U.S. Department of Labor
Employment Standards Administration
Office of Labor-Management Standards
Las Vegas Resident Office
600 Las Vegas Boulevard South
Room 750
Alan Bible Federal Building
Las Vegas, NV 89101
(702) 388-6126 Fax:(702) 388-6103
June 30, 2008
Mr. Frank Leone, President
Musicians Local 369
3701 W. Vegas Drive
Las Vegas, NV 89108
LM File Number: 055-551
Case Number: ||||||||||
Dear Mr. Leone:
This office has recently completed an audit of Musicians Local 369 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, Secretary Treasurer Thomas Pastor, and accountant Dawn Allen-McCoy on June 18, 2008, 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 369’s 2007 records revealed the following recordkeeping violations:
1. Credit Card Expenses
Local 369 did not retain adequate documentation for credit card expenses incurred by union officers and employees totaling at least $3,958.23. For example, there no were original receipts on file for charges made on the union’s credit card for a membership with PollStar in the amount of $689.00 and the Riviera Hotel and Casino for $190.75.
As previously 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. Meal Expenses
Local 369 did not require officers and employees to submit itemized receipts for meal expenses totaling at least $67.05. The union must maintain itemized receipts provided by restaurants to officers and employees. These itemized receipts are necessary to determine if such disbursements are for union business purposes and to sufficiently fulfill the recordkeeping requirement of LMRDA Section 206.
Local 369 records of meal expenses did not always include written explanations of union business conducted or the names and titles of the persons incurring the restaurant charges. For example, there was a charge in the amount of $249.05 at Café Chloe, but the receipt did not list any names or the business purpose of the meal. Union records of meal expenses must include written explanations of the union business conducted and the full names and titles of all persons who incurred the restaurant charges. Also, the records retained must identify the names of the restaurants where the officers or employees incurred meal expenses.
3. Lack of Salary Authorization
Local 369 did not maintain records to verify that the salaries reported in Schedules 11 (All Officers and Disbursements to Officers) and 12 (Disbursements to Employees) were the authorized amount and therefore were correctly reported. 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.
Based on your assurance that Local 369 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-2 filed by Local 369 for fiscal year ending December 31, 2007, was deficient in the following areas:
1. Disbursements to Officers and Employees
Local 369 did not include payments to officers and employees totaling at least $1,274.25 in Schedule 11 (All Officers and Disbursements to Officers) and Schedule 12 (Disbursements to Employees). 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 union personnel for expenses not necessary for conducting union business.
I am not requiring that Local 369 file an amended LM report for 2007 to correct the deficient items, but Local 369 has agreed to properly report the deficient items on all future reports it files with OLMS.
Other Violations
The audit disclosed the following other violation(s):
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. The audit revealed that Local 369’s officers and employees were not bonded for the minimum amount required at the time of the audit. However, the union 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. Personal use of Credit Cards
The audit revealed that Local 369 permits officers and employees to use union credit cards to pay for personal expenses. Although officers and employees promptly repaid Local 369 for the personal expenses charged, 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.
2. Use of Signature Stamp
During the audit, President Frank Leone advised that it is Local 369’s practice to use a signature stamp for himself or Secretary Treasurer Thomas Pastor in their absence. Article IV, Sections O9 and Q8 of Local 369’s bylaws require that checks be signed by the president and secretary-treasurer. The two signature requirement is an effective internal control of union funds. Its purpose is to attest to the authenticity of a completed document already signed. However, the use of a signature stamp for the second signer does not attest to the authenticity of the completed check, and negates the purpose of the two signature requirement. OLMS recommends that Local 369 review these procedures to improve internal control of union funds.
I want to extend my personal appreciation to Musicians Local 369 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,
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Investigator
cc: Mr. Thomas Pastor, Secretary Treasurer