U.S. Department of Labor
Office of Labor-Management Standards
Buffalo District Office
130 South Elmwood Avenue, Suite 510
Buffalo, NY 14202
(716) 842-2900 Fax: (716) 842-2901
April 13, 2011
Mr. John Bieger, Treasurer
Field Staff Association
8795 Stahley Road
E. Amherst, NY 14051
Case Number:
LM Number: 517261
Dear Mr. Bieger:
This office has recently completed an audit of Field Staff Association (FSA) 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 Executive Board Officers James Loga and Brian
Cornelius, and you on April 5, 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 Field Staff Association’s 2010 records revealed the following recordkeeping
violations:
Mr. John Bieger
April 13, 2011
Page 2 of 6
1. General Reimbursed Expenses
FSA did not retain adequate documentation for reimbursed expenses incurred by union
officers and employees totaling at least $1,411. For example, President Edward Mulchy
received reimbursed for $317 for airfare and other transportation costs, however no
itinerary or other receipts were retained. In addition, airline and hotel reimbursement was
sought and received by Treasurer John Bieger totaling $995.52 with little explanation for
the expense and no receipts.
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.
2. Meal Expenses
FSA did not require officers and employees to submit itemized receipts for meal expenses
totaling at least $1,769. The union must maintain itemized receipts provided by restaurants
to officers and employees. These itemized receipts are necessary to determine if such
disbursements are for union business purposes and to sufficiently fulfill the recordkeeping
requirement of LMRDA Section 206.
FSA records of meal expenses did not always include written explanations of union
business conducted or the names and titles of the persons incurring the restaurant charges.
For example, President Edward Mulchy was reimbursed on July 30, 2010 for $473 in meals
that were charged using his personal credit card, however there was no names record for
those present, nor were the itemized meal receipts retained. Union records of meal
expenses must include written explanations of the union business conducted and the full
names and titles of all persons who incurred the restaurant charges. Also, the records
retained must identify the names of the restaurants where the officers or employees
incurred meal expenses.
3. Reimbursed Auto Expenses
Union officers and employees who received reimbursement for business use of their
personal vehicles did not retain adequate documentation to support payments to them
totaling at least $6,300 during 2010. The union must maintain records which identify the
dates of travel, locations traveled to and from, and number of miles driven. The record
must also show the business purpose of each use of a personal vehicle for business travel
by an officer or employee who was reimbursed for mileage expenses.
Mr. John Bieger
April 13, 2011
Page 3 of 6
4. Receipt Dates not Recorded
Entries in FSA's deposit record and check stubs reflect the date the union deposited money,
but not the date money was received. Union receipts records must show the date of receipt.
The date of receipt is required to verify, explain, or clarify amounts required to be reported
in Statement B (Receipts and Disbursements) of the LM-3 Report. The LM-3 instructions
for Statement B state that the labor organization must record receipts when it actually
receives money and disbursements when it actually pays out money. Failure to record the
date money was received could result in the union reporting some receipts for a different
year than when it actually received them.
Based on your assurance that Field Staff Association will retain adequate documentation in the
future, OLMS will take no further enforcement action at this time regarding the above violations.
The proper maintenance of union records is the personal responsibility of the individuals who are
required to file FSA’s LM report. You should be aware that under the provisions of Section
209(a) of the LMRDA and Section 3571 of Title 18 of the U.S. Code, willful failure to maintain
records can result in a fine of up to $100,000 or imprisonment for not more than one year, or
both. Under the provisions of Section 209(c) of the LMRDA and Section 3571 of Title 18 of the
U.S. Code, willful destruction or falsification of records can result in a fine of up to $100,000 or
imprisonment for not more than one year, or both. The penalties provided in Section 209(c) and
Section 3571 of Title 18 apply to any person who caused the violations, not just the individuals
who are responsible for filing the union’s LM report.
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 (LM-3) filed by Field Staff Association for the fiscal year
ended September 30, 2010, was deficient in the following areas:
1. Disbursements to Officers
Field Staff Association did not report the names of some officers and the total amounts of
payments to them or on their behalf in Item 24 (All Officers and Disbursements to
Officers). The union must report in Item 24 all persons who held office during the year,
regardless of whether they received any payments from the union.
