The Government has established a Commission on Credit Unions to review the future of credit unions and to make recommendations for the future regulation. Some credit unions have run into financial difficulty, while most are considered to be well capitalised. However, given the severe downturn in the domestic economy, no credit union is immune from bad debts. It is thought that some Government funding will be required to strengthen the sector, but nothing like the bail-outs needed by the banks. It is expected that any such funding will be accompanied by a rationalisation of the sector, so that there are fewer, larger, credit unions throughout the country. More stringent loan book review procedures are already in place, and careful monitoring of the sector by the Regulator is already taking place.
The credit union movement is playing a more important role than ever in supporting the needs of small borrowers and savers in local communities throughout the country. The volunteer, not-for-profit ethos and community focus are a refreshing contrast to the banks, which have let the country down.
Chartered accountants who act as auditors of credit unions will receive new audit procedure toolkits in the coming weeks. These toolkits will reflect the new “clarified” International Standards on Auditing (“ISAs”).