Office of Labor-Management Standards (OLMS)
U.S. Department of Labor
Office of Labor-Management Standards
Kansas City Resident Investigator Office
Two Pershing Square Bldg.
2300 Main Street, Suite 1000
Kansas City, MO 64108
(816) 502-0290 Fax: (816) 502-0288
February 26, 2016
Mr. Bryan Rubner, President
Letter Carriers Branch 373
P.O. Box 10373
Cedar Rapids, IA 52410-0373
Case Number: 510-6006748
LM Number: 081606
Dear Mr. Rubner:
This office has recently completed an audit of Letter Carriers Branch 373 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 and Treasurer Brannen Bourgeois on February 18, 2016, 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.
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 Branch 373’s 2015 records revealed the following recordkeeping violations:
1. General Reimbursed and Credit Card Expenses
Branch 373 did not retain adequate documentation for reimbursed expenses and credit card expenses incurred by union officers totaling at least $1,700. For example, in May 2015, several receipts for credit card purchases which included hotel stays for union travel and expenses incurred for the union’s food drive were not properly maintained.
As noted above, labor organizations must retain original receipts, bills, and vouchers for all disbursements. The president and treasurer of your union, who are required to sign your union’s LM report, are responsible for properly maintaining union records.
2. Disposition of Property
Branch 373 did not maintain an adequate inventory of cards, calendars, and other property it purchased, sold, or gave away. The union must report the value of any union property on hand at the beginning and end of each year in Item 30 (Other Assets) of the LM-3. The union must retain an inventory or similar record of property on hand to verify, clarify, and explain the information that must be reported in Item 30.
3. Failure to Record Receipts
Branch 373 did not record in its receipts records some cash and/or checks received from members purchasing items from the branch such as Christmas cards and calendars. Although the union did record the total amounts deposited from these sales this is not adequate. 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.
The proper maintenance of union records is the personal responsibility of the individuals who are required to file Branch 373'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.
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 audit was completed for the fiscal year ended December 31, 2015, however there were violations identified throughout the course of the audit which indicated reporting violations on the previous year’s Form LM-3 report. The Labor Organization Annual Report (Form LM-3) filed by Branch 373 for the fiscal year ended December 31, 2014, was deficient in the following areas:
1. Acquire/Dispose of Property
Item 13 [LM-3] (During the reporting period did your organization acquire or dispose of any assets in any manner other than by purchase or sale?) should have been answered, "Yes," because the union gave away watches to retirees and gift cards during the year. The union must identify the type and value of any property received or given away in the additional information section of the LM report along with the identity of the recipient(s) of such property. The union does not have to itemize in the report every recipient of such giveaways by name. The union can describe the recipients by broad categories if appropriate such as “members” or “new retirees.”
2. 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. Branch 373 amended its local constitution and bylaws in 2013, but did not file a copy with its LM report for that year.
Branch 373 filed a copy of its most recent constitution and bylaws during the audit, if any changes are made following the audit they must be submitted when you file your annual LM report.
I am not requiring that Branch 373 file an amended LM report for 2014 to correct the deficient items, but Branch 373 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
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 Branch 373’s officers and employees were not bonded for the minimum amount required at the time of the audit. However, Branch 373 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.
1. Expense Policy
As I discussed during the exit interview with you and Mr. Bourgeois, the audit revealed that Branch 373 does not have a clear policy regarding the types of expenses personnel may claim for reimbursement and the types of expenses that may be charged to union credit cards. OLMS recommends that unions adopt written guidelines concerning such matters.
2. Duplicate Receipts
Members of Branch 373 buy items such as Christmas cards and calendars directly from the union. OLMS recommends that Branch 373 use a duplicate receipt system where the union issues original pre-numbered receipts to all members who make payments directly to the union and retains copies of those receipts. A duplicate receipt system is an effective internal control because it ensures that a record is created of income which is not otherwise easily verifiable. If more than one duplicate receipt book is in use, the union should maintain a log to identify each book, the series of receipt numbers in each book, and to whom each book is assigned.
I want to extend my personal appreciation to Letter Carriers Branch 373 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.
cc: Mr. Brannen Bourgeois, Treasurer