Learn more about the supervisory and audit committee of the future.

1. Supervisory & Audit Committee
Development Seminar
June 13 – 14, 2016
Facilitator
Michael G. Daigneault
Chief Executive Officer
Facilitator
Allen P. DeLeon, CPA, PFS
Founding Partner

2. Who Is Quantum Governance, L3C?
• Quantum Governance, L3C is a low
profit, limited liability service
organization dedicated to the public
good.
• We are one of the first such “hybrid”
organizations in the United States.
• We have 145+ years of combined
experience working with credit unions,
foundations, associations, nonprofits,
corporations & governments.
• We are a CUES Strategic Partner &
customize/process/analyze all the
Board & CEO assessment surveys that
are conducted by CUES.
Governance
Consulting,
Advice &
Counsel
Keynote
Presentations,
Workshops &
Seminars
Assessments,
Research &
Knowledge
Building
Strategic
Planning,
Retreats &
Facilitation

3. Who Is DeLeon & Stang?
• DeLeon & Stang is a full‐service
CPA firm with more than 30 years
of service.
• We provide high‐quality
accounting, tax, audit, financial,
business and professional services
throughout the Mid‐Atlantic
region.
• Our team serves a broad spectrum
of industries, with particular
expertise in credit unions,
construction, common interest
realty associations, hospitality
organizations and nonprofits.
Accounting
&
Tax
Audits,
Reviews &
Compilations
Financial
& Business
Services
Professional
Services

4. Agenda
Module 1. Welcome & Agenda Review
Quick Agenda Review
Exercise: Table Introductions & Your Objectives?
Module 2. The Supervisory or Audit Committee of the Future
Exercise: Flash Foresight, Hard & Soft Trends
Historical & Emerging Challenges
Future Possibilities
BREAK

5. Agenda (Continued…)
Module 3. Fundamental Cooperative & Credit Union
Governance Principles
Historical Underpinnings
– The Rochdale Principles
– What is a Cooperative?
– International Cooperative Alliance Cooperative Principles
– Credit Unions Come to North America
Credit Union Governance – The “3‐Legged Stool”
– What is Governance?
– The Challenge – Governance & Leadership
– Traditional & Contemporary Governance Models
– The Governance Spectrum

6. Agenda (Continued…)
Module 3. Fundamental Cooperative & Credit Union
Governance Principles (cont’d)
Basic Roles & Responsibilities of a Credit Union
– Boards
– Board Members, Officers and the CEO
– Board Committees & Task Forces
– Genesis of Governance Committees
LUNCH

7. Agenda (Continued…)
Module 4. The Unique Role of Credit Union Supervisory
& Audit Committees
Central Principles, Goals & Responsibilities
Video Exercise: NCUA Audit Video
Credit Union Financial Statements & Audits
– The Annual Audit
– Types of Credit Union Audits and Audit Requirements
– Core Audit Responsibilities
– Questions to Ask
– Internal & External Audits
– Review of Sample Financial Statements
– Verification of Member Accounts
– Member Relations

8. Agenda (Continued…)
Module 4. The Unique Role of Credit Union Supervisory
& Audit Committees (cont’d)
Video Exercise: Monitoring Management Activities
– Other Regulatory Responsibilities
– A New Trend: Enterprise Risk Management
Module 5. Day One – Conclusion
Exercise: Final Thoughts & Homework Assignment

9. Agenda (Continued…)
Module 6. Day Two Welcome
Exercise: Day One Thoughts
Module 7. The Hypothetical
Exercise: “A Challenging Meeting!”
BREAK

10. Agenda (Continued…)
Module 8. Credit Union Accounting & Regulatory
Fundamentals
What does the NCUA expect?
– Size & Independence
– NCUA Exam
– The Workplan
– Minutes & Meetings
– Committee Charter
– Member Verification
– Monitor the Annual Audit
– Address Member Complaints
Today’s Regulatory Environment
LUNCH

11. Agenda (Continued…)
Module 9. Crafting the Supervisory & Audit Committee of the
Future
Exercise: Drafting the Charter
Module 10. Crafting the Supervisory & Audit Committees – “Grab
Bag” Topics!
Module 11. Conclusion
Exercise: Final Thoughts

