Section 5- Supervisory Committee

Question 1

For FCUs, who appoints the supervisory committee and determines the number of committee members and their term of service?

Answer 1

The Board of Directors

Question 2

What are the two requirements to serve on the supervisory committee?

Answer 2

The person must be a member of the CU and be bondable.

Question 3

What are the two basic responsibilities of the supervisory committee?

Answer 3

1. Ensure that the financial statements accurately and fairly present the financial condition of the credit union
2. Ensure that management practices and policies safeguard members’ assets.

Question 4

True or false: The supervisory committee is responsible for following up with management to assure that problems identified in the audit report are corrected.

Answer 4

True

Question 5

How often does the FCU Act require the supervisory committee to verify the passbooks and accounts of CU members?

Answer 5

Must be verified with the records of the treasurer from time to time and not less frequently than once every two years.

Question 6

What are the three methods of verifying accounts?

Answer 6

1. Controlled verification
2. Statistical method
3. Nonstatistical method

Question 7

Which verification method includes 100% of member’ share and loan accounts?

Answer 7

Controlled verification

Question 8

T or F? NCUA’s Rules and Regulations require the supervisory committee to retain records of each verification of member’s accounts for six months.

Answer 8

False

Question 9

Which verification method includes a sampling of accounts that either provides a random sampling which is representative of the population from which it was selected, or sufficient accounts in both number and scope on which to base conclusions concerning management’s financial reporting objectives

Answer 9

Statistical method

Question 10

Which verification method can be described as a sampling that can only be done by an independent certified public accountant (CPA), choosing sampling methods consistent with generally accepted auditing standards (GAAS), with documentation recorded and available to NCUA upon request?

Answer 10

Nonstatistical Method

Question 11

NCUA’s Rules & Regulations requires that the Supervisory Committee retain member verification records for how long?

Answer 11

They must retain the records of each verification of members’ accounts until they complete the next verification of accounts.