Audit and Accounting Guide - Depository and Lending Institutions

Chapter 2 Industry Overview — Credit Unions

Gray shaded text in this chapter reflects guidance issued but not yet effective as of the date of this guide, July 1, 2018, but becoming effective on or prior to January 1, 2019, exclusive of any option to early adopt ahead of the mandatory effective date. Unless otherwise indicated, all unshaded text reflects guidance that was already effective as of the date of this guide.

Description of Business

2.01 The first credit union in the United States was organized in 1908. Although credit unions originally arose within communities, greater success was achieved by organizing credit unions to serve employee groups — particularly government employees, teachers, railway workers, and telephone company employees. A credit union is a member-owned financial cooperative, democratically controlled by its members and operating for the purpose of providing financial services to its members. Credit unions are organized as not-for-profit entities and are exempt from certain taxes. A credit union is subject to rules that restrict membership to the entity.

2.02 In 1934, Congress passed the Federal Credit Union Act (FCUA), establishing a federal regulatory system, which authorized the formation of federally chartered credit unions in all states. In 1970, the National Credit Union Administration (NCUA), an independent governmental agency, was created by Congress to charter, supervise, and regulate federal credit unions. It also extended supervision ...