12. Module 1.
Table
Introductions &
Your Objectives
Please formally introduce
yourself to your colleagues and
quickly address three sets of
questions:
1. Your Name & Your Credit
Union?
2. Your Role & Years of
Service?
3. Why You Are Here? (Your
Objective)

13. Power Point Title
Subtitle
The Supervisory or Audit
Committee of the
Future
Module 2.

14. Flash Foresight: 6 Principles
1. Anticipate ‐ base your strategies on what will happen in
the future
2. Transform ‐ how you sell, market, collaborate,
communicate, educate and innovate
3. Take your biggest problem, and skip it ‐ it’s not your
real problem anyway
4. Go opposite ‐ look where no one else is looking to see
what no one else is seeing
5. Redefine and reinvent ‐ use tech‐driven change to
create new products and services
6. Strategically direct your future ‐ or someone else will
direct it for you
From Daniel Burrus, Flash Foresight

15. Hard Trends
Hard Trends are those trends
that cannot be changed.
Ask These Questions:
1. Is the trend measurable?
2. Is the trend tangible?
3. What are the facts, events or objects behind this
trend?
4. Is this trend linear or cyclical?
From Daniel Burrus, Flash Foresight

16. Hard Trends
Hard Trends are those trends
that cannot be changed.
Ask These Questions:
1. Is the trend measurable?
2. Is the trend tangible?
3. What are the facts, events or objects behind this
trend?
4. Is this trend linear or cyclical?
From Daniel Burrus, Flash Foresight

17. Soft Trends
Soft Trends shape the future,
but don’t amount to a future fact.
Ask These Questions:
1. Is this trend a future fact? (If yes, then it is not a
Soft Trend)
2. Are you spending too much time debating
whether it’s a Hard Trend or a Soft Trend? (If yes,
then most likely it’s a Soft Trend)
From Daniel Burrus, Flash Foresight

18. Soft Trends
Ask These Questions ‐‐ continued:
4. Where are the Assumptions coming from?
5. Where is change coming from—a Soft
Assumption or a Hard Assumption?
6. Are there good data and research supporting the
assumption?
From Daniel Burrus, Flash Foresight

19. Power Point Title
Subtitle
Let’s identify
Hard and Soft

21. The Composition Challenge

22. The Technology Challenge

23. The very notion of community is being
altered by technology…community is
ceasing to be largely defined by geography
and more often as a sense of belonging.
The Community Challenge

24. If a disruptive freight train is suddenly barreling your way,
it’s better to take action than to trust the odds of sleeping
on the tracks.
Alistair Corbett & Darrell Rigby ‐ Directors at Bain & Company
The Disruptors Challenge

25. The Demographic Challenge

26. One of the key challenges for
CU’s today is frequently not a
lack of information…but,
rather…the flood of information
that is available!
It can be a bit like trying to satisfy
your thirst with a fire hydrant!
The Information Challenge (1)

27. The Information Challenge (2)

28. The Complexity Challenge

29. Very Low Risk Low Risk Some Risk Moderate Risk High Risk Very High Risk
Two Potential Difficulties:
1. Ability to understand, identify
and actually mitigate the risks to
the CU.
And…
2. The Level of risk the CU’s
leadership is willing to tolerate
(Risk Tolerance)
Organizations “that create the future
are rebels. They’re subversives.
They break the rules…Foresight
often comes not from being a better
forecaster, but from being less hide-
bound.”
From: “Competing for the Future”
by Hamel & Prahalad
The Risk Challenge

30. Partner With
Business
Foster
Individual
Evangelists
Advocate
To
Government
Innovative,
Adaptive
&
Nimble
Shared
Empowering
Leadership
Collaborate &
Network with
other
Credit
Unions
High
Impact
CU
After: Forces For Good
By Crutchfield & Grant
The Impact Challenge

31. Quantum Governance, L3C is
a low profit, limited liability
service organization
dedicated to the public good.
~
One of the first such "hybrid"
organizations in the U.S.
~
We have experience with the
credit union, nonprofit,
foundation, association,,
corporate and security related
communities.
1. Adapt to the complexity &
flood of information
2. Attract new board members
3. Think strategically on a
sustained basis
4. Hold effective board meetings
5. Stay current with today’s
technology
6. Evaluate and mitigate risks
7. Have the impact they desire
8. Effectively govern and lead!
In Sum…Many Credit Unions are stuck!
They are struggling to:

