A credit union is a not-for-profit financial co-operative and is owned by its members. Credit unions can and do operate to produce a profit making this type of organization different from a non-profit organization. Credit unions do not pay income tax.

Credit unions are formed and chartered based on an association that individuals have with one another, such as: place of employment, place of residence or membership in an organization. To join a credit union you must be within the credit union's field of membership. Credit unions offer a range of financial services and products that vary from credit union to credit union. Credit unions can be chartered either by an individual state regulatory agency or by the federal regulatory agency, the National Credit Union Administration. In Kansas, state-chartered credit unions are required to have deposit insurance through the National Credit Union Administration. Kansas state-charted credit unions are regulated by the Kansas Department of Credit Unions.

A member’s deposit in a credit union entitles them to a share in the cooperative. The member receives a dividend, typically quarterly, based on the amount of money deposited. Dividend rates and loan rates vary depending on the policies of the individual credit union.

Credit unions are governed by a committee of member-volunteers who receive no compensation for their service. These volunteers are organized into a Board of Directors, a Supervisory Committee and a Credit Committee.

Credit unions are unique among other financial institutions because its members are co-owners in the cooperative. Members work together to run the credit union with the main purpose to provide a means of thrift and borrowing for each member. Only a member of a credit union can deposit money and receive a loan.

You can use the Credit Union search resource on the Kansas Department of Credit Unions web-site for a current list of Kansas state-chartered credit unions. You can also visit the National Credit Union Administration for a listing of credit unions. Your local phone directory should also list credit unions in your area.

Simply contact the credit union and ask if you meet their field of membership requirements. If you do, you are required to deposit and maintain a minimum deposit in an account. The deposit maintains your membership and entitles you to part ownership of the cooperative and voting rights.

Yes. You can join as many credit unions as you like. To join, you simply have to meet the credit union’s field of membership.

The National Credit Union Administration provides protection for credit union member deposits and potential members.

Similar to banks, all credit unions are required to file a report of financial condition, known as a Call Report, at least quarterly. The call reports for all credit unions are available through the National Credit Union Administration.

All credit unions in Kansas are required by statute to have deposit insurance with the National Credit Union Administration. Accounts are insured up to $250,000.

A Certificate of Deposit (CD) is a deposit that requires you to keep the money deposited for a certain time period. The penalties you pay to redeem a CD prior to its contractual date of maturity depend on the details of the individual CD. The penalty is usually equivalent to several months of interest that would have been earned or a market-based penalty.

The amount of interest you pay on a loan depends on several factors: the rate of interest charged on the loan, how that interest rate may change over the term of the loan, the frequency and timing of loan payments, the amount borrowed and the term of the loan. The concepts are referred to as the Time Value of Money and also apply to the interest earned on a deposit in an interest bearing account. You can find loan calculators on the Internet or you can contact your credit union for assistance.

The APY refers to the total return that you will receive in one year if you deposit your interest earned on an interest bearing account and not withdrawal the interest. If you withdrawal the interest you will receive only the APR on the account. The APR is typically lower than the APY because of the lack of compounding.

Some credit unions offer “skip-a-payment” on consumer loans. There can be a fee or a voluntary donation for this service. The skip-a-payment service lets the consumer skip the scheduled payment that has been agreed upon by the credit union. The loan continues to accrue interest and the loan maturity will extend at least one or more months. Your credit union can provide you with the terms to participate.

The best way to become involved with your credit union is to first attend an annual meeting. This will show you the democratic nature of your credit union and give you more knowledge about the various volunteer opportunities. If interested, follow up with credit union staff.

Management of the credit union is performed by volunteers and staff. Because of the democratic nature of credit unions, a meeting of the credit union’s membership is held annually. The annual meeting is when the Board of Directors are elected. Depending on the bylaws of each credit union, members of committees, including credit and supervisory, may be elected at the annual meeting or may be appointed by the Board.

If interested, contact staff of your credit union.

