Serving on a supervisory committee presents a dichotomous challenge, says Emily Tillis, senior manager at the accounting firm Moss-Adams.
Committee members must digest and understand large volumes of specific rules and regulations, but also be comfortable working in gray areas because no manual or charter can address the practical, day-to-day application of their responsibilities.
“This isn't a hard science. There are many judgment calls,” says Tillis, who addressed the CUNA Supervisory Committee and Internal Audit Conference. “Apply your professional skepticism. Provide documentation of your concerns. Ask questions. And don’t be afraid. It’s your responsibility to get to a point where you’re comfortable with the outcome.”
Tillis teamed with Moss-Adams colleague Dustin Birashk to examine some central tenets of effective governance and address attendees’ questions.
The overarching dual responsibilities of the supervisory committee are to ensure management's financial reporting objectives have been met, and that management’s practices and procedures safeguard members’ needs.
“Those are big responsibilities,” Tillis says. “That can feel overwhelming at times.”
That’s especially true case when supervisory committee members lack clarity about their authority and jurisdiction, as evidenced by examples attendees offered related to resolution (or nonresolution) of audit findings.
“The finding is only as good as management’s response,” Tillis says.
But how does the supervisory committee validate the adequacy of management’s response, fulfilling the audit’s ambition? And what if the two parties disagree on whether that resolution qualifies as adequate?
Start by asking questions of management and the board of directors that shed more light on initial explanations the supervisory committee finds unsatisfying, say Birashk and Tillis.
If their answers don't address your concerns, document your objection. Because supervisory committee minutes go into board packets, which regulators review, that action will place the issue on their radar, presenting an opportunity for them to follow up.
Supervisory committee members must remember they don’t have the authority to create policies, only to oversee enforcement of those policies.
But if supervisory committee members believe the credit union’s dual control procedures are lax, they can and should present that opinion to the board and management and present solutions.