Credit Unions and CPA Firms in an Era of Accountability

The passage of the Sarbanes-Oxley Act is but the latest effort by Congress and regulatory agencies to increase the accountability of CEOs and auditors for a firm's financial statements. While the Act does not apply to credit unions, some of the issues raised of auditor independence are of concern to credit unions and their Supervisory Committees.

 
 

New Resource Available
The passage of the Sarbanes-Oxley Act is but the latest effort by Congress and regulatory agencies to increase the accountability of CEOs and auditors for a firm's financial statements. While the Act does not apply to credit unions, some of the issues raised of auditor independence are of concern to credit unions and their Supervisory Committees.

As of August 31, Arthur Andersen, one of the nation's oldest accounting firms officially ended its auditing practice. Approximately 15 credit unions had their books audited by Andersen at December 31, 2001. These credit unions, most over $500 million in assets, are required by law ( HR 1151) to engage a new firm for an opinion audit for year-end 2002.

The incidences of corporate financial and accounting scandals at public firms have caused credit unions and Supervisory Committees to raise questions such as:

  • Should my opinion-auditing firm also be used for other consulting or internal auditing assignments?
  • Should we automatically rotate our auditing firm after a period such as five or seven years?
  • How should the Supervisory Committee oversee the audit process?
  • How many CPA firms are qualified and interested in my credit union's auditing needs?

According to call report data, about half of the 2,143 credit unions over $40 million in assets have an external financial statement audit by a CPA firm. Thirty-one CPA firms have at least five or more clients in this group. Of these thirty-one firms, over half have national practices.

The firm with the largest number of clients is McGladrey & Pullen LLP with 341 credit union auditing clients over $40 million. Late in 2001, O'Rourke, Sacher and Molten, which had been the firm with the largest credit union client base, merged with McGladrey.

All of the Big 4 national accounting firms are also on the list led by KPMG which is ranked tenth with 34 clients.

New Callahan CPA Resource Guide and McGladrey & Pullen Conference

To assist Supervisory Committees, internal auditors and credit union management find CPA information and have guidance on issues like those listed earlier there are two resources available through CreditUnions.com:

1) Callahan & Associates, Inc. has just published a complete Guide to Credit Union CPA Auditors and Supervisory Committee Auditing Requirements.

This 200 page e-document PDF resource will help credit unions identify the leading CPA firms in their state, the client lists of CPA firms and the regulatory requirements governing auditing relationships including the just available NCUA Examiners Guide chapter covering Supervisory Committee audit oversight. In addition the guide shows the data processors used by each CPA's credit union clients to show which systems the firms will have the most experience with.

For CPA firms, the guide shows market shares and potential credit union clients in their market areas.

The full publication can be downloaded immediately in e-document PDF format or a printed version can be mailed at a slightly higher price. For further information on the CPA Guide including the Table of Contents, please click here.

 

 

 

Sept. 9, 2002


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