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Financial Recordkeeping

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Presentation on theme: "Financial Recordkeeping"— Presentation transcript:

1 Financial Recordkeeping
U.S. Department of Labor Office of Labor-Management Standards (OLMS) Financial Recordkeeping During this presentation we will discuss the financial recordkeeping requirements of the Labor-Management Reporting and Disclosure Act of 1959, (LMRDA). Most of the provisions of the LMRDA are enforced or administered by the United States Department of Labor’s Office of Labor-Management Standards (OLMS). Having an accurate and complete recordkeeping system is a key ingredient to sound internal financial controls and will greatly assist union officers in fulfilling their fiduciary responsibility to safeguard union funds from possible misuse. Maintaining the records that we identify will also aid union trustees or others who conduct union audits and ensure that the finances and assets of the union are protected, another important financial safeguard.

2 The OLMS Mission Administer the LMRDA Ensuring union democracy
Safeguarding union assets Financial recordkeeping and reporting Briefly explain how OLMS administers the Labor-Management Reporting and Disclosure Act. Ensuring union democracy: Trusteeship investigations. Election investigations and, if required, supervising elections where an OLMS investigation has found LMRDA violations that affected the outcome of that union’s election. Safeguarding union assets: Embezzlement investigations. Compliance Audit Program. Bonding investigations. Financial recordkeeping and reporting Reports filed by labor organizations. Reports filed by employers and labor relations consultants. Reports filed by union officials.

3 Recordkeeping Requirements
The financial recordkeeping requirements of the LMRDA are found in Section 206, Retention of Records. Unions must maintain records that will provide in sufficient detail the basic information from which reports filed with OLMS such as Form LM-2, LM-3, and LM-4 may be verified and checked for accuracy and completeness. Records must be maintained for at least 5 years after the report is filed. The financial recordkeeping requirements of the LMRDA are found in Section 206, Retention of Records. Section 206 states that “Every person required to file any report under this title shall maintain records on the matters required to be reported which will provide in sufficient detail the necessary basic information and data from which the documents filed with the Secretary may be verified, explained or clarified, and checked for accuracy and completeness, and shall include vouchers, worksheets, receipts, and applicable resolutions, and shall keep such records available for examination for a period of not less than five years after the filing of the documents based on the information which they contain.” By complying with the provisions of Section 206 the union’s officers can better ensure that this important safeguard will better account for and protect the members’ funds and assets. The LMRDA requires that the president and treasurer or corresponding principal officers or other persons filing an LM report must maintain records which will provide in sufficient detail the necessary basic information from which the reports may be verified, explained, or clarified, and checked for accuracy and completeness. Records must be maintained for no less than five years after the reports are filed.

4 Statutory Requirements
There are criminal and civil provisions of the LMRDA that relate to recordkeeping violations. Criminal Provisions can be found in Section 209 Civil Enforcement can be found in Section 210 There are criminal and civil provisions of the LMRDA that relate to recordkeeping violations. Any person willfully failing to maintain required records, making false entries in records, and concealing or withholding or destroying these records can be criminally prosecuted under the provisions listed in Section These penalties can include fines up to $10,000 and/or one (1) year in prison. Applicable provisions of 18 U.S.C 3571 permits the fines to be increased to $100,000. The Secretary of Labor can also bring a civil action for relief under Section 210 if it appears that a person has violated or is about to violate the provisions of Section 206. The best way to avoid recordkeeping problems is to meet with the union’s officers and employees and advise them of Section 206 requirements. Establish and enforce internal procedures to comply with the provisions of Section 206 and the recordkeeping requirements.

5 Statutory Requirements
LMRDA Section 501(a) – Fiduciary Responsibility of Officers A good recordkeeping system can help union officers meet their LMRDA fiduciary responsibilities and it provides a foundation for other internal financial controls. An adequate recordkeeping system can help union officials meet their general fiduciary responsibilities under Section 501(a) of the LMRDA and provides a foundation for other internal financial controls. These controls can help prevent or inhibit the misuse or embezzlement of union funds, a violation of Section 501(c) that is a felony punishable by prison and/or fines.

