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In its 2016 annual report, the $2.8 billion Municipal Credit Union touted how its Internal Audit Department conducted more than 50 integrated audits in the credit union’s divisions of operations, compliance, IT and finance, and continuously audited the most sensitive areas of New York’s largest credit union by members.

Presumably, those audits included a review and testing of internal controls to detect and prevent internal fraud. But industry experts said those internal controls obviously broke down because of a serious lack of oversight by key personnel, the supervisory committee and the board of directors, which led to a multimillion-dollar fraud scandal by its CEO. While the consequences of this fraud case will have a lasting impact on MCU, industry experts offered insights about how executives may prevent similar circumstances from happening at their credit union.

Peter Strozniak

Credit Union Times

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