U.S. Department of Labor Employment Standards Administration
Office of Labor-Management Standards
Boston District Office
Room E-365
JFK Federal Building
Boston, MA 02203
(617)624-6690 Fax: (617)624-6606
August 28, 2008
Mr. Ronald Jordan, Local President
APWU
Local 755
PO Box 177
Easthampton, MA 01027
LM File Number 092-588
Case Number: -
Dear Mr. Jordan:
This office has recently completed an audit of APWU Local 755 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 August 27,2008, 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.
The CAP disclosed recordkeeping violations, reporting violations, and other issues.
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 755's 2006 records revealed the following recordkeeping violations:
1. General Reimbursed Expenses
Local 755 did not retain adequate documentation for reimbursed expenses incurred by union officers totaling at least $3,938. For example, lost wage payments, hotel and other conference expenses, office supplies, postage, and other reimbursed expenses.
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 755 did not require officers to submit itemized receipts for meal expenses
totaling at least $300. 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 755 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, meal expenses incurred by union officers while
in attendance at the APWU National Convention and while on other official union
business did not include written explanations. 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. Other Expenses
Local 755 did not retain adequate documentation for local expenses and credit
card expenses totaling at least $10,755. These expenses included: hotels for union
conferences; professional fees paid for accounting services; gifts of door prizes and
flowers to members; federal and state tax payments; annual meeting expenses; and
office and administrative expenses including internet and internet service provider
services, and the local's post office box rental fee.
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 maintain union records.
4. Receipt Dates Not Recorded
Entries in Local 755's general ledger reflect the date the union deposited money,
but not the date money was received. 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.
5. Other Receipts
Local 755 did not retain adequate documentation for local receipts totaling at least $1,250. These receipts included: new member rebates received from the local's international, payments from members for the local's annual banquet, and other receipts.
As previously noted above, labor organizations must retain at least one record
showing the date, amount, purpose, and source of money received. 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.
6. Lack of Salary Authorization
Local 755 did not maintain records to verify that at least $3,569 of the salaries
reported in Item 24 (All Officers and Disbursements to Officers) of the LM-3 were
the authorized amounts and therefore were correctly reported. Specifically, Local
755 did not maintain records to verify Article 6, Section 7(2) of the local's
constitution, which states: [Each officer] will also receive an additional $2.00 per
bargaining unit member per month above the base [of up to 15 members of the
bargaining unit represented by the APWU]. This may include representing post
offices outside their own." 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.
7. Lack of Meeting Minutes
Local 755 did not maintain its 2006 fourth quarter local meeting minutes. Minutes
of all membership or executive board meetings must be maintained to verify
disbursement authorizations made at those meetings.
The proper maintenance of union records is the personal responsibility of the
individuals who are required to file Local 755's LM report. You should be aware that
under the provisions of Section 209(a) of the LMRDA and Section 3571 of Title 18 of the
U.S. Code, willful failure to maintain records can result in a fine of up to $100,000 or
imprisonment for not more than one year, or both. Under the provisions of Section
209(c) of the LMRDA and Section 3571 of Title 18 of the U.S. Code, willful destruction or
falsification of records can result in a fine of up to $100,000 or imprisonment for not
more than one year, or both. The penalties provided in Section 209(c) and Section 3571
of Title 18 apply to any person who caused the violations, not just the individuals who
are responsible for filing the union's LM report.
Based on your assurance that Local 755 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-3) filed by
Local 755 for fiscal year ending December 31,2006, was deficient in the following areas:
1. Disbursements to Officers
Local 755 did not include some salary or reimbursement payments to officers
totaling at least $8,295 in the amounts reported in Item 24 (All Officers and
Disbursements to Officers). It appears the union erroneously reported these
payments in Item 46 (Employees) and Item 48 (Office and Administrative
Expenses).
Also, Local 755 did not report the names and the total amounts of payments to or
on the behalf of the local's five installation stewards in Item 24 (All Officers and
Disbursements to Officers). According to Article 5, Section 1 of Local 755's
constitution, the local's officers include: president-chief steward, executive vice
president, secretary-treasurer, and one steward from each installation with-in the
area local with at least five people. The union must report in Item 24 all persons
who held office during the year, regardless of whether they received any
payments from the union.
The union must report most direct disbursements to Local 755 officers and some
indirect disbursements made on behalf of its officers in Item 24. A "direct
disbursement" to an officer is a payment made to an officer in the form of cash,
property, goods, services, or other things of value. See the instructions for Item 24
for a discussion of certain direct disbursements to officers that do not have to be
reported in Item 24. An "indirect disbursement" to an officer is a payment to
another party (including a credit card company) for cash, property, goods,
services, or other things of value received by or on behalf of an officer. However,
indirect disbursements for temporary lodging (such as a union check issued to a
hotel) or for transportation by a public carrier (such as an airline) for an officer
traveling on union business should be reported in Item 48 (Office and
Administrative Expense).
2. Failure to Report Receipts and Disbursements
Local 755 did not report at least $1,135 in local receipts and $1,135 in local
disbursements in Statement B of the local's LM-3 filed for the fiscal year ending
December 31,2006. The Statement B instructions state that receipts must be
recorded when money is actually received by the labor organization and
disbursements must be recorded when money is actually paid out by the labor
organization.
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 755 amended its
constitution and bylaws in 2006, but did not file a copy with its LM report for that
year.
Local 755 has now filed a copy of its constitution and bylaws.
Local 755 must file an amended Form LM-3 for fiscal year ending December 31,2006, to correct the deficient items discussed above. I provided you with a blank form and instructions, and advised you that the reporting forms and instructions are available on the OLMS website (www.olms.dol.gov). The amended Form LM-3 should be submitted to this office at the above address as soon as possible, but not later than September 19, 2008. Before filing, review the report thoroughly to be sure it is complete, accurate, and signed properly with original signatures.
Other Issues
Counter-Signing All Checks
According to Article 6, Sections 1 and 3 of Local 755's constitution, the local's
president and secretary-treasurer are required to counter-sign all checks.
Currently, Local 755 is not requiring all checks be counter-signed. The two
signature requirement is an effective internal control of union funds. Its purpose is
to attest to the authenticity of a document. OLMS recommends that Local 755
review these procedures to improve internal control of union funds.
I want to extend my personal appreciation to APWU Local 755 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,
Mark Letizi
District Director
cc: Secretary-Treasurer Jack Han