6 What does “failed to maintain records” mean?
The required record was either never created or was not obtained from another party. Records once existed and were in the union’s possession, but were not preserved. Often, as a result of an OLMS investigator completing an investigation under the requirements and procedures of the Compliance Audit Program (CAP), a union may be advised that they have “failed to maintain records”. A study by the Office of Labor-management Standards (OLMS) found that about 25% of unions failed to maintain adequate union financial records. Usually this means that the required record was either never created by the union or was not obtained from another party such as a vendor.

7 Is there a prescribed recordkeeping system?
There is no prescribed recordkeeping system. Vast array of recordkeeping systems No specific format required by OLMS Some International/National unions have required recordkeeping systems for subordinate unions The OLMS web site lists information that shows how to adapt certain bookkeeping programs (Quicken, MS Money, Peachtree) to the LM-2 Report. OLMS investigators are often asked if there is a prescribed or approved record-keeping system to which unions must adhere. That answer is no. There is a wide variety of record-keeping systems; they range from the elementary and simple to highly complex or computerized systems. Electronic storage systems which meet OLMS standards may be used for the preservation of records. Unions have no legal obligation to maintain their records in any specific format as long as they are clear and accurate. Several international and national unions prescribe a specific type of system to be used by their affiliates or local unions. Consequently, it is not possible for OLMS to precisely define what records must be maintained by every union. Information is available at the OLMS web-site that shows how to adapt certain bookkeeping programs (Quicken, MS Money, Peachtree) to the LM-2 Report.

8 What records must be maintained?
General Rule: All types of records used in the normal course of conducting union business. What records must a union maintain in order to comply with Section 206? In simple terms, the general rule is that all types of records used in the normal course of doing union business must be maintained for a period of not less than five years from the date which the report was filed. There are, however, exceptions to the five-year statutory requirement. For example, lets say that officers’ current salaries were established and approved at a union meeting eight years ago. Those union meeting minutes that document the salary levels must be maintained beyond the five-year statutory period or for as long as that current salary level is in effect.

9 Basic Receipt Records Itemized receipts journal
All receipts should be accurately recorded with the date, source, amount, and purpose. Duplicate receipt records Many unions prepare and issue in sequential order a pre-numbered duplicate receipt for all money received by the union. The duplicate receipt includes the initials or name of the person issuing it. Although neither the LMRDA, nor OLMS prescribe a specific recordkeeping system, there are basic records and documents that a union must retain to comply with the provisions of Title II. All income received by the union must be accurately recorded. Most unions will record that income to a receipt journal. Income relating to dues, per capita tax rebates, fees and fines, sale of supplies, interest and dividends, rent, sale of investments and fixed assets, loans and repayment of loans disbursed, payments received on behalf of affiliates and money received from members for disbursement on their behalf are some examples of what should be entered into the receipts journal. Other examples of income or receipts can include parent body payments for conventions, strike fund assistance, and vending machine proceeds. Record the date the income was received, identify the source of the income, include the amount and the purpose. Many unions prepare and issue in sequential order a pre-numbered duplicate receipt for all income that comes into the union. Remember to include basic information on those duplicate receipts including the date the money was received, the source of the funds, the purpose and the amount. Also include on the receipt whether the income was cash or by check or some other negotiable instrument such as a money order. OLMS strongly suggests this procedure as it is a sound financial safeguard. The initials or name of the person issuing the receipt should be included on the receipt. If dues collection receipt books are issued to business agents or anyone else who collects dues, a list must be maintained that identifies who used and issued receipts from a particular duplicate receipt book. The itemized receipts journal and duplicate receipts are examples of internal controls that will safeguard union funds. Both are strongly recommended by OLMS.

