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ALEXANDRIA, Va. – NCUA has issued a cease and desist order against Northeast Arkansas FCU for “accounting irregularities,” more than four months after its CEO was asked to resign. Without admitting or denying fault, NCUA said credit union officials have consented to cease and desist from engaging in specific activities and agreed to maintain complete and accurate records and produce complete and accurate financial statements; ensure the credit union’s information and technology systems function appropriately to maintain accurate records and provide a secure environment for member accounts and services; refrain from committing credit union resources until management can accurately assess the credit union’s liquidity position; and ensure qualified management is hired and retained. The credit union’s board asked former President/CEO Dan Trevathan to resign, which he did on Feb. 26.Trevathan told Credit Union Times that his resignation was prompted by a two-year old failed system conversion. Trevathan said it took about six to eight months after a conversion that began in July 2002 to realize the impact on the credit union’s ledger system. The controller, who initially “had enough knowledge to keep it working,” soon realized that the system could not be manipulated to keep up with reconciliation flows, he said. Frustrated by the ordeal, Trevathan said the controller resigned last May. A new controller came in “but that plan of action was limited in scope.” A leading credit union accounting firm also came through with a revised plan of action but “NCUA didn’t agree with it.” “There were significantly large balances thrown into a clearing account and NCUA wanted to go back and look at each transaction from the point of conversion,” Trevathan said. “That was going to be impossible because so many changes had been made along the way.” NCUA emphasized that the credit union is fully operational and its member accounts are federally insured. Northeast Arkansas FCU serves more than 13,000 members and has $72 million in assets.

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