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

This paper discusses various aspects of a credit union's general ledger review, which is a key part of the examination process. It gives the examiner a clear impression of the credit union's financial position and its relative financial stability.

The paper discusses:

• The objectives of the review, which include determining whether:
  • The credit union has adequate policies, practices, procedures and internal controls regarding its assets, liabilities and equity;
  • Accounting personnel operate according to rules, regulations and accounting norms, etc.
• The scope of the review, stating that the review should look at:
  • Loans, accounts receivable, cash, investments, etc.
• Examination procedures, which include determining that:
  • The general ledger accounts and balances are supported by an independent ledger;
  • The account is in balance with the total of its subsidiary ledgers, etc.
• Critical elements in determining the depth of the review, such as:
  • Account materiality;
  • Unusual activity, etc.
• The general ledger review process, which include:
  • Verifying that the financial statements balance and are correct by calculating total assets, liabilities and liquidity;
  • Determining that all the financial reports submitted to the regulatory agency since the last examination are accurate, etc.
• Signs of warning that may indicate existing or potential problems.
• Examination work papers that are written documents prepared or obtained by the examiner while performing an examination.
• General ledger deficiencies, which highlights operating exceptions, violations of law, unsound policies, practices and procedures.