Many credit unions see examinations as necessarily evils. CUNA is hoping to make the process more tolerable and fair.
That's the association's purpose in releasing its 64-page booklet, "Supervisory Issues and Examinations: Guidance for Credit Unions During the Current Economic Times and Beyond."
It's both one-stop shopping for credit unions who want to know about the NCUA's examination rules and a list of what the association sees as the rights for credit unions during the examination process. These rights range from managing risk without having to eliminate it to knowing when the NCUA will publish a Letter of Understanding and Agreement.
CUNA Senior Vice President Mary Mitchell Dunn said the association needed to publish the booklet because of concerns among credit unions about encountering state and federal examiners who are hostile and are "not necessarily just focusing on what's happening at their credit union but are comparing them to other credit unions."
Because of the financial crisis, the NCUA and some state regulators have increased the frequency of exams and have made them more rigorous. The NCUA is in the final stages of switching its examination schedule to at least once a year.
The NCUA didn't respond to the specific comments and recommendations in the booklet, but NCUA Chairman Debbie Matz said in a statement that "Credit union management and directors should always look at their role in the examination process as an active one, where a constructive dialogue between NCUA and the credit union can enhance safety and soundness and identify opportunities for improved service to members."
Kansas Department of Credit Unions Administrator John Smith said he forwarded the 24 parts of the credit union examination rights to his examiners. He singled out the provision about credit unions not being evaluated based on national trends.
"If you are going to do a risk-focused examination, as we do, then focus on the credit union's strengths and weaknesses," he said.
Dunn said CUNA issued the booklet because a survey of 200 credit unions found that 27% of respondents were dissatisfied with their most recent examination.
The survey found that there is a greater level of dissatisfaction with examinations among credit unions with more assets. Credit unions with less than $20 million in assets had an average satisfaction rating of their latest examination at 3.8 on a five-point scale, while those with assets of $100 million or more had an average satisfaction rating of 3.2.
The publication also includes sections dealing with general duties of examiners, credit union examination concerns, handling disagreements with examiners and recommendations for both credit unions and the NCUA.
The booklet also outlines the NCUA appeals process, which Dunn said isn't always easy to discern on the agency's website and in the documents it gives credit unions.
The booklet said that the agency's "process for allowing an appeal is far from clear. NCUA and state regulators should ensure that all examination forms which examiners provide to credit unions include sufficiently detailed information as to which issues may be appealed or challenged and the process for making such an appeal..."
The booklet also said published orders, such as consent orders, should "address only facts and not conjecture or speculation by the examiner."
The booklet concludes that there needs to be a balance. While no one "wants to undermine or lessen safety and soundness," there is a need for meaningful improvements and transparency in these [examination] processes."