OUR THOUGHTS ON:

A Postcard from the AICPA National Conference on Credit Unions

Risk Advisory/Internal Audit

By Robert Mackey

From October 25 through 27, the AICPA held its annual National Conference on Credit Unions in Las Vegas. The event drew more than 450 participants from the industry, National Credit Union Administration (NCUA) and service providers. I attended on behalf of Schneider Downs to assist the firm’s goal of staying abreast of the hot topics in the industry.

Among the many challenges facing the industry, the most discussed at the conference were the five corporate credit unions (corporates provide back-office infrastructure to many natural-person credit unions) that entered conservatorship, and the many natural-person credit unions that have failed recently. With such concerns sweeping the industry, significant regulatory changes have been implemented with the goal of strengthening the system.

Most presentations at the conference acknowledged the challenges the industry faces, but maintained a cautious optimism with respect to the future of the industry. The opening-day keynote address from Gigi Hyland, NCUA board member, centered on the NCUA’s plan to stabilize and reform the corporate credit union system. The NCUA has started down a path of isolating poorly capitalized corporates' underperforming assets in a “legacy” structure, similar to a “bad bank” for toxic assets. The NCUA continues to operate the conserved corporate credit unions in “bridge corporate,” continuing to process transactions under management of the NCUA until they can be transitioned to the members they serve.

The session titled “Credit Unions at a Tipping Point,” highlighted challenges and opportunities facing credit unions in the current economic environment and how credit unions are making the most out of the current situation. For example, Kemba, a large Ohio-based credit union, was applauded for its back-to-basics approach of lending to select employer groups during the economic downturn.

There was a smattering of general accounting topics. The topics that drew the greatest audience participation were the industry-specific discussions, including: The Credit Union Business Model in the New Age of Turmoil and Credit Union Fraud, which highlighted the increase in synthetic identity theft.

Also of note was the presentation that addressed the likely impact of the Dodd-Frank Act on credit unions and the stress it will likely inflict on compliance officers. The Internal Audit/Supervisory Committee Open Forum panel discussion was very engaging. The panel arrived at a consensus that credit unions of approximately $100 million in assets or more should consider a full-time internal auditor, and emphasized the importance of risk management.

In summary, the conference was a great opportunity to engage with industry experts on current issues and gain a wealth of knowledge from the presenters.  It was a pleasure to meet so many participants. To those who were unable to attend, the weather was beautiful. I wish you were there.

 

 

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