Your credit score is calculated from the information on your credit report. Everyone with a credit history has a credit score. The score is an indicator of how likely you are to repay your loan and make your loan payments on time. There are several different credit scoring systems and your score may vary from credit union to credit union based upon which system they utilize.

The better your credit score, the easier it will be to get the loan you want with a low interest rate. If you have a low credit score, you may have to pay a higher interest rate.

The KDCU may be able to assist credit union members if the credit union has violated a regulation or law. KDCU will not be able to assist when the member is not satisfied with a credit union’s policies, practices or services when no law has been violated or to resolve factual or contractual disputes.

Normally, a completed complaint form is required from the member in order to start the investigation process. This form can be found on this website or you may call the KDCU office to discuss your problem and a form will be mailed to you, if needed. Once this form is received with supporting documents, the complaint will be reviewed and an investigation will be conducted.

A credit union is like no other financial institution. Owned and operated by the people it serves, every credit union is formed by a group of people wanting to control their own financial destiny.

Management of Kansas credit unions is carried on by volunteers and staff. Members of the Board of elected from the credit unions membership at the annual meeting. The Board is responsible for the well being of the credit union, as members have put their faith in the Board to act in the best interest of the membership.

If your credit union has established an overdraft line of the credit with the member it is a loan subject to the Truth in Lending Act. If your credit union has established a discretionary program to pay overdrafts and disclaims any legal obligation to pay any overdraft is not subject to the Truth in Lending Act.

Your credit unions should follow generally accepted accounting principles (GAAP) and instructions for the NCUA 5300 Call Report to report income and loss recognition on overdraft protection programs. You should report overdraft balances as loans on regulatory reports. Overdraft losses should be charged to the allowance for loans and leases.

You can find a detailed discussion and guidance on “best practices” for credit unions offering courtesy pay programs in NCUA Letter No. 05-CU-03 which applies to all Federally Insured Credit Unions.

“Courtesy pay”, “overdraft privilege”, and “overdraft protection” are names of plans offered by your credit union so your checks (share drafts) do not bounce and your ATM and debit card transaction go through. Your credit union will still charge you an overdraft fee or bounce coverage fee for each overdraft item. The benefit to you is avoiding the merchant’s returned check fee and you maintain your relationship with the people you do business with.

There is no guarantee your credit union will cover any or all of the transactions that overdraw your account. Your credit union may decide not to cover your overdrafts if you habitually do not put enough money back into your account to cover both the overdraft and the fees associated with the overdraft.

There are other ways to cover overdrafts: 1) Link your checking account to share savings account you have at your credit union; 2) Set up an overdraft line of credit with your credit union; 3) Link your checking account to a credit card you have with your credit union: and 4) Practice good account management by keeping track of how much money you have in your checking account.

K.A.R. 121-1 1 allows the Administrator to assign a low-income designation if a majority of the credit union members are low-income members or if the credit union has a geographic field of membership in which the majority of the residents, if members of the credit union, would be low-income members. A credit union designated as a “low-income credit union” may accept low-income non-member shares if requirements are met.

After receiving approval for a low-income designation from the Administrator, the request will be forwarded to the National Credit Union Administration (NCUA) for their approval of a low-income designation. Among the benefits of receiving this designation from NCUA is the eligibility to apply for technical assistance grants to improve member services and increase the efficiency of credit union operations.

ALM (Asset/Liability Management) is the process of evaluating balance sheet risk (interest rate and liquidity risk) and making prudent decisions, which enables a credit union to remain financially viable as economic conditions change. A sound ALM process integrates strategic, profitability, and net worth planning with risk management.

A yield curve is a graph illustrating the level of interest rates as a function of time to maturity. The most common yield curve plots Treasury securities from the 3-month Treasury bill to the 30-year Treasury bond. This graph can be used as a comparison to investments with similar to maturities, such as a Certificate of Deposit, to judge if the CDs yield is comparable.

