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Board Financial Literacy Training at
MCUL & Affiliates Leadership Development Conferences
In response to the recently issued NCUA requirement regarding board financial literacy for federal credit unions, MCUL & Affiliates is helping credit unions prepare by offering several CUNA Volunteer Achievement Program (VAP) sessions at the Spring Leadership Development Conference, as well as at the Fall Leadership Development Conference later in the year.
The significant points of this new NCUA rule includes...
" ... directors having a working familiarity with basic finance and accounting practices, the ability to read and understand their credit union’s balance sheet and income statement, and being able to ask appropriate, substantive questions of management and the internal and external auditors..."
MCUL & Affiliates has inquired with NCUA to determine what the test would be to determine if board members have a "working familiarity with basic finance and accounting principles." While no official "test" exists, examiners will be looking to see if credit unions are running well and if their board minutes reflect the boards' knowledge and involvement.
And while training is encouraged, Board Financial Literacy Certification is not mandated.
However, since the final rule does not specify the types of training that could achieve the stated objective, each credit union will need to consider its size and complexity to dictate the level of knowledge each director needs to have to meet their fiduciary responsibilities in serving the best interests of the membership.
As an example, training provided in the CUNA VAP "Financial Reports for Volunteers" (V02) session would prepare volunteers to answer questions that they need to understand, such as:
Q: An example of an asset on the statement of financial condition is...
a. cash.
b. undivided earnings.
c. share certificates.
d. credit union reserves.
Q: To determine the average loan balance, divide...
a. total loan balance by total member savings.
b. total member loans by number of loans outstanding.
c. total member savings by total loans outstanding.
d. total amount of delinquent loans by total loans.
Q: The charged-off loans and recovery report is used to provide the board
with a list of...
a. loans charged off during the month or those that require board approval.
b. delinquent loans.
c. all loans charged off for the previous three years.
d. all the above.
Again, although certification is not mandated by the ruling, training is encouraged, and CUNA has developed a Board Financial Literacy Certification composed of six VAP training sessions, three which will be offered at the MCUL & Affiliates Spring Leadership Development Conference and three others which will be offered at the Fall Leadership Development Conference.
Many board members have already completed select VAP training topics; to access transcripts for individual volunteers contact CUNA at (800) 356-9655 ext. 4131 to find out which sessions directors may have already taken.
To Assist Credit Unions With Board Financial Literacy Training
Right Here in Michigan, the VAP Sessions Being Offered by
MCUL & Affiliates Will Take Place at the...
Spring Leadership Development Conference
March 25-27, 2011
Soaring Eagle Casino & Resort, Mt. Pleasant
The three VAP financial literacy topics sessions below may be taken individually or combined with the three VAP topics being offered at the Fall Leadership Development Conference to earn CUNA Board Financial Literacy Certification.
- Financial Reports for Volunteers (V02)
Designed to provide an understanding of financial reports with easy to follow explanations of the statement of financial condition.
- Managing Risk for Volunteers (V03)
Risk management is the direct responsibility of credit union officials and this session provides an understanding of the ways to identify, handle and monitor risks, establish procedures for internal controls, the role of a supervisory committee and more.
- Financial Management (V409) Recently Added to the Agenda!
Learn about financial management tools used by most credit unions in a simple, easy-to-understand format using several comprehensive asset liability management tools.
Fall Leadership Development Conference
September 16-18, 2011
Grand Traverse Resort & Spa, Traverse City
These three additional VAP sessions also support Board Financial Literacy will be offered for those interested in taking the classes individually, or combining them with the above VAP topics to earn CUNA Board Financial Literacy Certification.
- The Basics of Risk Assessment for Volunteers (V305)
- Asset-Liability Management for Directors (V415)
- Understanding Audit Reports (V428)
For more information about the certificate and the new requirement, visit training.cuna.org/boardreq.
Additional Information for Federally Chartered Credit Unions
The new NCUA rule addressing the duties of federal credit union boards will be effective in January 2011, and compliance with the financial literacy portion of the rule will be required by July 2011. Directors elected or appointed on or before January 27, 2011, including those directors serving prior to NCUA finalization of the rule, must be in compliance with the financial literacy requirements by July 27, 2011. Click here for NCUA Media Release. Directors elected or appointed after January 27, 2011 must satisfy the financial literacy requirements within six months following seating.
As part of the financial literacy requirements, all FCU directors, including existing directors, must have the ability to read and understand a credit union balance sheet and income statement, as well as have at least a working familiarity with basic finance and accounting practices, and to ask, as appropriate, substantive questions of management and the internal and external auditors.
Directors who do not yet have this ability should plan to receive financial literacy training in 2011. This does not mean that Board Financial Literacy Certification needs to be completed by July, since certification is not mandated. It does mean those needing basic financial literacy training, such as that being offered at the Spring Leadership Development Conference, should complete that training prior to the July compliance date.
Additional Information for State Chartered Credit Unions
OFIR’s director’s guide states that individual directors must become educated in the business of the credit union operations in order to effectively serve. Professional development and training are strongly encouraged. The managing officers of the credit union must be supported and supervised by directors who are thoroughly familiar with the credit union’s affairs and who will take an active part in making policies and decisions. Directors should not be wholly reliant on operational management to interpret financial data or other information received. Board members must be independent and able to question management about issues they do not understand or that are unclear. This helps to keep the credit union progressive, sound, and profitable.
To find additional information from OFIR, cut/ paste these URL's into your Web browser.
http://www.michigan.gov/documents/cis/Board_of_Directors_Guide_209519_7.pdf
http://www.michigan.gov/dleg/0,1607,7-154-10555_12900_12921-120614--,00.html
Plan Now to Attend Both of These MCUL & Affiliates Conferences...
Find the Board Financial Literacy Training You Need
Right Here in Michigan!
CUNA Volunteer Achievement Program Transcripts
To access transcripts for training that individual volunteers may have
completed in the past, contact CUNA at
(800) 356-9655 ext. 4131.
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