10 Basic Receipt Records Bank deposit records
(continued) Bank deposit records Duplicate copies of deposit slips and any other transaction records of bank deposits must be maintained. Check-off, cash dues, and/or initiation fee records For example, maintain dues check-off lists of members provided by the employer with the check - off check. Bank deposit records include the duplicate copies of deposit slips that you prepare. Often the bank will stamp the deposit slip. These are required union records that must be kept. Keep any deposit records provided by the bank. Keep any other transaction records of deposits. Bank deposit records can also be used by trustees or internal audit committees to verify that union funds are being deposited in an expeditious manner. Retain itemized dues check-off lists of members that are usually provided by the employer with the check-off check. Sometimes an information copy of the dues check-off check is attached to the dues check. Retain that copy for the union records. Cash dues should be recorded in the itemized receipt records and a duplicate copy of the cash receipt must be retained. A copy should also be given to the dues payer. Initiation fees may be paid through a check-off system or directly by the member. Keep all records of initiation or other fees that members pay to the union. Issue duplicate receipts if appropriate.

11 Basic Receipt Records Bank statements Credit memos
IRS Form 1099 INT showing interest paid to the union Notices of interest paid on CDs CD rollover statements Sometimes credit memos are included with the bank statements. Retain all of these documents. Keep all IRS Form 1099 INT that show interest paid to the union. Retain bank notices of interest paid on Certificates of Deposit. Retain all CD rollover statements.

12 Basic Receipt Records Sales of supplies
Duplicate receipts may be the best record that establishes when the union sells an item to a member such as a jacket or hat. Ensure that detailed information is recorded on the duplicate receipt. Record the sale in the receipt journal when money is accepted. Include date of sale, amount received and purchaser, and identify the item sold. Duplicate receipts may be the best record that establishes when the union sells an item to a member such as a jacket, hat or even a bible. Ensure that detailed information is recorded onto the duplicate receipt. Record the sale in the receipt journal when money is accepted. Include date of sale, amount received and purchaser, and identify the item sold. Records of gifts must also be maintained. For example, if a union decides to give its members a watch upon retirement, or a turkey at Thanksgiving, a bible to the family of a member who dies or some other gift of value, a record of that distribution must be maintained. Also, there must be some authority for that gift such as a motion recorded in the union meeting minutes or a provision in the union bylaws.

13 Basic Receipt Records Ticket sales
Records for union sponsored events such as social events or raffles Announcements or copies of advertising for events Sign-up sheets or registration forms Ticket stubs Records that explain the number of tickets printed and sold, including the price of each ticket and the amount of money collected Unsold tickets Record of total ticket sales (amount received) will assist in preparing the union’s LM report Retain all records for union sponsored events such as social events or raffles. Retain announcements or copies of advertising for events. Sign-up sheets or registration forms. Ticket stubs. Maintain records that explain the number of tickets printed and sold. These records must include the price of each ticket and the amount of money collected. Unsold tickets must be retained. A record of total ticket sales (amount received) will prove helpful when preparing the union’s LM Report.

14 Basic Receipt Records Rental income
Books or calendars of scheduled rentals Rental agreements or contracts Duplicate, pre-numbered receipts in sequential order for all money received, including deposits or payments in full Maintain records even if the rental was canceled Keep clear and accurate records Records of income received from the rental of union facilities or equipment must be maintained and should clearly explain the details of the rental. Most often the union hall will be rented to a member and a deposit or full amount of the rental is required. Retain books or calendars of scheduled rentals. Maintain all rental agreements or contracts. The agreement or contract may also serve as a disbursement record if the union refunds a security deposit. Use the duplicate, pre-numbered receipts in sequential order for all money received, including deposits or payments in full. Maintain records even if the event was canceled. Keep clear and accurate records.

15 Basic Disbursement Records
Canceled checks Check stubs Disbursements journal Bank statements Withdrawal slips Per capita tax reports sent to a parent body or other organization.