Too much liquidity may be defined when the cost of excess funds becomes a detriment to the credit union’s bottom line. Short-term cash liquidity ratios can vary from 7% to 15% of assets. Short-term investments and cash are measured with maturities less than one year.

There are several scenarios to consider. Does the investment require a premium to be paid to purchase? Does the investment have a call feature, step-up feature, or a cap? What is the average life of the investment? What will the market value be in rising or declining interest rate market? Should the investment be “Held to Maturity” or “Available for Sale”? These questions are just a sample of the pre-purchase analysis of an investment.

CMO – Collateralized Mortgage Obligation -A bond that represents a partitioned ownership of a mortgage pool. CMOs are issued by a trust which holds mortgage-backed securities as collateral. The trust issues several different classes of CMOs, called tranches. Tranches have different maturities, coupons, and risks.

MBS - Mortgage Backed Security - A term used broadly to refer to a security backed by mortgages, including pass-through securities, pools, mortgage-backed bonds, and CMOs.

ABS - Asset Backed Security - A security that is collateralized, typically, by loans, leases, unsecured receivables, or installment contracts on personal property. Asset-backed securities are not permissible investments for state chartered natural person credit unions.

No. An investment from a Master CD is not permitted within the KDCU written investment guidelines. This type of investment can not be placed in the credit union’s name, therefore, it cannot be safekept at a bank, trust, or a corporate credit union.

Per the Investment Guidelines of the Kansas Department of Credit Unions, investments can only be safekept at a bank, trust, or a corporate credit union.

A credit union must ask for permission in writing to apply a skip-a-payment fee granted by the KDCU’s Administrator. K.S.A. 16a-2-503 does not allow a skip-a-payment fee as of 1994. However, a current Kansas law, in effect in 2005 (a Missouri parity law), does allow a credit union to ask in writing to the KDCU Administrator for permission to charge a fee for this service.

Contractually, a loan cannot be paid ahead without arrangements made by the member with the credit union. Most loan contracts state a minimum monthly payment is required to be paid. Data systems that are not monitored properly let next due dates extend to the future when a member pays more than the required monthly payment. However, this procedure is not recommended.

Risk based pricing in lending is used by some credit unions to determine the interest rate charged for a loan. The interest rate is determined based on the credit risk of the borrower and the characteristics of the collateral, if applicable. The credit risk of the borrower is usually determined by the borrower’s credit score as well as other factors developed by the lender. Characteristics of the collateral can include the type of collateral, the age of the collateral and others.

You should obtain a credit score and credit report to assist you in making your loan decision. The better the credit score the better the chance the member will repay the loan as agreed.

The credit report will provide you with information about the member’s credit history. The credit report will tell you how much the member owes to others in addition to the credit union and if the member is making loan payments on a timely basis as agreed. You can learn if any lender has been forced to take collection action or legal action to collect monies owed.

You can use the credit score in combination with the credit report as tools evaluate the likelihood the member will repay the loan, the appropriate interest rate, and in the case of unsecured loans the amount to be loaned.

Indirect consumer lending can increase credit risk and operational risk if part of the lending underwriting process is performed by the indirect lending partner, such as an auto dealer, with whom the credit union has an indirect lending relationship. Some credit unions agree to have all of the underwriting performed by the partner. Other credit unions require all of the underwriting be performed by credit union loan officers, with only the application being done by the business. Each credit union contracts for its own agreements unique to its operational guidelines.

Any credit union that is considering a significant new product or new service area must first notify the Kansas Department of Credit Unions. Before you start an indirect loan program, it may also be appropriate to seek legal counsel to ensure that any contractual agreements between the credit union and the indirect lending partner are in the best interests of the credit union. Additional due diligence may take into consideration the indirect lending partner’s reputation, the indirect lending partner’s trade area, the method of pricing your loan rates, the credit union’s underwriting standards and the amount of underwriting decisions the indirect lending partner can make. Typically, the indirect lending partner makes at least part of the underwriting process such as taking an application or checking for a consumer’s eligibility for membership in your credit union. Indirect lending is a relationship agreement between the credit union and the indirect lending partner and special considerations must be taken prior to entering into contractual agreement.

