The passage of the Sarbanes-Oxley Act is but the latest effort by Congress and
regulatory agencies to increase the accountability of CEOs and auditors for
a firm's financial statements. While the Act does not apply to credit unions,
some of the issues raised of auditor independence are of concern to credit unions
and their Supervisory Committees.
As of August 31, Arthur Andersen, one of the nation's oldest accounting firms
officially ended its auditing practice. Approximately 15 credit unions had their
books audited by Andersen at December 31, 2001. These credit unions, most over
$500 million in assets, are required by law ( HR 1151) to engage a new firm
for an opinion audit for year-end 2002.
The incidences of corporate financial and accounting scandals at public firms
have caused credit unions and Supervisory Committees to raise questions such
- Should my opinion-auditing firm also be used for other consulting or internal
- Should we automatically rotate our auditing firm after a period such as
five or seven years?
- How should the Supervisory Committee oversee the audit process?
- How many CPA firms are qualified and interested in my credit union's auditing
According to call report data, about half of the 2,143 credit unions over $40
million in assets have an external financial statement audit by a CPA firm.
Thirty-one CPA firms have at least five or more clients in this group. Of these
thirty-one firms, over half have national practices.
The firm with the largest number of clients is McGladrey & Pullen LLP with
341 credit union auditing clients over $40 million. Late in 2001, O'Rourke,
Sacher and Molten, which had been the firm with the largest credit union client
base, merged with McGladrey.
All of the Big 4 national accounting firms are also on the list led by KPMG
which is ranked tenth with 34 clients.
New Callahan CPA Resource Guide and McGladrey
& Pullen Conference
To assist Supervisory Committees, internal auditors and credit union management
find CPA information and have guidance on issues like those listed earlier there
are two resources available through CreditUnions.com:
1) Callahan & Associates, Inc. has just published a complete Guide
to Credit Union CPA Auditors and Supervisory Committee Auditing Requirements.
This 200 page e-document PDF resource will help credit unions identify the
leading CPA firms in their state, the client lists of CPA firms and the regulatory
requirements governing auditing relationships including the just available
NCUA Examiners Guide chapter covering Supervisory Committee audit oversight.
In addition the guide shows the data processors used by each CPA's credit
union clients to show which systems the firms will have the most experience
For CPA firms, the guide shows market shares and potential credit union clients
in their market areas.
The full publication can be downloaded immediately in e-document PDF format
or a printed version can be mailed at a slightly higher price. For further
information on the CPA Guide including the Table of Contents, please click