32. Power Point Title
Subtitle
Credit Union Governance
Principles
Module 3.
&
Fundamental Cooperative

33. Power Point Title
Subtitle
Underpinnings
Historical

34. The Rochdale Principles
Original Version of Principles (adopted 1937)
• Open membership
• Democratic control (one person, one vote)
• Distribution of surplus in proportion to trade
• Payment of limited interest on capital
• Political and religious neutrality
• Cash trading (no credit extended)
• Promotion of education

35. What Is A Cooperative?
"A co‐operative is an autonomous association
of persons united voluntarily to meet their
common economic, social, and cultural needs
and aspirations through a jointly owned and
democratically‐controlled enterprise."
‐‐ International Cooperative Alliance

36. International Cooperative Alliance
Cooperative Principles
Cooperative Principle 1
Voluntary and Open Membership
Co‐operatives are voluntary organisations, open to
all persons able to use their services and willing to
accept the responsibilities of membership, without
gender, social, racial, political or religious
discrimination.

37. Cooperative Principle 2
Democratic Member Control
Co‐operatives are democratic organisations controlled
by their members, who actively participate in setting
their policies and making decisions. Men and women
serving as elected representatives are accountable to
the membership. In primary co‐operatives members
have equal voting rights (one member, one vote) and
co‐operatives at other levels are also organised in a
democratic manner.

38. Cooperative Principle 3
Member Economic Participation
Members contribute equitably to, and democratically
control, the capital of their co‐operative. At least part of
that capital is usually the common property of the co‐
operative. Members usually receive limited
compensation, if any, on capital subscribed as a
condition of membership. Members allocate surpluses
for any or all of the following purposes: developing
their co‐operative, possibly by setting up reserves, part
of which at least would be indivisible; benefiting
members in proportion to their transactions with the
co‐operative; and supporting other activities approved
by the membership.

39. Cooperative Principle 4
Autonomy and Independence
Co‐operatives are autonomous, self‐help
organisations controlled by their members. If they
enter into agreements with other organisations,
including governments, or raise capital from
external sources, they do so on terms that ensure
democratic control by their members and maintain
their co‐operative autonomy.

40. Cooperative Principle 5
Education, Training and Information
Co‐operatives provide education and training for
their members, elected representatives, managers,
and employees so they can contribute effectively to
the development of their co‐operatives. They inform
the general public ‐ particularly young people and
opinion leaders ‐ about the nature and benefits of
co‐operation.

41. Cooperative Principle 6
Co‐operation Among Co‐operatives
Co‐operatives serve their members most effectively
and strengthen the co‐operative movement by
working together through local, national, regional
and international structures.

42. Cooperative Principle 7
Concern For Community
Co‐operatives work for the sustainable development
of their communities through policies approved by
their members.

43. Credit Unions Come to North America
On December 6, 1900 Desjardins and his
wife, Dorimène Roy Desjardins, co‐
founded the first Caisse d'épargne
Desjardins in Lévis and opened for
business the following month. Later
renamed Caisses populaires Desjardins
(and today Desjardins Group), the
organization was a forerunner of current
North American credit unions.
In 1909 a Banking Commissioner of
Massachusetts who studied Desjardin's
work, introduced a bill in Massachusetts
to provide incorporation, recognition and
legal standing for small savings and loan
associations as financial institutions.
Though Desjardin testified, his testimony
as a foreign citizen carried little weight.
The bill passed thanks to
testimony from Edward
Filene, a wealthy Boston
merchant who saw credit
societies operate in Cal‐
cutta, India.
E. Filene
A. Dejardins
Desjardins then organized the first U.S.
credit union in a church parish, St.
Mary's Parish Bank.
In 1897 Alphonse Desjardins
became concerned with the
problem of usury and
undertook three years of
research and
correspondence with the
founders of cooperative
savings and credit
movements in Europe.