Your credit union may participate in loans made to credit union members jointly with other credit unions, credit union organizations, financial institutions* or financial organizations*. You may only participate in loans that meet the written loan policies of the directors of your credit union.

(*The Kansas Statutes pertinent to credit unions are silent on the definition of financial institution or financial organization. The NCUA has defined “Financial Organizations” as “federally chartered or insured financial institutions, not to include insurance and finance companies, retirement and investment funds”.)

Your credit union may participate in an out of state loan to a credit union member jointly with other credit unions, credit union organizations, financial institutions* or financial organizations.* You may only participate in loans that meet the written loan policies of the directors of your credit union and you may only participate in such out of state loans if the written loan policies of the directors of your credit union permit the credit union to make such loans out of state.

Simply stated if your credit union’s loan policies do not permit the credit union to make out of state loans the credit union may not participate in an out of state loan even if the loan is of a type permitted by the credit union’s loan policy.

Industry best practices dictate the credit union should not make or participate in loans outside of its established trade area. Making or participating in loans from outside your credit union’s normal trade area introduces additional risk into the loan portfolio.

Your credit union may not be familiar with the current economic conditions and legal/regulatory requirements in the out of state area. You also will have to constantly monitor for and react to changes in the economy and legal/regulatory requirements in the out of state area.

*(The Kansas Statutes pertinent to credit unions are silent on the definition of financial institution or financial organization. The NCUA has defined “Financial Organizations” as “federally chartered or insured financial institutions, not to include insurance and finance companies, retirement and investment funds”.)

Call reports are due to your examiner by the 24th of the month following the end of each calendar quarter. The examiner and his or her address will be stated in the letter containing call report materials sent by the KDCU shortly before the end of each quarter. Remember, however, that on this date the call report must be reviewed and corrected as well as completed. The call report should initially be sent to arrive several days earlier for necessary checking and processing.

The Kansas Department of Credit Unions Report of Officials is an official listing of the persons on the board of directors, supervisory committee, credit committee and certain members of the credit union staff. This document must be completed quarterly, including any changes in the listing of persons, on a quarterly basis. The signed report must be sent to the Kansas Department of Credit Unions with each quarterly call report.

For technical support, please call NCUA Customer Service at 1-800-827-3255 with any software questions.

For any other questions call the KDCU examiner to whom you will send the completed call report for review. The examiner’s name, phone number and E-mail address is listed on the letter from the KDCU.

State law requires the call report to be signed by the President/Chairman and Secretary of the Board of Directors under oath. There will be a “Special State Schedule” included in the mailing of call report materials that will need to be signed, notarized and returned to the KDCU with your call report. Do not hold up sending of the call report while waiting for signatures, include a note with the call report stating that the notarized signature page will be sent as soon as possible.

The call report should be transmitted using the instructions provided with the call report and should be filed electronically, if at all possible. If you are not able to transmit electronically, a paper copy of the electronically completed and checked form may be accepted if mailed sufficiently early to allow the examiner time to review the data before the due date. The call report file will also be accepted on a CD, however floppy disks are no longer acceptable. The Kansas Department of Credit Unions strongly suggests that you file the form electronically due to the reliability, speed and accuracy of the electronic filing. You can contact the National Credit Union Administration or your examiner for assistance using your Call Report program.

Starting with the June 30, 2006 call report cycle, all credit union will file the same call report regardless of the asset size of the credit union. Please refer to NCUA’s Letters to Credit Unions 06-CU-03 for more information.

The Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) was originally enacted in 1970 to assist law enforcement in the investigation and thwarting of money laundering, terrorist financing, tax evasion, and other criminal activity. The “Act” has evolved and currently consists of the Money Laundering Control Act, the Anti-Drug Abuse Act, the Currency and Foreign Transactions Reporting Act, and the USA Patriot Act.

