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Office of Labor-Management Standards
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Office of Labor-Management Standards (OLMS)

U.S. Department of Labor
           
Employment Standards Administration
Office of Labor-Management Standards
Denver District Office
1999 Broadway, Suite 2435
Denver, CO  80202-5712
(720) 264-3232  Fax:(720) 264-3230
          

January 14, 2009                     

Mr. Jack McHan, Treasurer
American Postal Workers Union Local 7029
7755 E 56th Ave.
Denver, CO  80217-5284
                                                                        LM File Number:  508-817
                                                                        Case Number:  ||||||||||
Dear Mr. McHan:

This office has recently completed an audit of American Postal Workers Union (APWU) Local 7029 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 on January 13, 2009, 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 recipients 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 Local 7029’s 2007 records revealed the following recordkeeping violations:

1.         General Reimbursed Expenses

Local 7029 did not retain adequate documentation for reimbursed expenses incurred by union officers totaling at least $2,700.  For example, the local wrote a check to Treasurer Jack McHan for the purchase of holiday gift certificates to be distributed to every member, but there was no receipt or member roster detailing each recipient to document the purchase and distribution of the gift certificates.

As previously 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. 

2.         Failure to Maintain Records

Local 7029 did not maintain adequate records used in the course of union business in that voided checks were not retained with other financial documents.

As previously noted above, labor organizations must maintain all union records used or received in the course of union business.  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 Local 7029 will retain adequate documentation and maintain all union records used or received in the course of union business 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 Local 7029 for fiscal year ending December 31, 2007, was deficient in the following areas:

1.         Disbursements to Officers

Local 7029 did not include some reimbursements to officers totaling at least $10,020.36 in the amounts reported Item 24 (All Officers and Disbursements to Officers).   It appears the union erroneously reported these payments in Item 54 (Other Disbursements).

The union must report most direct disbursements to Local 7029 officers and some indirect disbursements made on behalf of its officers in Item 24.  A "direct disbursement" to an officer is a payment made to an officer in the form of cash, property, goods, services, or other things of value.  See the instructions for Item 24 for a discussion of certain direct disbursements to officers that do not have to be reported in Item 24.  An "indirect disbursement" to an officer is a payment to another party (including a credit card company) for cash, property, goods, services, or other things of value received by or on behalf of an officer.  However, indirect disbursements for temporary lodging (such as a union check issued to a hotel) or for transportation by a public carrier (such as an airline) for an officer traveling on union business should be reported in Item 48 (Office and Administrative Expense).

2.         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.  Local 7029 amended its constitution and bylaws in 2005, but did not file a copy with its LM report for that year.

Local 7029 has now filed a copy of its constitution and bylaws.

Local 7029 must file an amended Form LM-3 for fiscal year ending December 31, 2007, to correct the deficient items discussed above.  OLMS provided you with a blank form and instructions, and advised you that the reporting forms and instructions are available on the OLMS website (www.olms.dol.gov).  The amended Form LM-3 should be submitted to this office at the above address as soon as possible, but not later than February 2, 2009.  Before filing, review the report thoroughly to be sure it is complete, accurate, and signed properly with original signatures.

Other Violation

The audit disclosed the following other violation:

Inadequate Bonding

The audit revealed a violation of LMRDA Section 502 (Bonding), which requires that union officers and employees be bonded for no less than 10 percent of the total funds those individuals or their predecessors handled during the preceding fiscal year. 

Local 7029’s officers and employees are currently bonded for $10,000, but they must be bonded for at least $10,349.  Local 7029 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 February 2, 2009.

I want to extend my personal appreciation to APWU Local 7029 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,

Jena de Mers Raney
District Director

cc:        Mr. Anthony Archuleta, President