Understanding Financial Statements - ACUIA

Understanding Financial Statements

Douglas J. Orth, CPA, CFE, Managing Partner Orth, Chakler, Murnane and Co., CPAs

 Become familiar with the basic rules governing financial reporting for credit unions.

Understand the key elements of the credit union's balance sheet and income statement.

Learn to calculate and interpret the credit union's key financial statement ratios.

Analytical review ? can help you develop "good questions" to ask about the credit union's financial performance.

Highlights of NCUA Call Report and Financial Performance Reports (FPRs).

NCUA Regulation ? Part 741.6

Ensure that financial statements are prepared in accordance with generally accepted accounting principles (GAAP).

Ensure that accounting records/financial reports are prepared timely and accurately.

What a Director Should Know At a minimum, a director should be able to examine the credit

union's balance sheet, income statement and be able to answer the following questions:

What does this line item mean?

Why is it important to the credit union?

Is the value of the line item changing over time? If so, what does that change (either positive or negative) mean?

Is the change important to the credit union?

NCUA Regulation ? Part 715, Basic Responsibilities Board of Directors and Management:

1) Meet required financial reporting objectives

2) Establish practices and procedures sufficient to safeguard members' assets

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