44. The Act is Signed Into Law
Roy F. Bergengren (June 14, 1879–
November 11, 1955) was an American
attorney and pioneer of the United
States credit union movement. Hired by
Edward Filene in July 1921 to head the
Credit Union National Extension Bureau,
Bergengren carried out an ambitious
legislative agenda that resulted in the
enactment of the Federal Credit Union
Act, the creation of the Credit Union
National Association (CUNA), and the
foundation of thousands of credit unions
across the United States.
1934 — Washington, D.C.
President Franklin Delano
Roosevelt signs the Federal
Credit Union Act into law.
Roy Bergengren

45. Credit Union Governance:
A 3‐Legged Stool

46. Power Point Title
Subtitle
Governance?
What’s

47. The Board is the legal caretaker
and steward of the organization and
is responsible for the mission’s current ‐
and future ‐ welfare.
Boards do this through their power to
govern the organization…

48. To govern is to steer, control, and
influence or persuade from a
position of authority.
Governance deals with the
legitimate distribution of authority
throughout a system – whether a country,
corporation or credit union.

49. Copyright, 2014 Michael Daigneault & Quantum Governance L3C
DysfunctionalDysfunctional
FunctionalFunctional
ResponsibleResponsible
ExceptionalExceptional
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The Challenge…
The Governance & Leadership of Many
Credit Unions Is Not As Effective
As It Should Be

50. This image cannot currently be displayed.
The Current Situation?

51. This image cannot currently be displayed.
The Desired Future?

52. © 2005, 2013 Michael G. Daigneault
Dysfunctional Functional Responsible Exceptional
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Number
Of CU
Boards
Quality of Credit Union
Governance & Leadership

53. Context
Traditional Governance Models
1. Collective/Co‐Operative Models
2. Parliamentary Models
3. Traditional (Nonprofit & Corporate) Models
1. Policy Governance Model ‐ John & Miriam Carver
2. Governance as Leadership Model ‐ Chait, Ryan & Taylor
3. Executive Model ‐ Coerver & Byers/Jan Masaoka
Contemporary Governance Models

54. Context
3 Contemporary Models
1. Policy Governance Model
John & Miriam Carver
2. Governance as Leadership Model
Chait, Ryan & Taylor/Trower
3. Executive Model
Coerver & Byers/Jan Masaoka

55. Board
Focused
Constructive
Partnership
Focused
CEO/Staff
Focused
High Board Authority High Executive Authority
The Governance Spectrum
High Board Authority High Executive Authority

56. Power Point Title
Subtitle
What are the
Core Responsibilities
of a Credit Union

57. Governance
&
Leadership
•CEO Support & Oversight
•Performance & Results
•Strategic Thinking, Learning &
Planning
•Budget
& Resources
•Membership & Outreach
The Core
Responsibilities
of a Credit Union
Board

58. The Core Legal Duties & Responsibilities of
Individual Credit Union Board Members
Duty of Care ~ Duty of Loyalty ~ Duty of Obedience
 Actively engage, contribute, participate & ask questions
 Keep informed, prepare for & attend board meetings
 Participate in board development & educational activities
 Support the credit union’s community effort & activities
 Regularly monitor financial safety & soundness
 Demonstrate personal & sustained commitment to craft &
achieve the vision, mission & goals of the credit union
 Serve as an active ambassador promoting the mission &
benefits of the credit union
 Obey the external and internal laws, regulations, policies &
procedures concerning the credit union

59. Key Responsibilities: Chair
Craft & Effectively
Facilitate Meetings
Build a Positive &
Healthy Board Structure
& Culture
Set & Model High
Standards for Board &
Staff
Serve As One of the CU’s
Chief Ambassadors
Key
Liaison
with CEO
Inspire &
Engage the
Board
Board
Operations
Manager
Board
Operations
Manager

60. Key Responsibilities: Vice Chair
Guide & Facilitate
Meetings in the Chair’s
Absence
Actively Learn and be “At
the Ready” at all Times
Inspire Learning Culture
& Learning Board
[Optional: Spearhead
Special Initiatives, i.e.,
Strategic Planning]
Board
Learner in
Chief

61. Key Responsibilities: Secretary
Work with Chair to
Build a Stronger Board
Oversee Adherence to
Organizational Policies
Work with Chair to
Build Engaging &
Effective Board
Meetings
Oversee Board
Nominations &
On‐Boarding Process
Board Builder
in Chief

