Every credit union inevitably faces findings. These might emerge from a compliance review, an audit, or an exam, but they serve an important purpose. They highlight areas where your credit union needs to bolster its practices.
Findings aren’t negative by definition. In fact, they can be quite beneficial! Discovering your own findings indicates a functional risk management system that can proactively spot areas of weakness, including shortcomings in controls. Perfection is unattainable, and if your credit union isn’t generating any findings, it may not be looking closely enough. Uncovering issues early allows you to rectify them before they escalate into larger challenges and attract scrutiny from examiners.
Sometimes, findings result from an examiner detecting an issue. It could be that your credit union’s risk and compliance management systems aren’t entirely in line with the examiner’s perspective on risk. It’s not an ideal situation, but it does occur.
Regardless, your credit union needs to remediate every finding. This isn’t solely about appeasing examiners – it’s also crucial for maintaining the integrity and stability of your credit union. But how can you ensure a proactive, robust findings management program that will withstand examiner scrutiny?
Here are six practices to ensure your findings management program is up to the task:
- Prompt, documented corrective action: Examiners anticipate swift and decisive action from credit unions when addressing findings. Evidence of the issue’s resolution is necessary. Implement a tracking system to monitor the corrective action’s status and guarantee its completion by a stipulated deadline. Assigning individual responsibility for remediation is a best practice—accountability is vital.
- Root cause analysis: It’s essential to conduct a thorough root cause analysis to understand the underlying reasons for a finding. Such an analysis should examine the existing processes and controls, as well as consider the role of human error or other factors. Without understanding the cause of the problem, you cannot genuinely fix it.
- Effective, documented action: Implementing corrective action plans shouldn’t be done in a disorganized manner. Examiners expect proof of successful implementation. This may come in the form of employee training documentation, updates to policies and procedures, and evidence of system changes to address the finding. Regular monitoring processes are necessary to ensure that the corrective action remains effective.
- Follow-up and monitoring: Examiners want proof that your credit union has a system for assessing the effectiveness of corrective action, including monitoring its results. This might include reviews of reports, documentation of control testing, and consistent monitoring of key indicators. Merely addressing a problem and assuming it’s resolved isn’t sufficient—you need to demonstrate evidence.
- Management involvement: Examiners expect clear evidence of strong management participation in the findings management process. Senior management must ensure corrective action is undertaken, regularly report on its status, and maintain effective communication with the examiner. Such involvement guarantees the findings management process is taken seriously, allocating the necessary resources and attention to address the findings.
- Effective communication: Clear and concise documentation of findings, action plans, and the status of corrective action is expected. In managing examination findings, your credit union should proactively inform the examiner about any updates or modifications to the corrective action plan.
Examiners don’t appreciate unexpected developments. If you encounter difficulty in addressing an issue, it’s better to discuss it proactively rather than allow them to discover it during an exam.
Having a robust findings management program extends beyond mere regulatory compliance. It’s a commitment to uphold a culture of compliance, ensuring safe and sound operations and a good member experience.
For more information, visit Ncontracts’ website.