COMPARISON OF TYPES OF AUDIT SERVICES

Financial Statement (certified) Audit vs. Supervisory Committee Guide Engagement

SIMILARITIES

Both types of audits meet the audit requirements of Part 715 NCUA Rules and
Regulations on Supervisory Committee Audits.

DIFFERENCES

Financial Statement (opinion) Audit

  • Includes preparation of full disclosure financial statements in accordance with generally accepted accounting principles (GAAP).
  • Includes the expression of an opinion on the financial statements taken as a whole, in accordance with generally accepted auditing standards (GAAS).
  • Outside auditor takes the responsibility for sufficiency of audit work performed for the expression of an opinion.
  • Reports can be utilized for outside purposes (i.e. given to credit union membership if requested or by choice of the credit union).
  • Can be performed only by a licensed CPA firm in accordance with state accountancy statutes.

Supervisory Committee Guide Engagement

  • Report includes discussion of select accounts and elements included in the financial statements as agreed to in the engagement letter procedures.
  • No expression of an opinion is provided as the procedures performed are in accordance with the procedures agreed to by the supervisory committee.
  • Supervisory committee takes the overall responsibility for the sufficiency of the audit procedures to be performed. (Note: For small credit unions, Ferrin & Company suggests the use of minimum procedures specified by NCUA. For larger credit unions, we supplement these procedures with procedures we believe to be prudent (asset size/types of services dependent) for this type of audit. Contact Ferrin & Company for details.)
  • Reports produced as a part of this engagement are for “credit union managements internal use only” and cannot be distributed externally.
  • Can be performed by licensed CPA and non-CPA individuals alike.

Additionally, a certified audit performed by Ferrin & Company, LLC also includes:

  • Performance of the credit unions member account verification requirements, saving the supervisory committee considerable time and related costs.
  • Includes a complete management letter, including internal control issues identified during the audit, lending review comments, and other observations and recommendations helpful to the credit unions successful operation.
  • Member account verification requirements must be fulfilled by the supervisory committee or contracted separately with an outside firm. The cost, in terms of time and money, can be costly, depending methodology used.
  • Report includes the results of the performance of the procedures agreed to by the supervisory committee as stated in the engagement letter. Ferrin & Company also provides, as a by-product of the engagement, any other additional observations noted during the performance of those agreed-upon procedures.

Note: Ferrin & Company can perform all audit options under Part 715. Though it is apparent that additional assurances are provided and greater flexibility is available by selection of a financial statement audit, Ferrin & Company does not advocate which type of audit is best for your credit union. Consult with us to determine which type of audit is best for your credit union.