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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 23, 2011

Mr. William Ferrara, Financial Secretary
Carpenters, Local 55
4290 Holly Street
Denver, CO 80216

Case Number:

LM Number: 540701

Dear Mr. Ferrara:

This office has recently completed an audit of Carpenters, Local 55 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 June 22, 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 55’s 2010 records revealed the following recordkeeping violations:

1) General Reimbursed and Credit Card Expenses

Local 55 did not retain adequate documentation for various reimbursed expenses and

credit card expenses incurred by the local totaling at least $7,962. For example, no

expense receipts were found in records for credit card charges to Mile High Rental,


Mr. William Ferrara
June 28, 2011
Page 2 of 4

Lehrer’s Flowers, Southwest Airlines, King Soopers, Target, Subway, and to various
vendors for office supplies.

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) Disposition of Property

Local 55 did not maintain an inventory of hats, jackets, and other property it purchased,
sold, or gave away. For example, the union spent over $39,100 on jackets, T-shirts,
pencil clips, calendars, Rockies tickets, and gift cards it gave away to members.
However, the names of members who received items bought with union funds were
missing from records. The union kept a signed list of 31 members who received
“tickets,” but the list did not show the type of tickets or the number of tickets that each
member received.

The union must report the value of any union property on hand at the beginning and end
of each year in Item 28 of the LM-2 (Other Assets). The union must retain an inventory
or similar record of property on hand to verify, clarify, and explain the information that
must be reported in Item 28. The union must record in at least one record the date and
amount received from each sale or gift of union hats, jackets and other items.

3) Failure to Record Receipts

In a sample of receipts OLMS reviewed, Local 55 did not record in receipts records, cash
received from five new members for initiation fees totaling $780. The cash was not
deposited to any Local 55 accounts. Although the union later showed that the cash was
deposited into a separate account owned by the Carpenters and District Council in Kansas
City, MO, the cash was not recorded in any Local 55 receipts records, nor was it recorded
as a disbursement to the Kansas City local’s account.

Also numerous duplicate receipts issued to members for dues and initiation fees, do not
indicate if the receipts were in the form of cash, check, or money order. Union receipts
records must include an adequate identification of all money the union receives. The
records should show the date and amount received, and the source of the money.

4) Information not Recorded in Meeting Minutes

During the audit, meeting minutes showed that the membership authorized various
purchases such as T-shirts, jackets, hats, pencil clips, gift cards, calendars, and Rockies
tickets. However, the minutes contained no reference to membership approval for the
total amount approved for items that the union purchased with union funds, or the names
of individuals who were authorized to travel, or the business conducted.


Mr. William Ferrara
June 28, 2011
Page 3 of 4

Section 54-D of the International Carpenters Constitution requires that all funds paid
from local funds, be approved by a majority vote of the members present at membership
meetings, and that the minutes of all meetings report any disbursement authorizations
made at those meetings.

The proper maintenance of union records is the personal responsibility of the individuals who are
required to file Local 55'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 (Form LM-2) filed by Local 55 for the fiscal year ended
June 30, 2010, was deficient in the following area:

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 55 amended its constitution and bylaws in 2002, but did not file a
copy with its LM report for that year.

Local 55 has now filed a copy of its constitution and bylaws.

Other Issues

1. Expense Policy
As I discussed during the exit interview with you, the audit revealed that Local 55 does
not have a clear policy regarding the types of expenses personnel may claim for
reimbursement and the types of expenses that may be charged to union credit cards.
OLMS recommends that unions adopt written guidelines concerning such matters.

2. Signing Blank Checks
During the audit, you advised that officers sign blank checks to pay officer salaries at
membership meetings. Your union’s bylaws require that all checks be signed by the


Mr. William Ferrara
June 28, 2011
Page 4 of 4

president and treasurer. 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 Local 55 review these procedures to improve internal control of union
funds.

I want to extend my personal appreciation to Carpenters, Local 55 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. Robert Disney, President