Development Best Practices in Credit Union Supervision: Examination Process - Savings Review

This paper discusses the "savings review", which is a part of the examination process of a credit union. The paper discusses:

• The objectives of the review, which include determining that:
  • Savings policies are realistic;
  • Members' needs are met;
  • Internal controls are adequate, etc.
• Scope of the review, which depends upon the complexity of a credit union's savings structure.
• Savings review process, which includes:
  • Verifying the general ledger savings balances and ensuring that they are equal to the subsidiary and financial statements balances;
  • Determining that the board of directors approves all interest rate changes and the approval is documented in the board minutes;
  • Determining the different types of savings accounts offered and the total amount in each type, etc.
• Signs of warning that may indicate existing or potential problems, like:
  • Interest rates significantly above or below the local market rates;
  • Concentration of savings in one account type;
  • A few members owning a large percentage of the savings funds, etc.

The paper concludes by examining the issue of capital, profitability and savings deficiencies. It states that:

• Issues of a material nature should be addressed in the "Document of Resolution";
• The action to be taken has to be noted along with the individual responsible for taking the corrective action and the time frame within which the action should be taken.