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

U.S. Department of Labor
Office of Labor-Management Standards
Denver District Office
1999 Broadway, Suite 1150
Denver, CO 80202-5712
(720) 264-3232 Fax: (720) 264-3230
June 29, 2011

Mr. Harvey J. Humphrey, Business Manager
IBEW Local 415
810 Freemont
Cheyenne, WY 82001

Case Number:
LM Number: 029549

Dear Mr. Humphrey:

This office has recently completed an audit of IBEW Local 415 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 Office Manager Chris E. Conine on June 14, 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 Local 415’s 2010 records revealed the following recordkeeping violations:

1. Credit Card Expenses
Local 415 did not retain adequate documentation for credit card expenses incurred by
Business Manager Harvey J. Humphrey and Organizer Doyle E. Eggli totaling at least


Mr. Harvey Humphrey
June 29, 2011
Page 2 of 5

$7,135. For example, they failed to retain receipts for meals, fuel, lodging, hotels, parking,
and Home Depot purchases.

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
Local 415 did not require officers and employees to submit itemized receipts for meal
expenses totaling approximately $400. 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.

Local 415 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, one of the officers purchased pizza but failed to explain the business
conducted. 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. Items Sold/Given Away
Item 15 of the LM-2 should have been answered, “Yes,” because the union gave away
prizes during its meetings and picnics. However, the local failed to keep any record
showing the disposition of those prizes. The union must identify the type and value of any
property received or given away in the additional information section of the LM report
along with the identity of the recipients or donors of such property. The union does not
have to itemize every recipient of such giveaways by name. The union can describe the
recipients by broad categories if appropriate such as “members” or “new retirees.” In
addition, the union must report the cost, book values, and trade-in allowance for assets that
it traded in.

4. Lack of Salary Authorization
Local 415 did not maintain records to verify that the salaries reported in Schedule 12
(Disbursements to Employees) of the LM-2 were the authorized amounts and therefore
were correctly reported. The union must keep a record, such as meeting minutes, to show
the current salary authorized by the entity or individual in the union with the authority to
establish salaries.


Mr. Harvey Humphrey
June 29, 2011
Page 3 of 5

5. Reimbursed Auto Expenses
Local 415’s employees who received reimbursement for business use of their personal
vehicles did not retain adequate documentation to support payments to them totaling at
least $720 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.

During the exit interview, I provided a sample of an expense voucher Local 415 may use to
satisfy this requirement. The sample identifies the type of information and documentation
that the local must maintain for mileage and travel expenses.

6. Union Owned/Leased Vehicles
The union did not maintain records necessary to verify the accuracy of the information
reported in Schedules 11 (All Officers and Disbursements to Officers) and 12
(Disbursements to Employees) of the LM-2.

Local 415 incurred expenses totaling at least $1,822 for automobiles during 2010.
However, Local 415 did not maintain records documenting business versus personal use of
the union vehicles.

The LM-2 instructions include specific rules for the reporting of automobile expenses. The
union must report operating and maintenance costs for each of its owned or leased vehicles
in Schedules 11 and 12 of the LM-2, allocated to the officer or employee to whom each
vehicle is assigned.

For each trip they take using a union owned or leased vehicle, officers and employees must
maintain mileage logs that show the date, number of miles driven, whether the trip was
business or personal, and, if business, the purpose of the trip.

7. Receipts and Disbursements Not Recorded
Local 415 failed to keep at least one record showing the date, amount, purpose, and source
of the money for the receipts and disbursements from the local’s “50-50 raffle” that took
place during the 2009 picnic.

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-2 filed by Local 415 for the fiscal year ended
June 30, 2010, was deficient in that or deficient in the following area:


Mr. Harvey Humphrey
June 29, 2011
Page 4 of 5

1. Failure to Itemize Disbursements
Local 415 did not properly report several “major” transactions in Schedule 18. A “major”
transaction includes any individual transaction of $5,000 or more or total transactions to or
from any single entity or individual that aggregate to $5,000 or more during the reporting
period and which the local cannot properly report elsewhere in Statement B. The audit
found that Local 415 failed to itemize overhead payments of $5,580 to Cheyenne Light,
$5,390 to Orbitcom, and $18,000 to IBEW Building Corporation even though the payments
were included in Item 53 (General Overhead) calculation.

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 415 amended its constitution and bylaws in
2010, but did not file a copy with its LM report for that year.

Local 415 has now filed a copy of its constitution and bylaws.

3. Failure to Report Receipts and Disbursements on the 2010 LM-2 Report
Local 415 did include on the 2010 LM-2 report the cash receipts and cash disbursements
related to the local’s “50-50 raffle” that took place at the 2009 picnic. Unions are required
to report all sources of receipts and all types of disbursements on “Statement B” of the
LM-2 report. The union told OLMS that half of the receipts were paid out to the winner of
the raffle and that the other half was used to pay in cash for some of the picnic’s expenses
but that no records were kept.

Other Issues

1.
Financial Safeguards
As I discussed during the exit interview with you and Office Manager Conine, the audit
revealed that Local 415 does not have proper financial safeguards in place because the
same person that is in charge of keeping the local’s accounting records also prepares
checks, signs checks, collects dues, and reconciles the bank accounts. OLMS recommends
that unions practice segregation of duties as a way of preventing financial fraud.

2.
Cancelled Checks – cancelled checks are an essential part of the documentation that
supports union disbursements. If your bank does not provide you with original cancelled
checks, OLMS recommends that you find out if they are available on line, make copies of
their images, and save them into some kind of electronic storage that can be easily access
in the future.

Mr. Harvey Humphrey
June 29, 2011
Page 5 of 5

Based on your assurance that Local 415 will retain adequate documentation in the future, OLMS
will take no further enforcement action at this time regarding the above violations.

I want to extend my personal appreciation to IBEW Local 415 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. Chris E. Conine, Office Manager
Mr. Thomas C. McBride, President