Non-compliant credit union auditors risk being reported

Credit union auditors will be reported to the appropriate prosecuting authority if they do not perform their functions adequately, the registrar of friendly societies has warned. In his report for 1999 the registrar, Mr Noel Martin Sisk, says that "in the light of ongoing experience" he felt it important to repeat a warning he had issued previously concerning the qualifications required for public auditors of a credit union.

The Companies Act 1990 stipulates that persons with various defined relationships with a credit union may not act as auditor to that credit union.

"The registrar wishes to put all auditors of credit unions on notice that, where it comes to his attention that an auditor had failed to perform his functions adequately, he will take whatever action he considers appropriate," the report states.

"Where the registrar has evidence that a person has acted as public auditor of a credit union while not in fact being a public auditor within the criteria of the Companies Acts, details will be forwarded to the appropriate prosecuting authority.

"Appropriate action will be taken where it appears that a person is acting as an auditor in circumstances suggestive of an attempt to circumvent the objectives of the legislation."

On computerisation, Mr Sisk says increases in membership have meant that many credit unions are beginning to use computer systems. He emphasised that systems needed to be adequate and secure.

"Some credit unions have purchased systems which were unsatisfactory in various ways, e.g. they did not record arrears properly or they were unable to hold, to a sufficient extent, past ledger accounts of members."

The registrar also says that where computer systems do not require members to keep passbooks, statements of account should be posted to members every three or six months. The statements should not be held in the credit union for collection. "The cost of this exercise is not acceptable as an excuse for not carrying it out."

On investments, Mr Sisk said that increased deposits had resulted in many credit unions having large surpluses. "In an effort to maximise the return obtained on these funds, a small number of credit unions have invested them imprudently."