62. Key Responsibilities: Treasurer
Translate Financial
Reporting for the
Board’s Understanding
& Action
Help Assure Safety &
Health of Financial
Systems & Internal
Controls
Help Identify Financial
Trends, Risks &
Opportunities
Oversee Budget & Audit
Processes & Requisite
Financial Filings
Board
Translator in
Chief

63. Key Responsibilities: CEO
Build, Structure, Manage &
Lead an Effective Staff &
Operational Effort
Partner with Board to Craft
Update & Forward the
Vision, Mission & Strategic
Goals
Actively Support Effective
Governance, Board & Board
Committees, Task Forces &
All Meetings
Partner Board to Ensure
Effective Functioning of
Outreach & Policy Efforts
Operations
Leader &
Manager in
Chief
Lead, Inspire
& Engage
Model &
Ensure High
Standards

64. BOARD
CEO/
STAFF
BOARD
CEO/
STAFF
BOARD
CEO/
STAFF
BOARD
CEO/
STAFF

65. Vice
Chair
Chair
Secretary
Treasurer
C
C
Super.
Com.
Chair
Com./
Task
Force
Chair
Com./
Task
Force
Chair
Mem.
Com.
Chair
B
B
B
B
B
B
At Large
Board
Members
Model Credit Union
Board Structure
C
C
C
Membership
Com.
C
Governance
Com.
C C
C
B
Sup. Com.
Finance Com.
KEY:
B = Board Member
C = Committee
Member (not member
of Board)
Com. = Committee
= Members of
Executive Committee
(Board Officers +
Chairs of Committees
& Task Forces
= Officers of the
Board
= Committee &
Task Force Chairs
© 2005, Michael G. Daigneault
C
C

66. Genesis of “Governance Committees”
Nominations Committee
• Fill Board Openings
Nominations Committee
• Fill Board Openings
Board Development Committee
• Fill Board Openings
• Orient Board Members
• Educate & Develop Board Members
Board Development Committee
• Fill Board Openings
• Orient Board Members
• Educate & Develop Board Members
Governance Committee
• Board Roles & Responsibilities
• Board Composition
• Board Knowledge
•Board Effectiveness
• Board Leadership
Governance Committee
• Board Roles & Responsibilities
• Board Composition
• Board Knowledge
•Board Effectiveness
• Board Leadership

67. Power Point Title
Subtitle
The Unique Role
of Credit Union
Supervisory & Audit
Committees
Module 4.

68. Central Principles, Goals
and Responsibilities
• Monitor Management Activities
• Annual Audit
• Verification of Members Accounts
• Handling of Member Complaints

69. The Annual Audit
Requirements
• Annual audit
required
• Once every calendar
year
• Covering period
elapsed since the last
audit period
Types
• Financial statement
audit, according to
generally accepted
auditing standards by
an independent, state‐
licensed person
• Supervisory
committee audit
options

70. Audit Options
• Balance Sheet Audit. Performed by a state
licensed person.
• Report on Examination of Internal Controls. Tests
the effectiveness of management assertions
about internal controls. Performed by state‐
licensed person.
• Audit per Supervisory Committee Guide.
Performed by the Supervisory committee, internal
auditor or certified public accountants (CPA) (or
other qualified person). If a CPA, must be state
licensed.

71. Audit Types & Options
Type of Charter Asset Size Minimum Audit
Required
NCUA Reg.
Citation
Federal charter $500 million or
more
Financial
statement audit
715.5
Federal charter Between $10 and
$500 million
Either financial
statement audit or
other supervisory
committee options
715.5
Federal charter Less than $10
million
Supervisory
committee options
715.5
State charter $500 million or
more
Financial
statement audit
715.6
State charter Less than $500
million
Either of
supervisory
committee options
unless state law is
more stringent
715.6

72. Core Audit Responsibilities
• Supervisory Committee hires the external
auditor, but the Board authorizes the budget
• Be sure to obtain an engagement letter
– Signed by a member of the supervisory committee
– Terms, conditions and objectives
– Basis of accounting
– Rate or fee
– Report delivery terms and target date
– Work papers retained for three years and available to
NCUA for review

73. Questions to Ask
Auditor
• Audit scope
• Adequacy of internal
controls
• Adequacy of computer
systems and security
• Discuss significant
findings and
management’s response
• Effects of any regulatory
compliance issues
• Significant risk exposures
Management
• Risks and management’s
steps to minimize
• Significant audit findings
and management’s
response
• Quality of earnings from
an objective point of
view
• NCUA regulatory
examinations or issues
• Evaluation of compliance
with laws and regulations

