U.S. Department of Labor
Office of Labor-Management Standards
Chicago District Office
230 South Dearborn Street, Suite 774
Chicago, IL 60604
(312) 596-7160 Fax: (312) 596-7174
May 5, 2011
Mr. Bill Black, Treasurer
Progressive Steelworkers of Hammond
13318 Robin Lane
Wheatfield, IN 46392
Case Number:
LM Number: 042-600
Dear Mr. Black:
This office has recently completed an audit of the Progressive Steelworkers of Hammond
(Progressive Steelworkers) under the Compliance Audit Program (CAP) to determine your
organization’s compliance with the provisions of the Labor-Management Reporting and
Disclosure Act of 1959 (LMRDA). As discussed during the exit interview with you and
President Alan Pearson on March 30, 2011, the following problems were disclosed during the
CAP. The matters listed below are not an exhaustive list of all possible problem areas since the
audit conducted was limited in scope.
Recordkeeping Violations
Title II of the LMRDA establishes certain reporting and recordkeeping requirements. Section
206 requires, among other things, that labor organizations maintain adequate records for at least
five years by which each receipt and disbursement of funds, as well as all account balances, can
be verified, explained, and clarified. As a general rule, labor organizations must maintain all
records used or received in the course of union business.
For disbursements, this includes not only original bills, invoices, receipts, vouchers, and
applicable resolutions, but also documentation showing the nature of the union business
requiring the disbursement, the goods or services received, and the identity of the recipient(s) of
the goods or services. In most instances, this documentation requirement can be satisfied with a
sufficiently descriptive expense receipt or invoice. If an expense receipt is not sufficiently
descriptive, a union officer or employee should write a note on it providing the additional
information. For money it receives, the labor organization must keep at least one record showing
the date, amount, purpose, and source of that money. The labor organization must also retain
bank records for all accounts.
The audit of the Progressive Steelworkers 2009 records revealed the following recordkeeping
violations:
Mr. Bill Black
May 5, 2011
Page 2 of 4
1. Lack of Supporting Documents
Supporting documentation was not maintained for the purchase of $59.07 in ink cartridges and
approximately $76.74 in undocumented disbursements from the petty cash fund.
As noted above, labor organizations must retain original receipts, bills, and vouchers for all
disbursements. The president and treasurer (or corresponding principal officers) of your union,
who are required to sign your union’s LM report, are responsible for properly maintaining
union records.
Based on your assurance that the Progressive Steelworkers will retain adequate documentation in the
future, OLMS will take no further enforcement action at this time regarding the above violations.
Reporting Violations
The audit disclosed a violation of LMRDA Section 201(b), which requires labor organizations to file
annual financial reports accurately disclosing their financial condition and operations. The Labor
Organization Annual Report Form LM-3 filed by the Progressive Steelworkers for fiscal year ending
December 31, 2009, was deficient in the following areas:
1. Number of Members
Item 19 (How many members did your organization have at the end of the reporting period?)
was reported as 185; however, a review of an individual dues deduction register for
December 2009 revealed that the union actually had 145 dues paying members at the end of
the reporting period. The Form LM-3 instructions state that Item 19 needs to include all
categories of members who pay dues at the end of the reporting period.
2. Fidelity Bond
Item 20 (What is the maximum amount recoverable under your organization’s fidelity bond?)
was reported as $5,000.00 even though a review of your union’s dishonesty bond revealed
that the president, vice president, and treasurer all had a maximum bonding coverage of
$100,000.00. The Form LM-3 instructions require that the maximum amount recoverable for
a loss caused by an officer, employee, or agent of your organization who handled your
organizations funds be reported in Item 20.
3. Dues Rate
The Progressive Steelworkers reported a regular dues rate of $38.60 per month in Item 23
(What are your organization’s rates of dues?) with no reported minimum or maximum. A
review of individual dues deduction registers for the audit period revealed that all members
were charged $40.00 per month. The Form LM-3 instructions require that the minimum and
maximum section of Item 23 should be completed with a “0” if only one dues rate applies.
Mr. Bill Black
May 5, 2011
Page 3 of 4
4. Initiation Fees
The Progressive Steelworkers miscategorized approximately $90.00 in initiation fees as dues
when such receipts should have been reported in Item 40 (fees, fines, assessments & work
permits).
5. Other Receipts
Item 43 (Other Receipts) included a $55.34 QuickBooks general journal adjusting entry,
appropriately rounded down to $55.00, as a cash receipt even though the union did not realize a
monetary gain from the adjusting entry. The adjusting entry was made in QuickBooks because
a check that was payable to the family of a deceased member in 2007 never cleared the union’s
checking account. The Form LM-3 instructions require that receipts should only be recorded in
Items 38 through 43 when money is actually received by the labor organization.
6. Failure to File Bylaws
The audit disclosed a violation of LMRDA Section 201(a), which requires that a union submit
a copy of its revised constitution and bylaws with its LM report when it makes changes to its
constitution or bylaws. The Progressive Steelworkers amended its bylaws in 2000, but did not
file a copy with its LM report for that year.
The Progressive Steelworkers have now filed a copy of its bylaws.
I am not requiring that the Progressive Steelworkers file an amended LM report for 2009 to correct
the deficient items, but the Progressive Steelworkers have agreed to properly report the deficient
items on all future reports it files with OLMS.
Other Violations
The audit disclosed the following other violation(s):
1. Inadequate Bonding
The audit revealed a violation of LMRDA Section 502 (Bonding), which requires the fidelity
bond to provide recovery for loss as a result of dishonest or fraudulent acts even though the
person committing the act receives no personal gain and the act is not subject to punishment as
a crime or misdemeanor. The Progressive Steelworkers current bonding certificate contains a
provision which defines a dishonest or fraudulent act as an act which is punishable under the
criminal code in the jurisdiction within which the act occurred, for which an employee is tried
and convicted.
The Progressive Steelworkers must obtain bonding coverage that does not require a trial and
conviction in order to be compensated in case of a loss. The Progressive Steelworkers should
obtain adequate bonding coverage for its officers and employees immediately. Please provide
proof of bonding coverage to this office as soon as possible, but not later than June 6, 2011.
Mr. Bill Black
May 5, 2011
Page 4 of 4
Other Issues
1. Signing Blank Checks
During the audit, you advised that former President or former Vice President
signed blank checks. The two signature requirement is an effective internal
control of union funds. Its purpose is to attest to the authenticity of a completed document
already signed. However, signing a blank check in advance does not attest to the authenticity
of a completed check, and negates the purpose of the two signature requirement. OLMS
recommends that the Progressive Steelworkers review these procedures to improve internal
control of union funds.
I want to extend my personal appreciation to Progressive Steelworkers of Hammond for the
cooperation and courtesy extended during this compliance audit. I strongly recommend that you
make sure this letter and the compliance assistance materials provided to you are passed on to
future officers. If we can provide any additional assistance, please do not hesitate to call.
Sincerely,
Investigator
cc: Mr. Alan Pearson, President