NCUA responds: Tech updates needed for 18-month exam cycle

September 14, 2015

ALEXANDRIA, Va. (9/14/15)--Moving to an 18-month examination cycle would require significant technological improvements, the National Credit Union Administration told the Cooperative Credit Union Association (CCUA) last week. Larry Fazio, director of the NCUA’s Office of Examination and Insurance, responded to CCUA President/CEO Paul Gentile’s August recommendation that the NCUA move to an 18-month exam cycle.

Fazio said the agency’s Automated Integrated Regulatory Examination System (AIRES) would need to be updated in order for the agency to better use data to analyze trends without being on-site at a credit union.

“The platform AIRES is built on is at the end of its life cycle. Therefore, NCUA must invest in updating this platform to maintain its functionality, and for the past year has been identifying the requirements and specifications to achieve this,” Fazio wrote. “In updating AIRES, we can leverage new technology and techniques to make the exam process more efficient and effective.

Fazio added that the new AIRES would “integrate the secure file solution (portal) slated to be deployed in early 2016.”

If the NCUA board approves funding for a new AIRES, examiners should be able to conduct more examination steps off-site, which Fazio said would reduce on-site time at medium to large credit unions by as much as half.

“This will increase the quality of exams, lower travel costs, reduce any disruption for credit unions caused by exams, and improve the quality of life for examiners," Fazio wrote.

Gentile said he appreciated the NCUA’s response, and added that he hopes the NCUA will find better ways to leverage data for ongoing analysis, not just for the on-site examination cycle.

“More flexibility is needed in the exam cycle duration to ensure the agency can better use resources in those credit unions that need it, and well-run credit unions experience less disruption from lengthy annual exams," he said. "We understand that the agency has a full plate, but we also know that the system is ready to work with NCUA to find ways to enhance data analysis and dialogue with the agency on what constitutes a well-run credit union.”

 CUNA Chief Advocacy Officer Ryan Donovan said last month that it is important that CUNA, the state leagues and credit unions maintain a dialogue with the NCUA and state regulators about examination issues.