CHARLESTON, S.C.-Speaking to the National Association of Community Credit Unions, NCUA Chairman Dennis Dollar told the group that NCUA has received the long awaited Deloitte and Touche study of the agency’s overhead transfer rate setting process. According to Dollar, the CPA firm found few errors in NCUA’s calculation method and said the study indicated that the errors were “insignificant.” “Deloitte and Touche listened to the views of associations representing all of our stakeholders and gave our process an extensive review based upon the issues raised,” Dollar said. “They found that our focus on risks to the share insurance fund from dynamics such as diversification, concentration and increasing asset size has been recognized in the overhead transfer calculation process.” The chairman, however, was careful to point out that the NCUA Board would not necessarily automatically leave the overhead transfer rate at 66.72% when it acts on the 2002 budget at its November meeting. The rate was increased last year from its historical 50% rate. State chartered credit unions dubbed the increase unfair, while federal credit unions benefited with a lower operating fee payment last year. Dollar reminded his audience that the independent study was not charged with providing a suggested overhead transfer rate, but to study the methodology. “It will still be our job to use their findings to help us set an equitable rate. I look forward to the challenge, particularly now that we know our process is sound,” he said. According to a partial copy obtained by Credit Union Times, NCUA is not comparable to the other federal financial institution regulatory agencies. “NCUA more closely resembles a multi-product company that uses the same manufacturing operation to produce multiple product lines,” the Deloitte and Touche study read. “Such companies must allocate their operating costs among multiple products using cost allocation methods. NCUA’s overhead transfer process is very comparable to the methods used by private industry to accomplish such cost allocation.” “Although funding any government agency is always controversial with those who foot the bill,” said Dollar, “the truth is that the present funding system is working well. Credit unions and the insurance fund are both stronger than ever, and NCUA is taking the right approach on safety and soundness issues as both an insurer and regulator.” The errors discovered by the study were minor. For example, First Source Federal Credit Union’s CAMEL rating was entered as “]” and Chatel Federal Credit Union’s asset size was listed as $78 million rather than $7.8 million. Copies of the Deloitte and Touche study may be obtained through the Freedom of Information Act. [email protected]

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