AuditLink, the audit and compliance division of CU*Answers, and Lillie & Company, a CPA services provider, recently facilitated a joint web conference on credit union internal controls and fraud controls attended by over 100 credit unions.

Lillie & Company is and has been one of the main CPA firms contracted to perform forensic analysis for the NCUA when insider dishonesty is suspected. In Fall 2020, Lillie & Company and AuditLink formed an alliance revolving around BSA and ACH audits for CU*Answers clients, as well as aligning strategic objectives for both firms. One of the firms’ major objectives was training credit unions on best practices related to internal controls. “The shear amount of embezzlements in our industry has been on the rise and the main reason is the lack of basic internal controls,” said Steve Lillie, President of Lillie & Company. “Educating credit unions through the use of real-life stories drives the point home on how much this problem is costing the industry, insurers, and NCUA.”

Jim Vilker, VP of Professional Services of AuditLink pointed out “it’s about the basics of segregation of duty, appropriate oversite, and awareness of the basic internal control to prevent these types of embezzlements—many of which resulted in the merger or liquidation of the credit union.”

The web conference concentrated on real life embezzlements, the events surrounding each case, and what internal controls broke down that led to the event. Lillie & Company performed the forensic analysis on these investigations and in some cases was assisted by AuditLink. Steve Lillie stated in the conference it is all about opportunity and motive. “The main point is that loose internal controls open the door for bad actors who are motivated to take advantage of the resulting vulnerabilities.”

Vilker added, “What was so self-evident 10 years ago relative to a culture of internal controls seems to have been lost. It is almost like the old guard is not training the new guard on the basics”.

The conference was highly attended and well received, with many participants asking for a follow up event.