Congress recently passed a comprehensive credit union membership bill (HR 1151) that contains three provisions, supported by the AICPA, which will affect CPAs.
Two of the provisions deal with audit requirements. The third item deals with the financial reports and statements filed by credit unions:
- Federally insured credit unions with assets greater than $10 million are required to file reports on their financial results with the National Credit Union Administration (NCUA) on a GAAP basis. They may file reports that are not on a GAAP basis; however, the principles underlying those reports may be no less stringent than GAAP.
- Credit unions that have more than $500 million in assets are required to have an annual independent audit performed in accordance with GAAS by either a CPA or a licensed public accountant.
- Credit unions with assets greater than $10 million, which choose to have an audit, must have that audit performed by a CPA or an appropriately licensed public accountant.
The new legislation makes the rules for auditing credit unions with $500 million or more assets similar to the rules for banks and thrift institutions of comparable size, said Mark A. Taylor, chairman of the Institutes credit unions committee.
The majority of those credit unions already have independent audits done by a licensed public accountant or a CPA, he added.
Lesie Bullock, spokesperson for the NCUA, confirmed that 31 federally insured credit unions with assets of $500 million or more were already being audited by licensed public accountants or CPAs.
Both Taylor and Bullock said the bill will have the greatest impact on credit unions with assets of more than $10 million.
The difference is that, under the old regulations, there was no specific requirement as to who had to do the audit, Taylor said. Theoretically, individuals, whether they were licensed or not or whether or not they had any accounting background, could do a credit union audit.
Now the requirements have been tightened up so that audits can only be performed by someone who is licensed, Taylor said. From the standpoint of the AICPA, this is an improvement for credit union members because audits will now be done by people who are licensed, have specific training in accounting and auditing, undergo continuing education and are subject to peer review.
Bullock said that the NCUA was working on new guidelines to implement the changes mandated in the bill. The NCUA, like the AICPA, worked closely with legislators in developing the many components of this bill and was satisfied with the results.
The audit provisions in the Credit Union Membership bill were a win for CPAs, Taylor concluded. However, the real beneficiaries of the new measures are members of the credit unions, he said.