Development Best Practices in Credit Union Supervision: Examination Process - Investment and Cash Analysis

This paper details the investment and cash analysis of credit unions, during the procedure of an examination. It discusses:

• The objectives of investment analysis, for instance the adequacy of investment policies, procedures and internal controls;
• Scope of the analysis, which would depend on the condition of investment records, etc;
• Investment policy review, stating that the board of directors of a credit union should have a written policy that complies with the law, rules and regulations;
• The investment policy's need to address:
  • Objectives;
  • Permissible investments and legality, etc.
• Physical review of requirements, listing the information that the examiner should include in writing;
• The need to maintain adequate, individual investment subsidiary ledger records for each investment;
• Investment valuation, with the data obtained from the credit union;
• Foreign currency investments;
• Warning signs like ratios, trends, or suspicious activity that may indicate existing or potential problems;
• Investment deficiencies, which lists operating exceptions, violations of law or regulation, unsound practices, policies and procedures.

The paper similarly discusses:

• Objectives of cash analysis;
• Scope of cash analysis;
• The review of cash-like items such as petty cash, bank cash, etc.

The paper concludes by listing warning signs to notice during cash reviews.