WOCCU urges Basel Committee to examine impact of external audits on credit unions

WOCCUThe World Council of Credit Unions recently requested that the Basel Committee on Banking Supervision consider the impact of its bank audits document on smaller financial institutions.

Michael Edwards, chief counsel for the WOCCU, said that national and provincial credit union officials often apply Basel standards to all credit unions, adding that while he generally supports external audits, the auditing standard should be applicable to an institution based on its size and complexity.

Edwards said the public company audit standards could “impose significant regulatory burdens on small and medium institutions such as credit unions,” which could negatively impact credit unions’ ability to promote the inclusion of the unbanked and would be inconsistent with regulatory requirements for smaller institutions.

Additionally, Edwards pointed to U.S. credit unions as an example of how regulations can burden institutions. In the U.S., credit unions are subject to examinations and require audits only if it holds more than $500 million in assets, but federally insured institutions with more than $10 million in assets must have an external audit conducted according to auditing standards.

“We believe that an external examination of a small credit union can limit the need for an external audit in a safe and sound manner, as is the case with smaller federally insured credit unions in the U.S.,” Edwards said.

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