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Compliance Audit Program (CAP) - Frequently Asked Questions

Additions are made to this frequently asked questions section on a regular basis. If you have a question that is not addressed here, you may e-mail it to OLMS-Public@dol.gov.

Pre-Audit Procedures

How is a union selected for a compliance audit?

OLMS considers a variety of factors when selecting a union for a compliance audit, including failure to file required annual financial reports with OLMS on a timely basis, discrepancies in financial reports filed, and complaints received by OLMS from members or others about the union's finances. A number of unions are also selected for CAP on a random basis each year.

What happens after a union is selected for a compliance audit?

An OLMS investigator contacts a union official, usually by telephone, when a union has been selected for an audit, and briefly describes the nature and scope of the planned audit, identifies union financial records that will be needed, and arranges a mutually convenient meeting time and place to start the audit. Following this contact, the investigator sends the union a letter confirming the arrangements. The letter will include a profile of the CAP program and a short financial questionnaire.


During the Audit

How does the compliance audit begin?

Audits begin with an opening interview of, at a minimum, the primary financial officer. If a union employs a bookkeeper, accountant, or other employee who plays a primary role in the keeping of union financial records, the OLMS investigator may request this person be present as well. Union presidents also frequently attend audit opening interviews. During the interview, the investigator will obtain detailed information about the union and its financial records, bookkeeping practices, and internal controls.

What is covered during the audit?

The compliance audit will usually cover the union's last fiscal year, although the audit may be expanded to other periods as appropriate. Many different types of union records are examined, including cancelled checks, bank statements, membership and dues records, journals, minutes of membership and executive board meetings, and bills and other supporting documents. OLMS also verifies certain financial transactions with outside parties such as banks, credit card companies, and other vendors doing business with the union. If problems are uncovered during the compliance audit, OLMS will conduct additional investigation as necessary.

How long does a compliance audit take?

While many audits are completed in less than 15 working days, no absolute time frame can be placed on the duration of the audit since much depends on the size of the union, the availability and condition of its records, the level of cooperation by union officials, and the type of compliance problems found. OLMS is committed to conducting the audit in a professional, efficient manner with the least possible disruption to normal union operations.

Where is the audit conducted?

OLMS will make every effort to work on union premises if possible. However, OLMS investigators will not work on union premises if no union officials or employees are also on the premises throughout the regular work day. In addition, if a union is unable to provide a reasonably private work area of an appropriate size for the investigator to work an eight hour day, it will be necessary for OLMS to take the union's records and conduct the audit at the investigator's workplace. In that situation, the union will be provided with a document receipt for its records.

Must union officers or employees be available to the investigator for questions during the audit?

No. While the investigator may have occasional questions regarding the financial records, it is not necessary for any officer or employee to be present at all times, other than to meet the condition noted above concerning the general presence of a union officer or employee on the union premises during the time the investigator is working there.

Will the confidentiality of proprietary information in union records be honored?

Because of the comprehensive nature of the compliance audit, all union records may be subject to review. However, OLMS recognizes that some union records, files, and documents might contain certain commercial or financial information that is privileged or confidential. OLMS considers such sensitive business information as proprietary in nature. As such, OLMS will assert every means available to protect this proprietary information from any disclosure to third parties. Of course, if the audit reveals potential violations of federal or state laws, information from union records may be provided to other law enforcement or regulatory agencies.

Why can't OLMS accept the report of a union's independent auditor?

OLMS recognizes the important role that independent auditors play in ensuring union compliance with financial accounting standards and norms. The investigator will rely on the work product of an independent auditor, but only to a degree. An OLMS compliance audit is different from the work performed by a typical auditor. Auditors concern themselves with the financial and business aspects of a union's operations. In the case of many unions, an external auditor does not actually conduct an "audit," but provides what is known in the accounting profession as a "compilation" - a presentation of the union's original data in the form of financial statements and supplemental schedules. In contrast, the role of an OLMS investigator is to assess compliance with all aspects of the Labor-Management Reporting and Disclosure Act (LMRDA) and the Civil Service Report Act (CSRA). Because the role of OLMS is much broader, compliance audits are more detailed and more thorough than a compilation or even a standard financial audit.

What records must unions provide for a compliance audit?

The LMRDA requires labor organizations to maintain records necessary to verify the information contained in the union's financial disclosure reports for up to five years. The investigator may request any of these records in order to establish a clear picture of the union's finances and operational structure and to assess compliance with the requirements of the law. The investigator will request from the union all financial records for the period of the audit. Typically, these include the following general categories of records:

  • Bank account records, including bank statements, duplicate deposit tickets, debit/credit memos, and bank reconciliations
  • Records for investments and all other assets, including inventories of fixed assets
  • Receipts records, including duplicate receipts, receipt journals, and individual membership records (member ledger cards)
  • Disbursement records, including canceled checks, check stubs, disbursement journals, payroll ledgers, vouchers, expense receipts, bills, credit card statements, and other supporting documents
  • Audit reports, if any, for the audit period prepared by union auditors or accountants retained by your union
  • Minutes of executive board and membership meetings
  • A copy of the current constitution and bylaws and any financial policy documents

This list is not exhaustive, and the investigator may request other records as needed. The investigator must be provided with original records, not copies. In addition, if the union maintains electronic records, copies of the electronic records must be made available.


Post-Audit Procedures

Does OLMS share the results of the compliance audit with the union?

When the audit is complete, the investigator will conduct an exit interview with key officials of the union. During this interview, the investigator will convey the audit findings and recommendations. The investigator will also offer compliance assistance and technical guidance about recordkeeping, reporting, bonding and other LMRDA or CSRA requirements. Union officials are invited to participate with questions and comments during this process. Following the exit interview, the investigator will provide union officials with a closing letter that details the audit findings and recommendations. This closing letter will be posted on the OLMS website for easy access by union members.

Can the union review the audit findings and defend its position before OLMS publishes the closing letter?

It is expected that the union will provide all information to the investigator during the compliance audit to ensure that the audit findings are accurate and complete. During the exit interview, the investigator discusses the audit findings and any internal control recommendations. The investigator also outlines any specific steps the union must take to comply with the law, such as filing an amended financial report to correct reporting deficiencies or modifying recordkeeping practices. Union officials and key employees are afforded an opportunity to express their positions and concerns at that time. In unusual circumstances, if the union presents additional information that was not available during the audit itself, the investigator may review the information and revise the findings if warranted.

When can a union expect to be audited by OLMS again?

Factors OLMS may consider when selecting a union for a compliance audit include the size of the union, its geographic location, the length of time since the last audit, and the availability of investigator personnel resources. OLMS may also conduct an audit based on a complaint from a member(s) or when it appears necessary to determine whether any person has violated or is about to violate provisions of the LMRDA. Audits based upon the complaint of a union member(s) or to determine whether any person has violated or is about to violate provisions of the LMRDA or CSRA can occur at any time.

How do I obtain a CAP or I-CAP closing letter that was completed prior to the dates listed on your website?

A request must be made pursuant to the Freedom of Information Act (FOIA) in order to obtain copies of any closing letters dated prior to the timeframes listed on our website. FOIA requests can be faxed to 202/693-1340, or mailed to: OLMS FOIA Coordinator, U.S. Department of Labor, Room N-5609, 200 Constitution Ave., NW, Washington, DC 20210.

Last Updated: 05/16/07