On Jan. 25, 2011, the Credit Union Leadership Forum held itsfirst web seminar entitled, "A Practical Perspective: RegulatoryRealities," featuring Paul Peterson, NCUA associate generalcounsel, Teresa Halleck, president/CEO, San Diego County CreditUnion and Sarah Snell Cooke, editor-in-chief of Credit UnionTimes, and myself. We discussed the practical and real-worldimplications of the new NCUA regulations regarding board ofdirector responsibilities.

The new regulation states that at the time of election orappointment, or within a reasonable time thereafter, not to exceedsix months, a director must have at least a working familiaritywith basic finance and accounting practices, including the abilityto read and understand the federal credit union's balance sheet andincome statement, and to ask, as appropriate, substantive questionsof management and the auditors.

In addition to having a basic understanding of finance andaccounting practices, we believe that directors should also have abasic understanding of the risks that can affect credit unions suchas credit, interest rate, liquidity, transactional, compliance,strategic and reputational risk, as well as the internal controlsto monitor these risks. Having this understanding will enabledirectors to ask "appropriate, substantive questions of managementand the auditors." Understanding risk mitigation must be a sharedlearning for all directors of a board.