74. Internal vs. External Audits
Internal Audit
• Done by CU staff or
third party
• Supervised by
Supervisory
Committee
• External auditor make
rely on work, but
should not also do
external audit
External Audit
• Done by independent
licensed CPA firm or
other licensed third
party
• Should not also do
internal audit

75. Credit Union Financial Statements
Refer to sample financial statements
in your handout materials

76. Verification of Member Accounts
• Required every two years
• Negative confirmation of account balances
• Send to all members
• Update bad or no addresses
• Verification of closed accounts
• Retain records

77. Member Relations
• Respond to any member complaints
• Investigate
• Written response
• Copy to NCUA

78. Monitoring Management Activities
• Do so on a regular basis
• Safeguard member assets
• Board functions in best interest of
membership
• Verifies management carries out approved
policies
• Verifies compliance with applicable laws
and regulations

79. Monitoring Management Activities (2)
• SC should develop an work plan
• Report findings to the Board
• Monitor to ensure staff follows up on findings
• Operating independently
• Attending BOD meetings
• Report on annual audit and NCUA exam
• Ensure internal controls are in place and
operating effectively
• Anti‐fraud measures are in place

80. Enterprise Risk Management (ERM)
"Enterprise risk management is a process,
effected by an entity’s board of directors,
management and other personnel, applied in
strategy setting and across the enterprise,
designed to identify potential events that may
affect the entity, and manage risk to be within its
risk appetite, to provide reasonable assurance
regarding the achievement of entity objectives."
A Formal Definition
COSO’s Enterprise Risk Management –
Integrated Framework (2004)

81. Committee of Sponsoring Organizations
of the Treadway Commission (COSO)
COSO is a voluntary private‐sector organization
dedicated to guiding executive management and
governance participants towards the establishment
of more effective, efficient, and ethical business
operations on a global basis. It sponsors and
disseminates frameworks and guidance based on in‐
depth research, analysis, and best practices.

82. The Scope & Importance of
ERM Efforts
"To successfully manage risk, an ERM initiative must
be enterprise wide and viewed as an important and
strategic effort. In the aftermath of the financial crisis
of 2008, there has been a growing emphasis on the
board’s responsibilities for overseeing an
organization’s risk management activities. For
example, the corporate governance rules of the New
York Stock Exchange require audit committees of
listed corporations to discuss the risk assessment and
risk management policies of their organizations."
COSO ‐ Embracing Enterprise Risk Management:
Practical Approaches for Getting Started

83. The COSO ERM Framework
The COSO ERM framework is geared to help assist in
achieving an entity’s objectives, set forth in four
basic categories:
• Strategic – high‐level goals, aligned with and
supporting its mission
• Operations – effective and efficient use of its resources
• Reporting – reliability of reporting
• Compliance – compliance with applicable laws and
regulations
COSO’s Enterprise Risk Management –
Integrated Framework (2004)

84. Enterprise
Risk
Management
Audit+
Audit
A New Trend: The Emerging
Role of the Supervisory
Committee

85. Power Point Title
Subtitle
Homework
Assignment
Final Thoughts
&
Module 5.

86. Power Point Title
Subtitle
What did you
Module 6.

87. Module 7.
The
Hypothetical
Exercise…
1. Please read through the hypothetical
with us.
2. Thinking as a "Supervisory/Audit
Committee," please identify the key
questions and issues the situation
presents you and your colleagues.
3. Discuss – and try to develop a
consensus on – how an effective
Supervisory/Audit Committee should
address (or not address!) the key
questions or issues you have
identified.
A Challenging
Meeting!

88. Power Point Title
SubtitleCredit Union Accounting
Regulatory
Fundamentals
Module 8.

89. Power Point Title
Subtitle
What does the
NCUA expect
from a Credit Union
Supervisory
Committee?

90. What Are They Looking For?
• Record keeping
• Committee size and independence
• NCUA Exam
• Work Plan
• Minutes of Meetings
• Charter
• Member Complaints Handled
• Audit Monitored
• Verification of Member Accounts

91. Appoint a committee secretary and
keep meeting minutes, records of
audits, meetings with management,
and meetings with NCUA.

