NEW YORK – The American Institute of CPAs said it has completed work with NCUA on removing obstacles to the implementation of a new policy designed to reduce the risk of manipulation or fraud by credit union management.
The policy change on external auditor reports was designed to reduce the risk of manipulation by management after some issues emerged in the agency’s periodic material loss reviews. The new requirement initially caused concern among some CPA firms, however, because the act of forwarding the audit report directly to the agency is considered a management function, which could impair an external auditor’s independence, the AICPA said. AICPA said that at its request, NCUA agreed to accept an online delivery option for the documents.
“The policy change was designed to preserve the integrity of the auditor’s report, but inadvertently raised issues for external auditors,” said Sydney Garmong, a partner with Crowe Horwath LLP and chair of the American Institute of CPAs’ Depository Institutions Expert Panel, which addresses professional practice issues regarding financial institutions, in a statement. “We’re grateful that the NCUA heard our concerns and agreed to acceptable alternatives to preserve auditor independence.”
In an update to credit union management and boards in May, NCUA said the external auditor could either forward its audit report directly to the regulator, provide time for physical inspection of the document at a specified time or place, or use “a secure portal that verifies and validates the original document source and ensures the audit report submitted to NCUA is authentic and unaltered.”
An online platform jointly developed by CPA.com – the technology arm of the AICPA – and Confirmation.com, RIVIO Clearinghouse, meets the latter criteria and is already in use for NCUA submissions, AICPA said.
RIVIO ensures private companies and authorized third parties can share audit reports and other relevant records from validated CPA firms, the AICPA explained. Company management, in this case credit union directors, can designate who views the audit reports uploaded by CPA firms, but cannot alter the financial presentation in any way. And because the clearinghouse ensures that management is solely responsible for authorizing access to data, it defuses questions about the auditor’s independence.