The credit union’s board of directors, acting through senior management, is ultimately responsible for ensuring that the credit union maintains an effective BSA/AML internal control structure, including suspicious activity monitoring and reporting. The board of directors and management should create a culture of compliance to ensure staff adherence to the credit union’s BSA/AML policies, procedures, and processes.

Natural-person credit unions are required to maintain a minimum level of net worth, consisting of reserves and undivided earnings, of at least 7%. Net worth is an accounting treatment which records the accumulation of accounting profits on the income statement. Net worth shows the financial strength of the credit union and also acts as an internal source of funding. Generally, higher net worth enables a company or a credit union to take more financial risk than a business with less net worth because the company can absorb losses and continue as a going concern.

A credit union may use a broker to purchase CDs and securities for investment purposes. A broker may be used for non-member deposits for liquidity purposes also. An annual review should be completed on each broker used and kept in the broker file. The investment policy should identify each approved broker to be used.

The ALLL account is a valuation account used to recognize impairment of a credit union’s recorded investment in loans on its balance sheet before losses have been confirmed later through a charge-off or write-down. This evaluation must be performed at least quarterly with review and approval by the credit union’s Board of Directors.

It is essential that you adequately and appropriately value the assets of the credit union, including loans and doubtful loans, and report those amounts accurately on our call report to meet the regulatory requirement of “Full and Fair Disclosure”.

A credit union should expense an amount to the ALLL for loans when:

1. It is probable a loss has been incurred and;
2. The loss can be reasonably estimated.

The determination of the amounts of the ALLL and the provision for loan and lease losses should be based on management’s current judgments about the credit quality of the loan portfolio, and should consider all known relevant internal and external factors that affect loan collectability as of the reporting date. Estimating the amount of an ALLL involves a high degree of management judgment and is inevitably imprecise.

Loans should be pooled by like credit risk characteristics and a loss factor applied (based on historical charge-off to average loan balances) which then may be adjusted upward or downward for relevant (and documented) internal or external data.

NCUA guidance on the proper methodology to be used to calculate the adequacy of the ALLL account is contained in Letter to Credit Unions 02-CU-09 and the related Interpretive Ruling and Policy Statement (IRPS) 02-3.

When the credit union takes possession of collateral and the borrower's obligation to the credit union has been canceled, then the fair value of the collateral should be transferred to “Assets Acquired in Liquidation of Loans” ( commonly account 707).

Assets so acquired should initially be recorded in this account at the cost of such assets at foreclosure which is the fair value of the asset foreclosed or repossessed. When the outstanding loan balance exceeds the fair value of the collateral at foreclosure, the remaining loan balance (the difference) should be charged off to the allowance for loan losses account.

Subsequent to foreclosure, the records should be adjusted periodically to reflect the asset at the lower of (a) fair value minus estimated costs to sell, or (b) cost at the time of foreclosure.

Kansas Statute 17-2204(a) addresses this issue. Investment guidelines are established by written investment policies approved the credit union’s board of directors and are subject to the written Investment Guidelines of the Kansas Department of Credit Unions’ Administrator.

The best way to become involved with your credit union is to first attend an annual meeting. This will show you the democratic nature of your credit union and give you more knowledge about the various volunteer opportunities. If interested, then contact a volunteer of your credit union. Each committee will require a different set of skills and have various time requirements. You may be better suited to one committee than another.

Management of the credit union is carried on by volunteers and staff. Because of the democratic nature of credit unions, a meeting of the credit union’s membership is held annually. The annual meeting is when members of the Board of Directors are elected. Depending on the bylaws of each credit union, members of the credit committee and supervisory committee may be elected at the annual meeting or may be appointed by the Board.

Depending on the size and complexity of the credit union there may be other volunteer opportunities available. The Board of Directors can establish either standing committees that address on going concerns such as budget, advertising, or member relations, or Ad Hoc committees that address specific concerns and disband upon completing their work.