16 Basic Disbursement Records
Canceled checks Canceled checks are part of the basic disbursement records kept by most unions. Canceled checks document payment for most union disbursements. Original canceled checks are an important union record that provide a wealth of information regarding a union disbursement. Canceled checks are part of the basic disbursement records kept by most unions. Canceled checks document payment for most union disbursements. Original canceled checks are an important union record that provide a wealth of information regarding a union disbursement. OLMS strongly recommends that checks be used for all disbursements of union funds.

17 Basic Disbursement Records
Canceled checks and “Check 21” Act Effective October 28, 2004 Banks are no longer required to save or return original canceled checks “Substitute checks” given under Check 21 are required records Check 21 became effective as of October 28, 2004. Banks are no longer required to save or return original canceled checks to the customer. Banks may issue “substitute checks”. A substitute check may be a photo image of the original check. A “substitute check” would be a required record under the provisions of Title II of the LMRDA. OLMS will provide additional information relating to Check 21, and the impact on the Title II, Section 206 recordkeeping requirements, in the future.

18 Basic Disbursement Records
Check stubs Check stubs should be completed and contain the same information as the canceled check. Voided checks must be maintained with the union records. “Miscellaneous” is never an acceptable explanation on a check stub or other disbursement record to explain the purpose of a disbursement. Check stubs should be completed and contain the same information contained on the canceled check. Some unions in order to account for a voided check leave it attached to the check stub. Voided checks must be maintained with the union records. “Miscellaneous” is never an acceptable explanation on a check stub or any disbursement record to explain the purpose of a disbursement.

19 Basic Disbursement Records
Disbursements journal Most unions, no matter their size, maintain a disbursements journal. The disbursements journal should include, at a minimum, the date of the disbursement, payee, amount, and purpose. Bank statements Keep all bank statements including debit memos or slips that show other charges to the union’s account. Most unions, no matter their size, maintain a disbursements journal. Typically disbursements include payments for per capita taxes, hall rental, office supplies and lost time or wages to union officers, employees, or members, payroll taxes, contributions, professional fees, office expenses and investments. Include, at a minimum, the date of disbursement, payee, amount, and purpose of the disbursement in this record. Bank Statements Like receipts, bank statements are an important union record that must be retained for the five year statutory period. Keep all debit memos or slips that show other charges to the union’s account.

20 Basic Disbursement Records
Benefits For example, documents relating to workers’ compensation policies, insurance, pension plans, benefit plans, etc. that the union pays for its officers and/or employees. Some unions pay for benefits for their officers and employees. These records may include worker’s compensation policies, insurance and pension plans. All documents such as policies and renewal documents relating to benefits plans for which the union pays must be retained.

21 Basic Disbursement Records
(continued) Payroll records Payroll records should identify the payee, date, amount, and purpose of the disbursement. The records should also verify gross payments, tax withholdings, and other deductions. State and federal tax records, written authorizations that identify the level of salary and all other compensation paid, and any required vouchers for pay, lost time, or expenses, must be maintained Some unions maintain payroll information only in their disbursement journal. Others maintain a separate payroll ledger. Payroll records should identify the payee, date, amount, and purpose of the disbursement. The records should also contain gross payments, tax withholdings, other deductions, state and federal tax records. Other required records should include written authorizations that identify the level of salary and all other compensation amounts paid. If a union requires a voucher for pay, lost time or expenses, ensure that the voucher is complete and properly approved.

22 Basic Disbursement Records
(continued) Bills and invoices Keep all bills and invoices that the union has paid as these are required records and are often the best documents to explain and justify disbursements. Keep all bills and invoices that the union has paid as these are required records and are often the best documents to explain and justify disbursements.

23 Basic Disbursement Records
(continued) Executive Board/general membership meeting minutes Executive Board and general membership meeting minutes must be complete and contain an accurate description of motions, authorizations, salary levels, allowances, expenses, travel or other disbursement or receipt of union funds. The status of motions made should be clear as to whether they were carried, lost or tabled. Ensure that the Executive Board and General Membership meeting minutes are complete and contain a full understanding of motions, authorizations, salary levels, allowances, expenses, travel or other disbursement or receipt of union funds. The status of motions made should be clear as to whether they were carried, lost or tabled.

