U.S. Department of Labor
Employment Standards Administration
Office of Labor-Management Standards
Los Angeles District Office
915 Wilshire Boulevard, Suite 910
Los Angeles, CA 90017-3409
(213) 534 6405 Fax: (213) 534-6413

January 11, 2008

Mr. Alex Lopez, Financial-Secretary
Painters AFL-CIO
Local 775
1074 E. La Cadena Drive, Ste. 4
Riverside, CA 92501-1400

LM File Number 003-470
Case Number:----------------

Dear Mr. Lopez:

This office has recently completed an audit of IUPAT LU 775 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 28, 2007, 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 the following:

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 775 for fiscal year ending December 31, 2006, was deficient in the following areas:

Loss or Shortage of Funds

Item 15 [LM-3] (During the reporting period did your organization discover any loss or shortage of funds or other property?) should have been answered, "Yes," because the payroll advance checks created by former secretary --------- constitute a loss or shortage of funds. In Item 56, the union must describe, including such information as the amount of the loss or shortage of funds or a description of the property that was lost, how it was lost, and to what extent, if any, there has been an agreement to make restitution or any recovery by means of repayment, fidelity bond, insurance, or other means.
Local 775 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 January 25, 2008. Before filing, review the report thoroughly to be sure it is complete, accurate, and signed properly with original signatures.

Failure to File Bylaws

The CAP 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 constitution or bylaw changes are made. Local 775 amended its constitution and bylaws in 2005, but a copy was not filed with its LM report for that year.

As agreed, Local 775 will file a copy of its current constitution and bylaws with this agency as soon as possible but not later than January 25, 2008.

Other Issues

1. Use of Signature Stamp

During the audit, you advised that it is Local 775's practice for checks to have one original signature and to stamp the signature of alternate officers. You indicated that often only one person reviews the checks before they are issued. 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 775 review these procedures to improve internal control of union funds.

During the closing interview, you said that although this procedure was followed during the audit period it is no longer practiced.

2. Signing Blank Checks

During the audit, you advised that it has been past practice for officers to sign blank checks. 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, signing a blank check in advance does not attest to the authenticity of a completed check, and negates the purpose of the two signature requirement. OLMS recommends that Local 775 review these procedures to improve internal control of union funds.

During the closing interview, you said that although this procedure was followed during the audit period it is no longer practiced.

I want to extend my personal appreciation to IUPAT LU775 for the cooperation and courtesy extended during this 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,

Michael J. Miller
Acting District Director

cc: Joe Maniez, President