Thursday, December 5, 2013

IG Report: G.I.C. FCU Failed due to Fraud

NCUA's Office of the Inspector General (IG) determined that fraud led to the failure of G.I.C. Federal Credit Union of Euclid, Ohio.

According to the Material Loss Review, the failure of G.I.C. resulted in an estimated loss of $7 million to the National Credit Union Share Insurance Fund.

The IG report found that the credit union overstated its assets by $8.1 million, primarily through the misstatement of certificates of deposit held as investments and cash held on deposit.

The report noted that several factors contributed to the fraud going undetected, including
  • senior management displaying a lack of integrity and not managing the credit union in the best interest of its members;
  • supervisory committee failing to obtain supervisory committee audits for three consecutive fiscal years; and
  • the Board of Directors of the credit union failing to exercise its responsibilities.
The IG report pointed out that only federal credit unions with $500 million or more in total assets are required to have a financial statement audit performed by a licensed independent auditor. However, the report makes the observation that "smaller credit unions ... often have less sophisticated supervisory committees, Boards of Directors, and/or management." The report suggested that NCUA management review various Material Loss Reviews and consult with various stakeholders whether the $500 million asset threshold is too high.

Read the Material Loss Review.

1 comment:

  1. A while back we recall hump-el at cuna (cu not accountable) saying losses in the system from the credit bubble wont be as bad on a relative basis in part because losses proor to the bubble were mostly from fraud and therefore more expensive to resolve.
    GIC is one of perhaps 6 (or more) where mgt absconded more than the assets of the cu.
    cuna. Waste of dues money.
    Hump/el. Robusteerian economist (as in written by an idiot).

    ReplyDelete

 

The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.