Investment risk in Credit unions and its impact on the audit process.

Irish Credit Unions have witnessed a decrease in leng in recent years while at the same time , saving in credit unions has increased. With lending income not as abundant in recent years, credit unions have had to resort to investments to help fund a dividend for an increasingly demanding saver. As lending diminishes further, the reliance on investment income increases , leading to credit unions purchasing more complex and riskier investment products that may be outside their understanding and suitability. this has increased investment risk for credit unions and has implications for auditors of these credit unions. This dissertation is a qualitative analysis of investment risk in credit unions and its impact on the audit process. The research objectives were to exploere investment risk; identify the framework in which investment risk in credit unions is managed: assess the basis on which these investments are reported in the financial statements and the extent to which the reporting addresses the risk dimensions ; and investigate the issues faced by auditors on the reporting of credit union investments. The primary data was collected through seven semi structured interviews. The conclusions from the study have implications for credit unions , auditors, and regulators. The results indicate that investment risk has increased in credit unions but also identifies factors which have decreased it. It is found that the level of training for investment committees is inadequate and that investment committees should be subject to a fitness and probity test. The findings indicate that the Guidance Notes from the reghistrar of credit unions are not complete and some modifications are suggested in the study. The findings also suggest that the disclosure note on investments in the financial statements needs expansion and valuations of investments and recognition of investment income should be done on a prudent basis . the study also highlights the importance of an independent investment advisor to aid the investment committee in decision making and also to aid the auditor in valuations. The auditor faces issues on investment valuation difficulties, and the study highlights how the perpetual bond controversy involving credit unions will impact on the future role of the auditor . The study also suggests that regulators are requiring a higher quality from auditors and it is suggested that a standard of best practice in auditing credit union investments is developed by the accounting bodies.