Office of Labor-Management Standards (OLMS)
U.S. Department of Labor
December 12, 2014
Office of Labor-Management Standards
Chicago District Office
Federal Office Building
230 South Dearborn Street, Suite 774
Chicago, IL 60604
(312) 596-7160 Fax: (312) 596-7174
Mr. Mike Ryan, President
Case Number: 310-3123570
Government Employees (AFGE) Local584 LM Number: 501895 1034 Pioneer Street Davenport, IA 52802
Dear Mr. Ryan:
This office has recently completed an audit of Government Employees (AFGE) Local 584 under the Compliance Audit Program (CAP) to determine your organization's compliance with the provisions ofthe Labor-Management Reporting and Disclosure Act of 1959 (LMRDA). As discussed during the exit interview with you on November 18, 2014, the following problems were disclosed during the CAP. The matters listed below are not an exhaustive list ofall possible problem areas since the audit conducted was limited in scope.
Title II of the LMRDA establishes certain reporting and recordkeeping requirements. Section 206 of the LMRDA and Title 29 ofthe Code of Federal Regulations (C.F.R.) Section 403.7 require, among other things, that labor organizations maintain adequate records for at least five years after reports are filed by which the information on the reports can be verified, explained and clarified. Pursuant to 29 C.F.R. Section 458.3, this recordkeeping provision ofthe LMRDA applies to labor organizations subject to the requirements of the Civil Service Reform Act of 1978 (CSRA) as well. Therefore, as a general rule, labor organization must retain all records used or received in the course ofunion business.
For disbursements, this includes not only original bills, invoices, receipts, vouchers, and applicable resolutions, but also documentation showing the nature ofthe 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 ofthat money. The labor organization must also retain bank records for all accounts.
The audit ofLocal584's 2012 records revealed the following recordkeeping violations:
1. General Reimbursed and Credit Card Expenses
Local 584 did not retain adequate documentation for reimbursed mileage and office
expenses claimed by former president totaling at least $619. Also, the local
did not retain account statements, receipts, expense vouchers, or other documents
explaining transactions charged to the union's credit card totaling at least $6,719. For
example, a single invoice in the amount of$677 was retained by the union for purchases
made at office and computer supply stores totaling at least $4,586. As 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 584 did not require officers to submit itemized receipts for 18 meal expenses totaling at least $656. The union must maintain itemized receipts provided by restaurants to officers. 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. Local584 records ofmeal expenses did not always include written explanations ofunion business conducted or the names and titles ofthe persons incurring the restaurant charges. For example, the local's records do not explain the purpose ofa meal expense incurred in February 2012 for $229. Union records ofmeal expenses must include written explanations ofthe union business conducted and the full names and titles ofall persons who incurred the restaurant charges. Also, the records retained must identify the names ofthe restaurants where the officers or employees incurred meal expenses.
3. Information not Recorded in Meeting Minutes
During the audit, you advised OLMS that the executive board must authorize expenses greater than $200 at its meetings. Local 584 maintained minutes for only one executive board meeting, and other records the local retained do not document the approval of expenses over $200. Minutes of all membership and executive board meetings must report any disbursement authorizations made at meetings. Based on your assurance that Local584 will retain adequate documentation in the future, OLMS will take no further enforcement action at this time regarding the above violations.
Pursuant to 29 C.F.R., Section 458.3, the reporting requirement under 29 C.F.R. Section 403.2 (see Section 201(b) ofthe Labor-Management Reporting and Disclosure Act (LMRDA)) is made applicable to labor organizations subject to the requirements ofthe CSRA. This provision requires labor organizations to file annual financial reports that accurately disclose their financial condition and operations. The audit disclosed a violation ofthis requirement. The Labor Organization Annual Report Form LM-3 filed by Local584 for the fiscal year ended June 30, 2012, was deficient in that:
Disbursements to Officers (LM-3)
Local584 did not include some reimbursements to totaling at least $1,618 in the amounts reported in Item 24 (All Officers and Disbursements to Officers). It appears the union erroneously reported these payments in Item 48 (Office and Administrative Expense). Also, Local 584 did not report $446 in salary payments received by in Item 24, Column D. The union must report most direct disbursements to Local 584 officers and some indirect disbursements made on behalf ofits 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 ofvalue 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).
I am not requiring that Local584 file an amended LM report for 2012 to correct the deficient items, but Local 584 has agreed to properly report the deficient items on all future reports it files with OLMS.
The audit disclosed the following other violation(s):
1. Inadequate Bonding
Pursuant to 29 C.F.R. Section 458.35, officers and employees ofany labor organization subject to the CSRA are required to be bonded in accordance with Section 502( a) ofthe LMRDA. This provision requires that union officers and employees be bonded for no less than 10% ofthe total funds those individuals or their predecessors handled during the preceding fiscal year.
The audit revealed that Local 584's officers and employees were not bonded for the minimum amount required at the time of the audit. However, Local 584 obtained adequate bonding coverage and provided evidence ofthis to OLMS during the audit. As a result, OLMS will take no further enforcement action regarding this issue.
1. Expense Policy
As I discussed during the exit interview with you, the audit revealed that Local 584 does not have a clear policy regarding the types ofexpenses personnel may claim for reimbursement and the types ofexpenses that may be charged to union credit cards. OLMS recommends that unions adopt written guidelines concerning such matters.
2. Signing Blank Checks
During the audit, you advised that former president pre-signed five blank checks. You indicated your union requires all checks be signed and countersigned by signatories on the account. The two signature requirement is an effective internal control ofunion funds. Its purpose is to attest to the authenticity ofa 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 ofthe two signature requirement. OLMS recommends that Local584 review these procedures to improve internal control ofunion funds.
I want to extend my personal appreciation to you 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.