WASHINGTON—Support for NCUA's proposed guidance that would allow credit unions to more easily hire job candidates with minor criminal records, is being offered by NAFCU, which said the proposal "ensures the safety and soundness of credit unions while extending opportunities to qualified candidates."
The trade group has also published an analysis to the recently issued Final Rule on Supervisory Committee Audits and Verifications.
“NAFCU appreciates the NCUA updating its rules to reduce the number of minor criminal offenses that preclude individuals who pose a low risk to credit unions from working for, or otherwise participating in the affairs of, a credit union unless they obtain the NCUA’s written consent," wrote Mahlet Makonnen, NAFCU’s regulatory affairs counsel, in response to the proposal. "… This proposed Second Chance IRPS improves consistency with other prudential regulators, allows credit unions to better serve their communities, and decreases the burden of the waiver application process."
The NCUA’s proposed Interpretive Ruling and Policy Statement (IRPS), or "second chance IRPS" focuses on a section of the Federal Credit Union Act that prohibits credit unions from hiring candidates that have been convicted of certain criminal offenses without NCUA board consent.
Additional Clarification Requested
The second chance IRPS would expand the current de minimis and conviction exceptions to include additional offenses, implement a new age-based exception to the filing requirement, and considers whether the NCUA board should delegate responsibility of reviewing certain applications to streamline the application process, among other things.
Makonnen also requested additional clarification on how the proposal would affect fidelity bonds, and that the NCUA evaluate whether the delegation of the waiver process would compromise sensitive credit union and consumer data.
Supervisory Audits
Separately, following the NCUA board's decision to retire its Supervisory Committee Guide, NAFCU has published an analysis to the recently issued Final Rule on Supervisory Committee Audits and Verifications.
The original Supervisory Committee Guide will remain on the NCUA's website as an additional resource for credit unions.
“The final rule replaces the Supervisory Committee Guide with a simplified appendix, eliminates two audit types that federally insured credit unions (FICUs) seldom use, and eliminates a specific deadline (120 days) for outside, compensated persons to deliver written audit reports to FICUs,” said NAFCU Regulatory Compliance Counsel Reginald Watson. "In replacing the guidance, the final rule adopts the newly-created Appendix largely as proposed, with the addition of two new topics: a review of board minutes and testing for unrecorded liabilities. In lieu of prescriptive provisions, the appendix provides flexibility for the Supervisory Committee to use its judgment in determining the auditing procedures."
Topics to Include
According to Watson, topics that must be outlined in the Supervisory Committee review include:
- Reviewing board of director minutes
- Testing and confirming certain types of asset and liability accounts
- Testing material equity, income and expense accounts
- Testing unrecorded liabilities
- Reviewing key internal controls
- Testing the methodology and mathematical accuracy of the allowance for loan and lease loss account
- Testing loan delinquency and charge-offs
Watson added the appendix "also requires that the audit report explain the method of selection when a test or confirmation procedure includes the making of a sample or selection."