Resources to Fight Fraud
Although the NCUA recently announced it is developing new exam procedures to improve the identification of fraud risk indicators, especially at small institutions, experts agree that fighting fraud requires a team effort that includes active boards, strong supervisory committees and stiff internal controls.
“Weak internal controls provide a breeding ground for substantial losses or even failure,” C. Keith Morton, NCUA Region IV director, wrote in an article for Cornerstone Credit Union League earlier this year. “Record-keeping problems, out-of-balance conditions, overdue audits or member account verifications, and manipulated records create a dangerous environment for fraud to take root and go undiscovered. It may be only one person who commits the fraud, but lax management oversight, along with a failure of the supervisory committee to perform its vital functions, may allow this individual to embezzle for months, if not years.”