Colletts said another important fraud prevention task is to complete cash counts in the appropriate way.

All cash items should be included, she said, noting that all cash counts don't have to be done in one day. Teller funds, travelers' checks and ATMs counts could be conducted on separate days. Credit union management should also count cash in the presence of the employee responsible for maintain the funds in the event of a shortage. Cash bundles should also be broken down and cash totals should be verified with the general ledger.

"It's important to break down the bundles because there have been cases where someone has replaced $100 bills in the center of a bundle with $1 bills," Colletts said.

The NCUA also encourages supervisory committees to review employee and director accounts as well as related family member accounts, bank statements and reconciliations.

It's also important to keep an eye on dormant and closed accounts, which are frequently used to perform unauthorized transactions, the NCUA said.

In many prior cases involving CEO fraud, the credit union's performance has often been poor for many years before the fraud occurred, according to Tom Glatt Jr., a credit union consultant in Wilmington, N.C.

"Boards should not accept consistently poor performance," Glatt said. "Board members need to develop proficiency in governing to include fully understanding the quality and scale of financial results."

Glatt said two simple steps could have helped boards minimize losses in previous CEO fraud cases.

"First, asking detailed, informed, well-researched questions about performance would have perhaps deterred the fraud in the first place. When someone is looking over your shoulder you tend to cheat less," he said. "Second, by asking the right questions, they would have become disappointed with the performance they were receiving versus what should have been. This would have led to leadership change and minimization of the impact of the fraud itself—simply because it would not have gone on for so long."

Most experts agree that the war on dishonesty needs to start at the top.

"With strong leadership and training, credit unions can create an internal culture that deters dishonest acts, detects those that do occur, and follows a disciplined investigation and correction process," said Mike Mossel, a managing director at the consulting firm McGladrey.

Experts interviewed agreed credit union boards should draft a formal fraud policy, with the assistance of legal counsel, and the policy should be updated annually and signed by all employees.

Effective fraud policies should address specific items, establish guidelines for investigations and explain consequences, because credit unions can risk litigation if proper procedures are not followed during fraud investigations, the NCUA said.

In recent cases, small credit unions were looted by managers who were sole employees.

"The most important internal fraud prevention policy is separation of duties," said Christopher Marquet, founder of Marquet International Ltd., a Wellesley, Mass.

"If a single individual has control over both authorization and execution of funds transfers, for example, you have a recipe for fraud to occur," he said.

Other tips include watching for "red flags" among employees include attitude changes, not taking vacations, keeping records in disarray and lifestyle changes such as excessive spending or borrowing.