Office of Labor-Management Standards (OLMS)
U.S. Department of Labor
Office of Labor-Management Standards
San Francisco District Office
90 7th Street, Suite 2825
San Francisco, CA 94103
(415) 625-2661 Fax: (415) 625-2662
September 27, 2012
Mr. Chris Davis, President
UGSOA Local 403
1509 Eden Avenue
San Jose, CA 95117
LM Number: 542722
Dear Mr. Davis:
This office has recently completed an audit of 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 September 26, 2012, 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.
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 UGSOA Local 403’s 2011 records revealed the following recordkeeping violations:
1. Failure to Record Receipts
Local 403 did not maintain any record of its receipts, including dues payments from the employer and per capita payments from the International. 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.
2. Receipt Dates not Recorded
Local 403 did not maintain a receipts journal, so no record reflecting the date money was received was preserved. 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. 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.
3. Retention of Union Records
UGSOA Local 403 did not retain all records used or received in the course of union business for the last five years. The union did not retain its checkbook with check duplicates and corresponding disbursement information for 2011. The union also did not retain all deposit slips and dues check-off lists for 2011.
Based on your assurance that Local 403 will retain adequate documentation in the future, OLMS will take no further enforcement action at this time regarding the above 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 403 for the fiscal year ended December 31, 2011, 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 403 amended its constitution and bylaws in 2008, but did not file a copy with its LM report for that year.
Local 403 has now filed a copy of its constitution and bylaws.
The audit disclosed the following other violation:
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.
The audit revealed that Local 403’s officers and employees were not bonded for the minimum amount required at the time of the audit. Local 403 must be bonded for at least $5,200. Local 403 should obtain adequate bonding coverage for is officers and employees immediately. Please provide proof of bonding coverage to this office as soon as possible, but not later than November 1, 2012.
I want to extend my personal appreciation to UGSOA Local 403 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.
cc: Ms. Tammy Bowie, Senior Vice President