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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
Boston District Office
JFK Federal Building, Suite E-365
Boston, MA 02203
(617) 624-6690 Fax: (617) 624-6606
June 20, 2011

Ms. Barbara Kirk, President
CWA Local 1290
53 Frye Street
Marlboro, MA 01752

Case Number:

LM Number: 006-096

Dear Ms. Kirk:

This office has recently completed an audit of CWA Local 1290 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 Secretary Treasurer Richard Halbrook on June 9, 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 1290’s records for the fiscal year ended September 30, 2010 revealed the
following recordkeeping violations:

1. General Expenses and Reimbursed Expenses
Local 1290 did not retain adequate documentation for general union expenses and
reimbursed expenses incurred by union officers totaling at least $1,844.11. For example,


Ms. Barbara Kirk
June 28, 2011
Page 2 of 4

Local 1290 failed to maintain sufficiently descriptive vouchers for reimbursed mileage

expenses paid to officers.

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. Lack of Salary Authorization
Local 1290 did not maintain records to verify that the salaries reported in Item 24 (All
Officers and Disbursements to Officers) of the LM-3 were the authorized amounts and
therefore were correctly reported. During the opening interview, both Ms. Kirk and Mr.
Halbrook told OLMS that salaries were paid in accordance with past practice. 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.

3. Information not Recorded in Meeting Minutes
During the audit, Ms. Kirk advised OLMS that local’s executive board discussed changes
in the salary of officers at an August 2010 meeting; however, Local 1290 maintained no
minutes of that meeting. Minutes of all membership or executive board meetings must
report any disbursement authorizations made at those meetings.

Based on Secretary-Treasurer Halbrook’s assurance that Local 1290 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 Local 1290 for the fiscal year ended
September 30, 2010, was deficient in the following areas:

1. Disbursements to Officers
Local 1290 did not include some reimbursements to officers totaling at least $4,403.71 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).

Furthermore, Local 1290 did not report the names of some officers, specifically its vice
president and five area representatives, and the total amounts of payments to them or on
their behalf in Item 24 (All Officers and Disbursements to Officers). The union must


Ms. Barbara Kirk
June 28, 2011
Page 3 of 4

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 Local 1290 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. Fixed Assets
During the audit year, Local 1290 purchased a netbook, which President Kirk uses for
union business. The local failed to report the purchase of this computer in Item 52
(Purchase of Investments and Fixed Assets) and its value at the end of the reporting period
in Item 29(B) (Fixed Assets). It appears that it was improperly reported in Item 54 (Other
Disbursements). Instructions for the LM-3 indicate that the local should report the “book
value at the start and end of the reporting period of all fixed assets, such as land, buildings,
automobiles, and office furniture and equipment owned by your organization.”

Local 1290 must file an amended Form LM-3 for the fiscal year ended September 30, 2010, to
correct the deficient items discussed above. I provided Secretary-Treasurer Halbrook with a
blank form and instructions, and advised him 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 Monday, July
25, 2011. Before filing, review the report thoroughly to be sure it is complete, accurate, and
signed properly with original signatures.

Other Issue

Use of Signature Stamp and Single Signatory

During the audit, Secretary-Treasurer Halbrook advised that it is Local 1290’s practice for
Halbrook stamp his own signature on most union checks. The local does not have a two-
signature requirement, and Halbrook indicated that only he reviews the checks before they
are issued. OLMS recommends that Local 1290 review these procedures and consider
discontinuing the use of the signature stamp. Adding a second signatory requirement would
strengthen the internal controls governing the disbursement of union funds.

I want to extend my personal appreciation to CWA Local 1290 for the cooperation and courtesy


Ms. Barbara Kirk
June 28, 2011
Page 4 of 4

extended during this compliance audit. I strongly recommend that you make sure this letter and
the compliance assistance materials provided to your local are passed on to future officers. If we
can provide any additional assistance, please do not hesitate to call.

Sincerely,

Investigator

cc: Mr. Richard Halbrook, Secretary-Treasurer