Current through Register Vol. 48, No. 12, March 22, 2024
a) The Supervisory Committee must make or
cause to be made at least once each year a reasonable percentage verification
of members' share and loan accounts. Except when prior written permission is
given by the Division, for good cause shown, the verification results are to be
reported in the Supervisory Committee Report filed with the Division. The
verification shall be conducted by the Committee, or by a registered public
accountant, under the supervision of the Committee.
b) Verifications Conducted by the Supervisory
Committee
1) The Committee must test 100% of
the accounts at least once every two years; however, the Committee may submit a
modified program using generally accepted auditing standards for approval by
the Division. When conducting the verification, the Committee must establish
the following controls:
A) The commencement of
the verification must be on a surprise basis, including taking possession and
control of books and records, or copies thereof, necessary for the
audit.
B) All work is to be done by
the Supervisory Committee or its designated agents; all credit union staff,
employees and other directors shall not be involved, other than to explain
exceptions.
C) General notice of
the verification is to be publicized to the membership in the credit union
offices and by other appropriate means.
D) Separate records of members' share and
loan account trial balances are to be maintained by the Committee; the
Committee must also maintain a separate list of members that is to be updated
from the Board minutes for new and terminated members.
E) All responses and communications to the
verifications by members must be to the Supervisory Committee or its
agents.
F) All records supporting
the verification are to be retained by the Supervisory Committee.
2) Verification requests may be of
either the positive kind, which requires a direct reply or attestation by the
member as to the correctness or the balances, or the negative kind, which
require replies only if the information listed is, in the opinion of the
member, incorrect. Provided however, that the following accounts must be
verified using the positive method:
A)
Inactive or dormant accounts - members' accounts that show no member initiated
activity for at least 3 years.
B)
Accounts with recent activity following a period of at least 3 years of
dormancy.
C) Accounts that show
unusually large share withdrawals.
D) Accounts that have delinquent
loans.
E) Share and loan accounts
closed or charged off since the last verification was conducted.
F) Accounts where negative requests are
returned due to an inaccurate address.
G) Any other accounts with unusual or
significant activity, or which, in the judgment of the Committee, should be
done on a positive basis to verify the integrity of the negative verification
requests.
3) All
discrepancies reported should be resolved and, if known, the reason for the
error shall be reported to the board, along with the results of the
audit.
c) Verification
Conducted by a CPA Firm or Individual Registered with the State of Illinois to
Practice as a Public Accountant
1) When the
Supervisory Committee's audit is performed by a CPA or a Registered Public
Accountant, either positive or negative verification requests may be used. The
extent and nature of all tests is to be decided jointly by the Committee and
the CPA or Registered Public Accountant.
2) At the conclusion of the audit, a
statement must be given that reflects the work performed and the
responsibilities accepted by the firm or individual. This statement shall be
signed by the person in charge of the audit, or by the person who accepts
responsibility for the firm, and shall be attached to the audit report given to
the board of directors.