24 Basic Disbursement Records
(continued) Other disbursement records may include the following: Petty cash records. ATM withdrawal records. Credit card statements and individual charge slips. Hotel, airline and car rental documents. Documents relating to travel advances such as authorization, purpose and conditions or terms for the advance. Repayment information for an unused portion returned to the union must be clear and accurate. Any other record that explains or clarifies the disbursement of union funds.

25 Asset Records Cash Loans receivable U.S. Treasury securities
Other investments Inventories of assets

26 Asset Records Cash Cash on deposit
- Maintain records verifying funds in banks, credit unions, and other financial institutions, which includes checking and savings accounts, certificates of deposit, and money market accounts. • Petty Cash - Keep a log of all payments from a petty cash fund that includes the date, amount, payee, and reason. - Maintain any invoices or receipts, including cash register receipts. Maintain a record of how and when the fund is replenished. Records of cash. Cash on deposit refers to funds in banks, credit unions or other financial institutions and includes checking and savings accounts, certificates of deposit and money market accounts. Petty cash is often maintained by a union to pay for incidental expenses. Keep a log of all payments to include date, amount, payee and reason. Attach any invoices or receipts including cash register tapes. Include in the record how and when the fund is replenished. OLMS recommends using union checks for all disbursements of union funds.

27 Asset Records Loans receivable
Maintain written records of all loans made by the union, including to whom made, amount, terms of repayment, security, repayments received, and, if the loan is liquidated, reduced, or written off, the reason, authorization, and amount involved. It is illegal for a union to make a direct or indirect loan to any of its officers or employees which results in the officer or employee owing the union more than $2,000 at any time. Maintain records of all direct or indirect loans owed to the union by individuals, business enterprises, benefit plans, and other entities including labor organizations. Sometimes unions are not clear about what constitutes an indirect loan. An example of a indirect loan is a disbursement by the labor organization to an educational institution for the tuition expense of an officer, employee, or member that must be repaid to the labor organization by that individual. Advances, including salary advances, are considered loans for reporting purposes. LMRDA Section 503 prohibits a labor organization from making a direct or indirect loan to any officer or employee which results in a total indebtedness to the union in excess of $2,000. Advances to officers or employees for travel expenses necessary for conducting union business are not considered loans if: The amount of an advance for a specific trip does not exceed the amount of expenses reasonably expected to be incurred for official travel in the near future, and the amount of the advance is fully repaid or accounted for by vouchers or paid receipts within 30 days after the completion or cancellation of the travel. The amount of a standing advance to an officer or employee who must frequently travel on union business does not unreasonably exceed the average monthly travel expenses for which the individual is separately reimbursed after submission of vouchers or paid receipts, and the individual does not exceed 60 days without engaging in official travel.

28 Asset Records U.S. Treasury securities
Maintain records of savings bonds and treasury notes, bills and bonds. Maintain all brokerage statements. Keep all purchase and/or sale records. Maintain records of savings bonds and treasury notes, bills and bonds. Maintain all brokerage statements. Keep all purchase and/or sale records.

29 Asset Records Other investments Keep all brokerage statements.
Maintain records of other investments such as mutual funds, corporate stocks and bonds and commercial, municipal and foreign government bonds and securities, and mortgages purchased on a block basis. Keep all brokerage statements. Maintain records of other investments such as mutual funds, corporate stocks and bonds and commercial, municipal and foreign government bonds and securities. Records relating to mortgages purchased on a block basis. Keep all brokerage statements.