A credit union is like no other financial institution. Owned and operated by the people it serves, every credit union is formed by a group of people wanting to control their own financial destiny.

Management of Kansas credit unions is carried on by volunteers and staff. Members of the Board of elected from the credit unions membership at the annual meeting. The Board is responsible for the well being of the credit union, as members have put their faith in the Board to act in the best interest of the membership.

The Supervisory Committee shall supervise the acts of the board of directors, credit committee and officers and they must ensure that the two following goals are completed:

1. Management’s financial reporting requirements have been met;
2. Management practices and procedures safeguard the members’ assets.

Additionally, the Supervisory Committee must determine whether the credit union manager has:

1. Established and maintained effective internal controls to achieve the credit union’s financial reporting objectives. These controls must meet the requirements of the Annual Supervisory Committee Audit, the verification of members’ accounts and the accuracy and reliability of accounting data.
2. Promptly prepared accounting records and financial reports to accurately reflect the credit union’s operations and results.
3. Properly administered the relevant plans, policies, and control procedures established by the board of directors.
4. Established policies and control procedures that safeguard against error, carelessness, conflict of interest, self-dealing and fraud.

The Board of Directors administers the credit union shall have the general management of the affairs, funds and records of the corporation, and unless they shall be specifically reserved to the members it shall be the special duty of the directors: to act upon all applications for membership, determine the rates of interest paid and charged to members, to acquire surety bonds, to fix the number of shares held or loaned to anyone one member, fill vacancies of the board and credit committee until the election, to have charge of the investment funds of the credit union, to meet at least six times each year with at least one meeting in each quarter year.

No member of the board or supervisory committee shall receive any compensation for their volunteerism at the credit union.

Additionally, the members of the Board of Directors are the managers of the credit union. The success of the credit union is the responsibility of each member of the Board of Directors. The board has a fiduciary and legal responsibility to ensure that the manager and staff of the credit union are full-filling their duties to the credit union. The Board should actively participate in the oversight of the manager and staff to ensure these responsibilities are carried out. The Board of Directors are the stewards of the credit union.

Committees help the Board of Directors administer the credit union. In most credit unions, the credit committee is responsible for approving or denying all loan applications. Depending on the bylaws of the credit union the credit committee may appoint one or more loan officers and delegate the power to approve or disapprove loans. The credit committee meets as often as the business of the credit union requires either considering applications for loans or reviewing the work of loan officers.

Minutes are a part of books and records concerning the safety and soundness of credit unions (K.S.A. 17-2206). Minutes are a final accurate record of what transpired at a board or committee meeting and are considered to be a legal document.

Minutes at a minimum consist of the following:

• Name of the credit union
• Date, time, location (address) of meeting
• Complete list of all attendees, determination of a quorum, time of attendance by name for those who arrived after the meeting is formally convened and departed prior to the end of the meeting.
• A copy of the agenda
• Reports such as financial statements, committee reports, etc.
• Approval of loans to be charged off, identified by each loan or an amount corresponding to an attached list
• Approval of new members, unless a membership officer is appointed
• Approval when changing loan rates
• Approval of dividends
• Approval of loans to officials, as required by K.S.A. 17-2216a(b)
• Recording of all motions

Record motions properly. A motion is a formal suggestion made by an attendee at the meeting that has been seconded by another attendee, and then passed by a vote. The secretary or member who records the minutes may need to restate a motion after a lengthy discussion. It is therefore very important to record these motions exactly as they have been stated. An example of how to document a motion is as follows: Moved, seconded, and carried that all members of the Board established the quarterly dividend as 3% on member share accounts. The names of all attendees making and seconding any motions should be recorded.

Record every action taken. Actions taken by consensus are discouraged but if occur should be recorded as part of the minutes. Pertinent points made by attendees as part of a discussion prior to a motion should be recorded as part of the minutes. One final tip would be to read the book Robert’s Rules of Order. This is an excellent tool to assist anyone taking minutes. It will help to familiarize you with the format for making, seconding and amending motions.

