DIRECT CONFIRMATION WITH BORROWERS AND SHARE ACCOUNT HOLDERS

012 DIRECT CONFIRMATION WITH BORROWERS AND SHARE ACCOUNT HOLDERS. 012.01 The method of prescribing for the verification of accounts in connection with the annual audit is not to be construed as being a requirement in conjunction with the actual annual audit. The method is deemed appropriate whether used by the Supervisory Committee or an authorized accountant or accounting firm during the annual audit. 012.01A Prepare and mail confirmation requests on all loan and deposit categories, including participation loans purchased and sold. 012.01B For participation loans purchased, confirm balances with the selling credit union only. For participation loans sold, confirm the balances sold with the purchasing credit union and the total balances with the borrower. 012.01C Mail confirmation requests to a selected number of members whose loans were charged-off since the last audit. 012.01D Mail confirmation requests for a selected number of dormant accounts and accounts with zero balances that have been closed since the last audit. 012.01E Confirmations returned as undeliverable or with exceptions and non-replies to positive confirmation requests should be followed up by review of underlying documents, subsequent activity, or other appropriate procedures. 012.01F List names of account holders not responding to positive confirmation requests and describe the procedures followed to determine the accuracy of these accounts. 012.01G All verifications must show a return address other than the normal mailing address of the subject credit union. 012.02 REPORT OF VERIFICATIONS. 012.02A A report of the results of the verifications is to be made to the Board of Directors within 120 days from the issuance of the verifications if 100% of the accounts are verified. A similar report is to be made within 30 days if a lesser percent of the accounts are verified. 012.02B A confirmation statistics summary showing the extent and results of the type of confirmation and type of account is to be submitted rather than the extent and results of such procedures under each specific account heading in the body of report. 012.02C Any accounts selected for confirmation which have not been, or cannot be, mailed or delivered to the customer must be so listed in the final report.