NCUA Working Group Releases Report to Improve Exam Process

The National Credit Union Administration's Exam Flexibility Initiative working group will submit 10 recommendations to the NCUA Board during the Board's November 17 open meeting to improve the examination process.

The following recommendations would become effective January 1, 2017, if approved by the NCUA Board:

• An extended examination cycle for well managed, low-risk federal credit unions with assets of less than $1 billion;
• Enhanced examinations of small federal credit unions;
• Enhanced coordination of exams for federally insured, state-chartered credit unions; and
• Establishment of an NCUA and state supervisor working group.

NCUA could make other changes as of July 1, 2017, including improvements in examination planning and the issuance of a post-exam survey.

For a federal credit union to qualify for an extended examination cycle, NCUA defines a well managed, low risk federal credit union, as a CAMEL code 1 or 2, both in composite and management rating components; less than $1 billion in assets; well capitalized per prompt corrective action regulations; no documents of resolution related to significant recordkeeping deficiencies; and no formal or informal enforcement or administrative order, such as a cease and desist order, letter of understanding and agreement, or preliminary warning letter. For qualifying credit unions, examinations will generally begin between 14 and 20 months from the prior examination completion date.

However, federal credit unions that do not meet the above criteria examinations will generally begin between 8 and 12 months from the prior
examination completion date.

Read the report.