The Kansas Department of Credit Unions Report of Officials is an official listing of the persons on the board of directors, supervisory committee, credit committee and certain members of the credit union staff. This document must be completed quarterly, including any changes in the listing of persons, on a quarterly basis. The signed report must be sent to the Kansas Department of Credit Unions with each quarterly call report.

The Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) was originally enacted in 1970 to assist law enforcement in the investigation and thwarting of money laundering, terrorist financing, tax evasion, and other criminal activity. The “Act” has evolved and currently consists of the Money Laundering Control Act, the Anti-Drug Abuse Act, the Currency and Foreign Transactions Reporting Act, and the USA Patriot Act.

The credit union’s board of directors, acting through senior management, is ultimately responsible for ensuring that the credit union maintains an effective BSA/AML internal control structure, including suspicious activity monitoring and reporting. The board of directors and management should create a culture of compliance to ensure staff adherence to the credit union’s BSA/AML policies, procedures, and processes.

The ALLL account is a valuation account used to recognize impairment of a credit union’s recorded investment in loans on its balance sheet before losses have been confirmed later through a charge-off or write-down. A credit union should expense an amount to the ALLL for loans when:

1. It is probable a loss has been incurred and
2. The loss can be reasonably estimated.

The determination of the amounts of the ALLL and the provision for loan and lease losses are based on management’s current judgments about the credit quality of the loan portfolio, and consider all known relevant internal and external factors that affect loan collectability as of the reporting date. Estimating the amount of an ALLL involves a high degree of management judgment and is inevitably imprecise.

Delinquency is one of, if not the most important indicators of the financial condition of a credit union. Delinquency is an indicator both of current asset quality and of the potential for future loss to the credit union.

Delinquency is a direct indicator of the quality of loan underwriting, loan policies, procedures and practices, internal controls and due diligence as well as the ability of management to properly administer its assets, including the timely identification and collection of problem assets.

An essential part of a credit union’s management is a comprehensive, disciplined, timely and consistently applied charge-off policy for uncollectible loans.

When management (Board of Directors or other delegated official) deems a loan a loss, they must charge-off the loan to the ALLL account in compliance with full and fair disclosure requirements of Part 702 of NCUA Rules and Regulations.

Guidance regarding loan charge-off as well as specific examples of loans which would qualify for charge-off is contained in NCUA Letter to Credit Unions 03-CU-01. All credit union management (including volunteers) should ensure that they are familiar with this document.

The Supervisory Committee shall make or cause to be made an annual audit of the receipts, disbursements, income, assets, and liabilities of the credit union and shall make a full report to the directors, which report shall be presented at the annual meeting and shall be filed and preserved with the records of the credit union.

The Supervisory Committee shall make, or cause to be made, a 100% certification of members’ accounts at least once each two years or a control random statistical sample in accordance with AICPA guidelines at least once each year.

The Annual Supervisory Committee Checklist is a questionnaire of the credit union operations developed by the Kansas Department of Credit Unions. This checklist is a required document that must be answered by the Supervisory Committee or a qualified person, such as a CPA, in charge of the annual audit.

1. Provide an environment for every person to excel.
2. Treat every person with dignity and respect – no one is more important than anyone else.
3. Be forthright, honest, and direct with every person and in every circumstance.
4. Improve effective use of technology to gain efficiency.
5. Cherish your time and the time of others – it is not renewable.
6. Identify the critical problems that need solution for the organization to succeed.
7. Describe complex issues and problems simply so every person can understand.
8. Never stop learning – depth and breadth of knowledge are equally important.
9. Encourage constructive criticism.
10. Surround yourself with great people and delegate to them full authority and responsibility.
11. Make ethical standards more important than legal requirements.
12. Strive for team-based wins, not individual wins.
13. Emphasize capability – not organized.
14. Incorporate measures and metrics everywhere.
15. Identify and concentrate on core functions.