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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
May 3, 2011

Mr. Adolph Mares, Secretary/Treasurer
Musicians, Local 20-623
1165 Delaware Street
Denver, CO 80204-3607

Case Number:
LM Number: 011949

Dear Mr. Mares:

This office has recently completed an audit of Musicians, Local 20-623 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 April 28, 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.

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 20-623 for the fiscal year ended
December 31, 2010, was deficient in the following areas:

1. Disbursements to Officers and Employees (LM-2)
Local 20-623 did not include some reimbursements to officers and employees in
Schedule 11 (All Officers and Disbursements to Officers) and Schedule 12 (Disbursements
to Employees) for travel expenses. It appears that the local erroneously reported these
payments in Schedules 15 through 19.

The union must report in Column F of Schedules 11 and 12 (Disbursements for Official
Business) direct disbursements to officers and employees for reimbursement of expenses
they incurred while conducting union business. In addition, the union must report in
Column F of Schedules 11 and 12 indirect disbursements made to another party (such as a
credit card company) for business expenses union personnel incur. However, the union
must report in Schedules 15 through 19 indirect disbursements for business expenses union
personnel incur for transportation by public carrier (such as an airline) and for temporary
lodging expenses while traveling on union business. The union must report in Column G
(Other Disbursements) of Schedules 11 and 12 any direct or indirect disbursements to


Mr. Adolph Mares
May 3, 2011
Page 2 of 3

union personnel for expenses not necessary for conducting union business.

2.
Local 20-623 did not include loans received and paid on Schedule 9 of the LM-2 report
during the audit period. For example, the local received loans totaling $15,569 advanced to
their account through overdraft receipts which the local repaid during the audit period.
The union must report details of all loans payable on which the labor organization owed
money on at any time during the reporting period except those secured by mortgages or
similar liens on real property (land or buildings) that must be reported in Item 32
(Mortgages Payable) of Statement A of the LM-2 report.

3.
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 20-623 amended its constitution and bylaws in
April 2009, but did not file a copy with its LM report for that year.

Local 20-623 has now filed a copy of its constitution and bylaws.

I am not requiring that Local 20-623 file an amended LM report for 2010 to correct the deficient
items, but Local 20-623 has agreed to properly report the deficient items on all future reports it
files with OLMS.

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 20-623’s officers and
employees were not bonded for the minimum amount required at the time of the audit. However,
Local 20-623 obtained adequate bonding coverage and provided evidence of this to OLMS
during the audit. As a result, OLMS will take no further enforcement action regarding this issue.

Other Issues

1.
Signing Blank Checks
The audit disclosed that an undated blank check was signed by officers. You reported that
the union requires duplicate signatures on all checks over $300. However, a total of 253
cancelled checks were found containing only your signature.

Your union’s bylaws require the signature of the president, not the secretary/treasurer on all
checks over $300. The two signature requirement is an effective internal control of union


Mr. Adolph Mares
May 3, 2011
Page 3 of 3

funds. Its purpose is to attest to the authenticity of a completed document already signed.
However, signing a blank check in advance and checks with only one signature does not
attest to the authenticity of a completed check, and negates the purpose of the two signature
requirement. OLMS recommends that Local 20-623 review these procedures to improve
internal control of union funds.

2. Personal Use of Credit Cards
The audit revealed that Local 20-623 permitted former president and
employee to use the union credit card to pay for personal expenses.
Although the officer and the employee promptly repaid Local 20-623 for the personal
expenses charged with the union credit card, OLMS does not recommend policies that
allow personnel to make personal purchases with union credit cards because this may lead
to misuse of union funds.

I want to extend my personal appreciation to Musicians, Local 20-623 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