Mr. Joe Mulvey:

Yes. This, of all the issues highlighted in our submission, is the one of most concern. We must rid ourselves of the idea that the board of a credit union would appoint an internal audit function - it may be an internal or external appointment - which would carry out the internal audit. This would simply be a case of the piper calling the tune because there would be no independence of stand back in terms of the operation of the credit union. In addition, where an internal audit function identified any issues of concern to the credit union these could be swept under the carpet. We have had evidence of internal audits within our banking structure not being taken seriously. We welcome the introduction of the internal audit function. It is good housekeeping in any commercial organisation to have an internal audit function. However, we would argue that when making its findings it should report to the proposed supervisory committee-board oversight committee. We believe it is important that the committee be the third point on the triangle, thus ensuring any findings or recommendations are acted upon quickly.

A time limit should also be provided for to ensure that when problems are identified, the supervisory committee brings them to the attention of the board, which should act upon them within one month, thus ensuring anything that is untoward or in need of repair or action is not put on the long finger but acted upon quickly. The essence of the credit union movement is to not let problems fester and get out of control but to maintain a solid hold on them. This would be the role of the supervisory committee following report of the internal audit function to it. It is all about governance, compliance, good business and keeping one's house in order. The size of the credit union does not matter. It is important there is someone in place to ensure that where inadequacies are identified they are addressed and within a specified timeframe.