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A Direct Line Blog

Trust, But Verify

February 19, 2020 7:30 am

By Donya Parrish, VP- Risk Management, MCU

The supervisory committee is charged with being the watchdog for the internal controls and financial records of your credit union. In reviewing their duties in the CUNA Supervisory Committee Handbook, the Montana Division of Banking administrative rules (2.59.415), and even in the NCUA Supervisory Committee Audit Minimum Procedures Guide , the word “verify” is used regularly to describe the committee’s responsibility.

You know what word is not used in explaining the committee’s role? Trust.

It is human nature to give people the benefit of the doubt and assume they will make the right decision when their conscience is challenged or opportunity presents itself. History has proven that to be a foolish plan. Internal fraud and losses continue, especially in smaller institutions. A more successful plan is to trust but verify.

Having nice and caring people working in our institutions is not enough. There is a need for oversight because there is too much at risk if losses and breaches of trust occur. The credit union’s reputation and financial soundness are just the start of what is being protected.

As noted in an article on fraud and internal controls, “there is a fine line between suspicion and performing due diligence… organizations should guard against allowing trust to blindside them to the potential dangers of fraud and theft in the workplace.”



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