U.S. Department of Labor
Office of Labor-Management Standards
Nashville District Office
233 Cumberland Bend Drive, Suite 110
Nashville, TN 37228
(615) 736-5906 Fax: (615) 736-7148
April 5, 2011
Mr. Gordon James, Secretary-Treasurer
Musicians Local 80
Post Office Box 3609
Chattanooga, TN 37404
Case Number:
LM Number: 036244
Dear Mr. James:
This office has recently completed an audit of Musicians Local 80 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 March 18, 2011, 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 80’s 2010 records revealed the following recordkeeping violations:
1. Failure to Record Receipts
Local 80 did not record in its receipts records some employer dues checkoff checks and
some checks received from banks for interest earned on certificates of deposit totaling at
least $1,000. For example, Local 80 failed to record a deposit for $970 that the bank
Mr. Gordon James
April 5, 2011
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reported on September 22, 2009. Union receipts records must include an adequate
identification of all money the union receives. The records should show the date and
amount received, and the source of the money.
2. Receipts/ Disbursements Dates not Recorded
Entries in Local 80’s receipts journal reflect the date the union deposited money, but not
the date money was received. Additionally, some of the check dates were incorrectly
reported in the disbursements journal. 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 or disbursed could result in the union reporting some receipts and
disbursements for a different year than when it actually received them.
3. Lack of Salary Authorization
Local 80 did not maintain records to verify that the salaries reported in Item 24 (All Officer
and Disbursements to Officers) of the LM-3 was the authorized amount and therefore was
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 80 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 80 for the fiscal year ended June
30, 2010, was deficient in the following areas:
1. Disbursements to Officers (LM-3)
Local 80 did not include some reimbursements to officers totaling at least $1,000 in the
amounts reported Item 24 (All Officers and Disbursements to Officers). It appears the
union erroneously reported these payments in Item 48.
The union must report most direct disbursements to Local 80 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
Mr. Gordon James
April 5, 2011
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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. Cash Reconciliation
It appears that the cash figures reported in Item 25 (Cash) are not the figures according to
Local 80’s books after reconciliation to the bank statements. The instructions for Item 25
state that the union should obtain account balances from its books as reconciled to the
balances shown on bank statements.
Local 80 must file an amended Form LM-3 for the fiscal year ended June 30, 2010, to correct the
deficient items discussed above. I 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 April 29,
2011. Before filing, review the report thoroughly to be sure it is complete, accurate, and signed
properly with original signatures.
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.
Local 80’s officers and employees are currently bonded for $10,000, but they must be
bonded for at least $12,416.40. Local 80 should obtain adequate bonding coverage for its
officers and employees immediately. Please provide proof of bonding coverage to this
office as soon as possible, but not later than April 29, 2011.
I want to extend my personal appreciation to Musicians Local 80 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,
Investigator
Mr. Gordon James
April 5, 2011
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cc: Mr. Robert Burks, President