92. Size & Independence
• The Committee should be 3 or 5 members
• One member can/should be a Board Member
• It should be independent and without conflict

93. NCUA Exam
• Meet examiner and identify exam schedule
• Exit conference at conclusion of fieldwork
• Review report
• Arrange for report to be given to Board
• Identify action steps
• Ensure follow‐up on action steps
• Document of resolution (DOR)
• CAMEL rating
• Examiner’s guide

94. The Work Plan
• Monthly or quarterly work plan
• Board meetings
• Work activities
• Meet with the internal auditor
• Meet with the external auditor
• Review and assessment of Internal Controls

95. Minutes & Meetings
• Meet regularly, at least quarterly
• Keep written minutes of meetings
• Make the minutes available to NCUA

96. Committee Charter
• Have a charter or statement of goals and
mission
• Address:
– Meetings
– Members
– Chair & Secretary
– Role of the CEO
– Charge of the Committee
• Quantum Governance is providing sample

97. Member Verification
• Done every two years
• Written report
• Follow up by management

98. Monitor the Annual Audit
• Ensure annual audit
• Completed timely 120 days after year‐end
• Meet with auditors

99. Address Member Complaints
• Handle complaints independent of
management
• Respond in writing
• Copy to NCUA, if the complaint came through
NCUA

100. Today’s Regulatory Environment
Regulators:
 Who are they?
Risk based capital issues
 Current & Proposed Rules
Secondary capital issues
 What is secondary Capital?
 How much is allowed by NCUA?
 What are the rules?
Cyber threats
• NCUA
• State Regulatory
Agencies
• CFPB
• Federal Reserve
• OFAC
• NACHA

101. Power Point Title
Subtitle
The Committee
of the
Module 9.

102. Fundamental or “transformational”
changes…and not just
incremental improvements…
are needed to overcome
the challenges that we face to craft
the exceptional
credit union of the future!

103. Power Point Title
Subtitle
These 6 Key
Ask Yourselves
Questions!

104. 1. What is our
Com's role?
3. How should we be composed
and structured?
5. Are we asking the
right questions?
6. ULTIMATELY – HOW SHOULD
WE THINK & ACT DIFFERENTLY?
2. What should we
FOCUS on?
4. How are we consistently
learning and improving?

105. Power Point Title
Subtitle
How would YOU change the
Charter?

106. Power Point Title
SubtitleCredit Union Supervisory
& Audit Committees
“Grab Bag” Topics!
Module 10.

107. Power Point Title
Subtitle
Your Final
Thoughts
Module 11.

108. Power Point Title
Subtitle
Michael G. Daigneault
Chief Executive Officer
Quantum Governance, L3C
michael@quantumgovernance.net
Business Cell: 703‐801‐7580
quantumgovernance.net
© 2016, Quantum Governance, L3C and DeLeon and Stang
Thank You…
Allen P. Deleon, CPA, PFS
Founding Partner
DeLeon & Stang CPA
allen@deleonandstang.com
Phone: 301‐948‐9825
deleonandstang.com

109. Additional Resources…
• DeLeon & Stang, CPAS and Advisors – Credit Union
newsletter
www.deleonandsang.com/news‐articles/credit‐union‐edge
• Federal Credit Union handbook
www.ncua.gov/legal/GuidesEct/GuidesManuals/fcu_handb
ook.pdf
• Quantum Governance
www.quantumgovernance.net
• Supervisory Committee Guide
www.ncua.gov/legal/GuidesEct/GuidesManuals/supcomm.p
df

110. Additional Resources…
• Opinion Audit Report (30‐50 Pages) + Management Letter
• Supervisory Committee Audit (AUP) Agreed Upon
Procedures (15‐20 Pages)
• Resources Guide
– NCUA Examiner Guide (Free)
– NCUA Supervisory Committee Guide (Free)
– Supervisory Committee Handbook (Free)
– Federal Credit Union Handbook (Free)
– Articles by CU Management, DeLeon & Stang and Others (Free)
– NCUA Accounting Manual (Free)
– NCUA Newsletter (Free)
– NCUA Letters/Alerts (Free)
• Quantum Governance Supervisory Committee Charter (Free)