Why is Credit Union Accounting Shrouded in Fog?

While there is abundant data in other areas of credit unions’ critical functions, such as loans, strategy, marketing, and regulation, accounting is a grey mist on the horizon.

We have found there is little to no industry data compiled in this area, and many credit unions are left wondering if their accounting team is staffed appropriately as well as whether they should outsource various functions, such as ATM balancing.

Debra Templin, CFO of CU Service Network, manages the company’s Outsourced Accounting Service, which assists many credit unions across the country. “The most frequent question we are asked is ‘are we overstaffed?’ That is a difficult question to answer without knowing the type of positions and activities that are performed within the accounting department.”

The accounting function mystery is so difficult to crack because it is three-fold. Not only do credit unions need data on how many employees are staffed in credit unions’ accounting departments, but secondly, they need more data on what accounting functions are being managed. And thirdly, are their resources appropriately aligned in their asset class.  Without these three pieces of information available concurrently, the individual data is basically irrelevant.

As you can imagine, obtaining all of this data from credit unions can be difficult. However, the need for this type of information couldn’t be more critical. We find credit union managers are frustrated and unsure of whether they need to grow or scale back their accounting team. Are they inefficient? Wasting money? Overstaffed? Understaffed? They have nowhere to go to compare.

Last November, NACUSO published an article that discussed credit union CEO pain points and burdens. The survey responses showed that credit unions needed assistance in many areas, including cyber security and compliance. High expense ratio was also a nagging issue. Could some of these pain points be alleviated by credit unions having data on their peers’ accounting? If credit unions find that they are overstaffed in accounting, their resources could be reallocated to other functions – including cyber security and compliance. Furthermore, understanding how they compare to their peers in staff size and accounting functions could help reduce expense ratios. Credit unions would no longer have to shoot in the dark.

Here at CU Service Network, we felt compelled to help. We wanted to find a way to compile data in this unknown area. In 2016, we launched an Accounting Assessment tool designed specially to fill this information gap. We felt that the need was so pressing, we offered the tool for free – any credit union can simply sign up and take the assessment.

The assessment tool works like this:
The credit union enters their asset size, which places them into their appropriate peer group. From there, the credit union selects all the accounting functions/services they do in-house. Accounting services are broken down into three groups – Traditional, Administrative, and Electronic. Each function is weighted, providing the credit union an overall “score.” When the credit union submits their data, they see their accounting services score and services offering compared other credit unions, via bar graph.

Below is an example of the assessment results a credit union would see.

CFO Templin comments, “We hope this type of analytical data will help credit unions measure and improve both efficiencies and effectiveness of their accounting function.” The graph was created to specially address the three data requirements needed for credit unions to understand how their accounting department compares, stated earlier. Staff size, asset size, and functions being managed.

Would you like to see how your credit union compares to your peer group? To participate in the assessment, please visit https://bit.ly/2af7f3T

ABOUT THE AUTHOR:  Debra Templin moved to Denver in August 2015 from Hermosa Beach, California where she managed her own credit union consulting practice in the Los Angeles area.  Prior to consulting, Debra worked in the credit union industry for more than 25 years, including 8 years as CFO, and 7 years as CEO.

She has experience in a wide range of areas – budgeting and forecasting, examination and audit support, allowance for loss methodologies and other financial strategies, as well as asset liability management.