The union must report most direct disbursements to FSA 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
Mr. John Bieger
April 13, 2011
Page 4 of 6
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. Disbursements to Employees
Field Staff Association did not include some payments to employees in Item 46
(Disbursements to Employees) totaling at least $5,500. The union must report most direct
and indirect disbursements to FSA employees in Item 46, less deductions. This includes
disbursements to individuals other than officers who receive payments for work performed
or expenses incurred, including meals, mileage, and other direct or indirect expenses. It
appears the union reported these payments in Item 54 (Other Disbursements).
3. Contributions, Gifts, and Grants Disbursements
FSA failed to report the total disbursements for contributions, donations and gifts made by
the organization in Item 51 (Contributions, Gifts & Grants). During the period, the union
made at least $2,600 in contributions, gifts, and donations, however only $1,236 was
reported in Item 51. It appears the union erroneously reported these payments in Item 50
(Benefits). Direct benefit disbursements are those made to officers, employees, members,
and beneficiaries. Indirect benefit disbursements are those made from the union’s funds to
a separate and independent entity, such as a trust or insurance company, which in turn, will
pay benefits to the covered individuals. During the period, FSA did not make direct or
indirect benefit disbursements from the organization’s funds as explained above.
4. Other Disbursements
The organization reported $92,048 in Item 54 (Other Disbursements). It appears the union
erroneously reported the majority of the organization’s administrative expenses such as
meeting expenses, and indirect disbursements to employees in Item 54, rather than
including these disbursements in the appropriate categories on the form, Item 46 (To
Employees) and Item 48 (Office & Administrative Expense), respectively.
Item 54 should include disbursements made by your organization which can not be
reported elsewhere in Items 45 through 53 on the form. Examples of disbursements to be
included in Item 54 are fees, fines, repayment of loans obtained, withholding taxes and
similar disbursements.
Mr. John Bieger
April 13, 2011
Page 5 of 6
5. Investments Reported as Cash
FSA improperly included the value of their Investments as Cash in Statement A (Assets
and Liabilities). For LM reporting purposes, OLMS considers Cash as any funds in banks,
credit unions, and other financial institutions, such as checking accounts, savings accounts,
certificates of deposit, and money market accounts. FSA has investments in the form of
mutual funds and stocks, which are held and managed through the financial institution.
These investments should be reported as such on the LM-3 Report in Item 28
(Investments).
FSA must file an amended Form LM-3 for the fiscal year ended September 30, 2010 to correct
the deficient items discussed above. I 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 May 13, 2011.
Before filing, review the report thoroughly to be sure it is complete, accurate, and signed
properly with original signatures.
Other Violations
The audit disclosed the following other violation:
1. 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.
Field Staff Association Officers John Bieger and Edward Mulchy are currently bonded for
$25,000 each, but they must be bonded for at least $31,717. FSA should obtain adequate
bonding coverage for its officers immediately. Please provide proof of bonding coverage
to this office as soon as possible, but not later than May 13, 2011.
2. Delinquent Filing
Field Staff Association is required to a file annual financial reports accurately disclosing
their financial condition and operations to OLMS within 90 days after the end of it’s fiscal
year.
FSA was delinquent in their filing of the annual reports in violation of Section 201(b) of
the LMRDA. For the fiscal year ending September 30, 2010, the report was not
properly filed with OLMS until April 4, 2011. OLMS records show that FSA has
been delinquent in their reports for the previous five consecutive years.
Mr. John Bieger
April 13, 2011
Page 6 of 6
During the audit, you advised that President Edward Mulchy signs blank checks. Your
to the authenticity of a completed document already signed. However, signing a blank
Other Issues
1. Expense Policy
As I discussed during the exit interview, the audit revealed that Field Staff Association
does not have a clear policy regarding the types of expenses personnel may claim for
reimbursement including meals, per diem, and mileage reimbursements. OLMS
recommends that unions adopt written guidelines concerning such matters. Copies of
OLMS Compliance Tips on this issue were provided to you during the audit.
2. Signing Blank Checks
union’s bylaws require that all checks be signed by the president and treasurer. The two
signature requirement is an effective internal control of union funds. Its purpose is to attest
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 Field Staff Association
review these procedures to improve internal control of union funds.
I want to extend my personal appreciation to Field Staff Association 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. Edward Mulchy, President
Mr. James Loga, Executive Board Officer
Mr. Brian Cornelius, Executive Board Officer