Examiners’ profitability audits focus on these key criteria

Examiners’ Objectives

• Review income and expense trends
• Analyze budget projections and practices
• Evaluate due diligence by management of services and products affecting the credit union’s profitability (e.g., cost-benefit analysis)
• Determine adequacy of policies and practices addressing income and expenses
• Compare actual performance to the income and expense budget and capitalization goals
• Determine sufficiency of earnings to cover operating expenses, dividends, and necessary reserve transfers
• Determine adequacy of earnings to increase the net worth ratio (if necessary) or to maintain the net worth ratio at or above established benchmarks
• Ensure compliance with applicable laws, regulations, accounting practices, and policy statements when recording income and expense items
• Determine that management has instituted prompt correction of deficiencies or exceptions