SAN DIEGO — Attendance at credit union attorney Mitchell Klein's educational session regarding third-party due diligence, despite stiff competition from perfect San Diego weather on a Friday afternoon, underscored the importance of the subject matter.
Klein, who is senior vice president and general counsel for $3 billion Police and Fire FCU, said the NCUA isn't kidding when it says it will review vendor due diligence this year; in fact, Klein's Philadelphia-based cooperative is scheduled for an audit this month, and examiners have already requested the information.
What is the NCUA looking for? A formalized due diligence policy and documentation the policy is being followed, he said. The agency will also use a checklist to ensure credit unions follow vendor due diligence to a "T." It includes questions regarding the need for a vendor, the bidding process, risk assessment, background checks, business model, cash flows, financial and operational control, contracts, accounting, monitoring and control.
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