duties; executive committee; membership officers; membership application, permits one board member to serve on the supervisory committee as long as that board member is not a compensated officer. These prohibitions and limitations protect the supervisory committee’s independence.

FCUA § 1761(c), Compensation, prohibits a FCU from compensating its supervisory committee members. Depending on the characteristics of a credit union’s field of membership, supervisory committee members may or may not have an audit or financial background. NCUA regulation § 715.4, Audit responsibility of the Supervisory Committee, details the committee’s audit responsibilities.

This section of the Examiner's Guide includes the following topics related to supervisory committees.

• Primary Risks

• Risk Management

• Responsibilities

• Types of Audits

• Auditors

• Exam Procedures

• Workpapers and Resources

Last updated on October 14, 2022