Office of Labor-Management Standards (OLMS)
International Compliance Audit Program (I-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.
How is a union selected for a compliance audit?
OLMS considers a variety of factors when selecting a national or international union (IU) for an audit, including the size of the IU, its geographic location, the length of time since the last audit, and the availability of OLMS 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 Labor-Management Reporting and Disclosure Act (LMRDA), or the Civil Service Reform Act (CSRA).
What can a national or international union expect once it has been selected for a compliance audit?
Shortly after a union has been notified by letter that it has been selected for an audit, the OLMS team will contact the union by telephone to schedule a preliminary conference call. During the conference call, the audit team will work with the union to arrange a mutually convenient audit schedule, arrange a date for the opening meeting, and answer any questions the union has. As indicated in the opening letter, the IU must provide OLMS with an electronic copy of the general ledger and complete the computer questionnaire before the start of the on-site audit. These documents and materials will help the audit team better understand the computer and financial systems of the IU, and allow the audit to be completed more efficiently.
How long does a compliance audit take?
An OLMS compliance audit may take many weeks, months, or perhaps even longer, to complete. No absolute time frame can be placed on the duration of the compliance audit because 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.
During the opening meeting, the team leader will discuss a preliminary assessment of the time requirements necessary for the audit, and the factors that will affect the time requirements.
What is the difference between an I-CAP and a CAP?
The Compliance Audit Program, or CAP, and International Compliance Audit Program, or I-CAP, are companion audit programs developed by OLMS to assess compliance with all aspects of the LMRDA and CSRA using specialized records review and investigative techniques. An I-CAP is designed to audit the complex operating environment of national and international unions. CAP's are streamlined compliance audits for local unions and intermediate bodies. Audits are primarily conducted by OLMS investigators. Neither a compliance audit of a national or international union (I-CAP) nor the compliance audit conducted of a local or intermediate body (CAP), nor any subsequent follow-up reviews, purport to identify all potential problem areas, because the compliance audits are limited in scope.
Where and how is a compliance audit conducted?
The OLMS team primarily conducts the audit on-site at the union headquarters. At the start of the audit, the union is asked to provide the electronic general ledger. The audit team reviews the electronic general ledger as a starting point to understand the records of union financial transactions and to identify the volume of transactions for the audit period. The audit team may require copies of certain IU documents to retain in OLMS records. No original records will be removed from the union's headquarters. When the majority of on-site work has been completed, the audit team reviews the results of the audit and drafts the closing letter, which OLMS issues at the conclusion of the audit. The audit team makes every effort to conduct the audit in an efficient and timely manner.
Are employees required to be available to the audit team during the audit?
The availability of key personnel may affect the ability of the audit team to conduct the audit efficiently. The team will make every effort to conduct the audit in an unobtrusive manner and to minimize disruption to union operations. However, the team will require access to certain key employees on a regular basis. These might include union officers, the comptroller, accountants, information technology specialists, and bookkeepers.
The team will work with union personnel to avoid conflicts with their other duties. However, reasonable cooperation is expected from union officials and employees to ensure that the audit proceeds smoothly and without undue disruption.
Will the confidentiality of proprietary information in union records be honored?
Because of the comprehensive nature of an OLMS compliance audit, all records of the union may be subject to review. However, OLMS recognizes that some of the union's 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 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 an IU's independent auditor?
OLMS recognizes the important role that independent auditors play in ensuring union compliance with financial accounting standards and norms. To a degree, the compliance audit team will rely on the union's auditors for opinions on various matters under consideration. However, the role of the compliance audit team is different from that of a typical auditor. External auditors concern themselves with the financial and business aspects of a union's operations, whereas the role of the OLMS audit team is assessing financial and business aspects of a union's operation as well as assessing compliance with all aspects of the LMRDA, or CSRA. Because our role is much broader, our audits are typically more detailed and more thorough than a standard financial audit.
What records must the international union provide during a compliance audit?
The LMRDA and CSRA require labor organizations to maintain records necessary to verify the information contained in the union's financial disclosure reports for up to five years. The OLMS audit team 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. Typically, the I-CAP team will request from the union the following records for the audit period:
- The general ledger
- The general journal
- A copy of the current constitution and bylaws
- 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 the union
- Minutes of executive board and membership meetings
- A copy of any financial policy documents including expense and travel policies
This list is not exhaustive, and the audit team may request other records as needed. The union must provide original records, not copies.
When a compliance audit is complete, will OLMS share the audit results with the union?
When the audit is complete, the audit team will conduct an exit interview with key officials of the union to discuss its findings and recommendations. Union officials are invited to participate during this process and will be requested to provide a written response describing actions it will take to correct deficiencies and implement recommendations. Following the exit interview, the audit team will provide union officials with a closing letter detailing the findings and recommendations. This closing letter will be posted on the OLMS website for easy access by union members.
Can a union review the findings and defend its position before OLMS publishes the closing letter?
It is expected that the union will provide all information to the audit team during the audit to ensure that the findings are accurate and complete. During the exit interview, the audit team explains the findings and recommendations. Union officials and key employees have an opportunity to express their positions and concerns at that time. If the union presents additional information that was not available during the audit itself, the I-CAP team may review the information and revise the findings, if warranted.
What is required of a union if a six-month follow-up review is necessary?
A six-month follow-up review may be necessary to assure that deficiencies have been corrected and to assess progress in correcting internal control and compliance issues. If a follow-up is required, the union will be advised in the audit closing letter, and the specific deficiencies or internal control issues that need to be addressed will be identified. The union will be requested to provide a written response describing the actions it intends to take to correct deficiencies and implement recommendations. The audit closing letter, the union's response letter and the amended report, if required, will be reviewed at the six month follow-up. The union will be expected to demonstrate that progress has been made between the end of the initial compliance audit and the beginning of the follow-up review to rectify deficiencies identified.
Once an OLMS audit is conducted, can a national or international union expect to be audited again?
Factors OLMS may consider when selecting an IU for a compliance audit include the size of the union, its geographic location, the nature of the findings in the last audit, the length of time since the last audit, and the availability of OLMS personnel resources. OLMS may also conduct an audit based on a complaint from a union member, or when it appears necessary to determine whether any person has violated or is about to violate provisions of the LMRDA, or the CSRA. Audits based on 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 202/693-1345, or mailed to: OLMS FOIA Coordinator, U.S. Department of Labor, Room N-5605, 200 Constitution Ave., NW, Washington, DC 20210.
Last Updated: 10-29-13