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091301 1 (1978-06-19)

handle is hein.gao/gaobacwch0001 and id is 1 raw text is: 
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             UNITED STATES GENERAL ACCOUNTING OFFICE
                  WASHINGTON REGIONAL OFFICE
                          FIFTH FLOOR
                      803 WEST BROAD STREET
                   FALLS CHURCH, VIRGINIA 22046




                                             19 JUN 1978



The Honorable Lawrence Connell,  Jr.
Administrator, National  Credit Union              LM091301
  Administration

Dear Mr. Connell:

     During our audit  of the National Credit Union Adminis-
tration  (NCUA) financial statements for the 15 months ended
September 30, 1977, we  noted the following matters that
should be adopted  to improve NCUA's management:

     1.  Legal action  should be taken to recover losses
         on unpaid  loans.


         data processing  (ADP) systems.

     3.  Internal  audit staff should increase their ADP
         technical  proficiency.

     4.  ADP management  should be strengthened by

         --establishing  an ongoing ADP Committee,
         --requiring  specific program documentation, and
         --developing  sufficient security measures and
           plans  in case of an emergency.

     Although  these matters did not affect our opinion on
the financial  statements and were not included in our report
to the Congress,  we are taking this opportunity to bring
them to your  attention.

LEGAL ACTION  TO RECOVER LOSSES

     When  a credit union liquidates involuntarily, the
shareholders  are paid out of credit union assets and the
share  insurance fund if necessary.  Credit union assets
are usually  liquidated by NCUA personnel acting as liqui-
dating agents.   The share insurance fund usually suffers
a loss  from involuntary liquidations, because these credit

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