Red flags examiners look for associated with share accounts:
Examiners should remain aware of the following red flags (not an all-inclusive list) when reviewing share accounts.
- Failure to set restrictions on employees processing transactions on their own accounts, the accounts of their family members, and those of their relatives;
- Failure to set computer access controls on authority levels to post transactions;
- Failure to require passwords or a teller ID number for each staff person to identify accountability;
- Employees’ failure to produce records or to delay access to records;
- Long-standing problem of records not posted currently or being out-of-balance;
- Employee salaries and fringe benefits substantially below those of other credit unions providing equivalent services. Employees may reason the board is shortchanging them and may attempt forgery to overcome their perception of being under-compensated;
- Employees who live beyond their standard of living on their visible income, often indicated by luxury cars, expensive hobbies, gambling, or heavy drinking;
- Employees who resist taking vacations or resist attempts for someone else to perform their work during vacation;
- Employees who resist giving up control of certain records to another employee when promoted to a new position (e.g., performing the bank reconcilement);
- Failure to review negative Share and Share Draft Reports;
- Failure to review Dormant Share Reports;
- Cost of funds exceeds dividend rates;
- Credit union share growth not commensurate with above market dividend rates paid;
- Print command coded to suppress printing of statement of accounts;
- Numerous statement of accounts delivered to the same P.O. Box;
- Member complaints on accuracy of their statement of accounts;
- Failure to mail statement of accounts; 0 Share trial balance report header shows not all share accounts were selected for printing on the share trial balance;
- Missing or incomplete membership cards; or
- Failure to correct internal control weaknesses identified in examinations, supervisory committee audits, internal audits, and risk-management analysis audits.
Examiners should use their professional judgment in questioning high risk practices involving share accounts.