Office of Labor-Management Standards (OLMS)
U.S. Department of Labor
Employment Standards Administration
Office of Labor-Management Standards
Minneapoilis District Office
900 Second Avenue South
Minneapolis, MN 55402
(612) 370-3111 Fax:(612)370-3107
September 11, 2007
Mr.Steven Jenson, President
UTU Local 1059
611 25th Avenue NW
Minot, ND 58701
LM File Number: 026-923 Re: Case Number:
Dear Mr. Jenson:
This office has recently completed an audit of UTU Local 1059 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 Secretary-Treasurer Delton Hust on August 16, 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.
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 1059's 2006 records revealed the following recordkeeping violations:
1. Disposition of Property
Local 1059 did not maintain an inventory of jackets and other property it purchased, sold, or gave away. Any union property on hand at the beginning and end of each year must be reported in Item 30 (Other Assets) of the LM-3, and Local 1059 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.
The date and amount received from each sale of union jackets and other items must be recorded in at least one record.
2. Lack of Salary Authorization
Local 1059 did not maintain records to verify that the salaries reported in Item 24 (All Officer and Disbursements to Officers) and in Item 46 (Cash Disbursements to Employees) of the LM-3 report were the authorized amounts and therefore were correctly reported. A record, such as meeting minutes, to show the current salary authorized by the entity or individual with the authority to establish salaries must be kept.
Based on your assurance that Local 1059 will retain adequate documentation in the future, OLMS will take no further enforcement action at this time regarding the above 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 1059 for fiscal year ending December 31, 2006, was deficient in the following areas:
1. Acquire/Dispose of Property
Item 13 (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 Local 1059 gave away bibles and savings bonds totaling more than $300 during the year. The type and value of any property received or given away must be identified in the additional information section of the LM report along with the identity of the recipient(s) or donor(s) of such property. Local 1059 does not have to itemize every recipient of such giveaways by name. The recipients can be described by broad categories, if appropriate, such as "members" or "new retirees." In addition, Local 1059 must report the cost, book value, and trade-in allowance for assets that it traded in.
2. Cash Reconciliation
It appears that the cash figures reported in Item 25 are not the cash figures according to Local 1059's books after reconciliation to the bank statements. The difference is approximately $52. 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.
I am not requiring that Local 1059 file an amended LM report for 2006 to correct the deficient items, but Local 1059 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. Expense Policy
As I discussed during the exit interview with Mr. Hust, the audit revealed that Local 1059 does not have a clear policy regarding the types of expenses personnel may claim for reimbursement. OLMS recommends that unions adopt written guidelines concerning such matters.
2. Signing Blank Checks
During the audit, Mr. Hust advised that you occasionally sign blank checks. Local 1059 requires two signatures on every check. 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 1059 review these procedures to improve internal control of union funds.
I want to extend my personal appreciation to UTU Local 1059 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: Delton Hust, Secretary-Treasurer