Transform Your Audit/Supervisory Function

Strengthen risk management practices to gain a competitive advantage.

December 16, 2015

Credit unions prepare for audit and supervisory activities much like we prepare for the flu or allergy season. We take proactive steps to prevent contact, sanitize items we touch, and get flu shots.

Think about the way you treat your audit/supervisory function. From anecdotal evidence and scientific surveys, the large majority of organizations view the audit/supervisory role as a necessary evil—understanding that at times, we must expose ourselves to viruses to garner immunity.

At best, we appreciate a second set of eyes to cover our backside. At worst, we manipulate that role and the information to ensure the desired outcome. Too often we fail to leverage an integral function of our organization that could otherwise deliver significant value—and actually contribute to our competitive advantage.

Directors NL subscribeThis neglect stems from a concern some supervisory committee members and auditors aren’t positioned—nor do they possess the necessary expertise—to function in this value-added role today. Some have limited their skills to reviewing controls and financial statements, relegating themselves to their current limited role.

Change is afoot, though. Regulators, internal stakeholders, and customers are scrutinizing executives, boards, and auditors to provide greater insight and assurance around risk, fraud, compliance, and governance. This pressure is bringing about an evolutionary change to the way businesses adopt best practices such as governance, risk, and compliance and enterprise risk management (ERM) models.

The complexity of operating a financial institution in today’s dynamically charged environment requires credit unions to invest more dollars and resources into managing these types of programs to ensure they remain on track to achieve their objectives. Unfortunately, most of these systems are in their infancy. Disparate tools, functions, data, and roles lead to wasted time, data delusion, and confusion.

Governance, risk, and compliance programs offer a roadmap for creating integrated capabilities. This enables credit unions to reliably achieve objectives while addressing uncertainty and ensures organizational integrity across governance, assurance, organizational performance, risk, and compliance.

Organizations that succeed understand this new, dynamic environment. They:

  • Implement a culture and processes that enhance employee buy-in;
  • Proactively address uncertainty through enhanced risk processes;
  • Rapidly and deftly respond to policy and regulatory changes; and
  • Create systematic processes that turn data into business intelligence, which organizational leaders can use to make wiser and more proactive decisions.

Development Opportunities

CUNA Enterprise Risk Management for Directors, Sept. 12-14, 2016, Scottsdale, Ariz.
Information and registration

CUNA Supervisory Committee and Internal Audit Conference, Dec. 4-7, 2016, Las Vegas
Information and registration

CUNA Enterprise Risk Management Certification School, Dec. 5-7, 2016, Las Vegas
Information and registration

These processes, when implemented, create a competitive advantage through their cross-functional coordination and seamless collaboration. They drive efficiencies, add assurance and operational integrity, and improve organizational knowledge. This positions your credit union to accomplish its goals and objectives.

Success within these programs requires interdisciplinary collaboration between the board, management, and auditor/supervisory roles. The more integration and functionality between these bodies, the greater the assurance of success and efficiency in your organization.

Effectiveness relies on the transformation of all governance and managerial roles at your credit union—not just the audit role.

To advance the campaign for a “cure” to the current conundrum, each constituent must understand these programs in greater detail and seek organizational clarification and coordination on roles and responsibilities.

This is no small feat. Ingrained roles, distrust, lack of support, and limited expertise create barriers that you must overcome. But the return on your efforts is worthy. A great deal of research proves organizations that master these processes perform significantly better than their peers. Start by:

  • Garnering understanding around governance, risk, and compliance and ERM;
  • Beginning to enhance the efficiency and effectiveness of assurance functions, and;
  • Increasing collaboration and linkages between risk, assurance, and business functions.

To gain or maintain a competitive advantage, credit unions must leverage their respective organizations’ resources better than the competition.

So remember: Risk isn’t a virus to crush, and the organization’s assurance processes aren’t a plague to avoid.

Instead, regard these as two of the basic elements of the preservation and creation of value, pillars upon which you build a great organization.

TONY FERRIS is managing partner for The Rochdale Group. Contact him at

This article initially appeared in Credit Union Directors Newsletter, which provides strategic insights for policy makers.