Report on NCUA's Examination and Compliant Processes for Small CUs

NCUA's Office of the Inspector General (IG) released a report on NCUA's examination and complaint processes for small credit unions.

The report was requested by Senator Tim Johnson, Chairman of United States Senate's Committee on Banking, Housing, and Urban Affairs.

The report found that "NCUA’s examination process has clear standards and policies to conduct examinations. However, we noted inconsistencies in the manner in which NCUA carried out the procedures to implement those policies."

The IG believed that the inconsistency arose from the agency’s organizational structure consisting of five separately run regional offices with each having its own supervision manual. The IG report found that no two regional supervision manuals were the same and each region had its own customized approach to conducting risk-focused examinations.

However the report concluded that the exam inconsistencies have been addressed by the implementation of a new National Supervision Policy Manual.

Furthermore, the report concluded that NCUA examinations were completed in a timely fashion. NCUA guidelines state examiners should complete all examinations/supervision contacts within 60 calendar days from the start date.

The report found that on average NCUA completed regular FCU and joint FISCU examinations in 28 days and 32 days, respectively. Also, credit unions with CAMEL composite ratings of 1 or 2 took less time to complete the exam than credit unions with CAMEL 4 or 5 composite ratings. The IG report noted that it takes a greater time commitment to work on troubled institutions.

The IG report found that "NCUA has an adequate appeals process, which allows credit unions to question examination results."

According to logs from the five regional offices, between January 1, 2007 and December 31, 2011, each regional offices averaged six examination-related complaints annually with an average resolution time of 43 days. According to the logs, 85 percent of the complaints were decided in favor of the agency.

The report did note that there were some operational and organizational deficiencies associated with compliance monitoring, the regional determination process, the Supervisory Review Committee, and the Ombudsman position, respectively. For example, the report found that "Ombudsman position does not organizationally report directly to either the agency’s highest-ranking official or the NCUA Board, as required by the criteria which originally established the position."

Read the report.