30 Asset Records Inventories of assets
An inventory of liquid assets or other union records should identify all checking and savings bank accounts, money market accounts, all certificates of deposit, bonds, stock certificates and any other type of marketable securities. This inventory should include the name, location, type of account, account number and ending balance of each account. A record must be maintained to account for any property disposed of by the union. Again, if a fixed asset is disposed of by being donated, keep any correspondence such as a thank you letter that confirms that the donation was received. Include original purchase agreements and vehicle(s) title. Maintaining inventories will assist the union’s trustees or others responsible for auditing the union.

31 Asset Records Inventories of assets
An inventory of fixed assets or other union records should include the various types of equipment the union owns including automobiles and other vehicles, office furniture and equipment and other fixed union property. The fixed asset inventory should include the approximate date of purchase, original or estimated current value or the value carried in the union’s books for the asset, and the location of the asset. A record must be maintained to account for any fixed assets disposed of by the union. The inventory of liquid assets should identify all checking and savings bank accounts, money market accounts, all certificates of deposit, bonds, stock certificates and any other type of marketable securities. This inventory should include the name, location, type of account, account number and ending balance of each account. An inventory of fixed assets should include the various types of equipment the union owns including automobiles and other vehicles, office furniture and equipment and other fixed union property. The fixed asset inventory should include the approximate date of purchase, original or estimated current value or the value carried in the union’s books for the asset, and the location of the asset. Remember, if an asset such as an automobile is “expensed out” it still must be listed in the union records. A record must be maintained to account for any property disposed of by the union. Again, If a fixed asset is disposed of by being donated, keep any correspondence such as a thank you letter that confirms that the donation was received. Include original purchase agreements and vehicle(s) title.

32 Asset Records Other assets records may include:
Utility deposit records Inventory of supplies for resale Records of travel advances that are not required to be reported as loans Records relating to property the union owns including deeds and titles If the union has a safe deposit box, a record of who has access to the box and an inventory of the contents of the box should be maintained Other assets may include records relating to: Utility deposits. Inventory of supplies for resale. Travel advances that are not required to be reported as loans. Records relating to the various property the union owns including land and buildings. The building deed or title. If the union has a safe deposit box, a record of who has access to the box should be maintained. Maintain an inventory of the contents of the box.

33 Liability Records Loans and mortgages payable
Any authorization for the loan should be noted in union meeting minutes. Records should be maintaining indicating the source of the loan, the date, the amount, the purpose, and the terms for repayment. The original loan documents must be retained. Receipt and disbursement records should note when the loan was received and repaid. The union should note any authorization for the loan in union meeting minutes. Note the source of the loan, when it was received, the amount, purpose, and terms. Receipt and disbursement records should note when the loan was received and repaid.

34 Liability Records Other liabilities
Maintain records to verify any other liabilities of the union including any unpaid per capita tax or any portion of withheld taxes or any other payroll or other deductions not yet paid. Other liabilities include any portion of withheld taxes or any other payroll or other deductions not yet paid. Unpaid per capita tax

35 Other Records Constitution and bylaws
Maintain the latest copy of the union’s constitution and bylaws and copies of those which may be the basis for current salary levels or other compensation/expense payments. Keep any written records or interpretations of union policies. Maintain the latest copy of bylaws and copies of those which may have been the basis for current salary levels or other compensation/expense payments. Keep any written records or interpretations of union policies.

36 Other Records Surety Bond
Keep bond certificate, coverage and renewal information, and proof of payment records. Keep bond certificate, coverage and renewal information, and proof of payment records.

37 Other Records Member information
Maintain any records such as member ledger cards or computer-generated material that contains information on either current or former members for at least five years. In addition to any per capita lists or dues receipts, some unions maintain member ledger cards or keep this information in a computer-generated format. Information in these records may include the member’s name, address, date the member joined the union, dues rate, and other information Keep these records of current and former members for at least five years.

38 Other Records Reports and work papers
(continued) Reports and work papers Keep all internally produced reports and work papers, audit results and any reports to the parent organization. Accountant reports and work papers must be retained. The union should make sure the accountant is aware of the record retention requirements under the LMRDA. Keep all internally produced reports and work papers, audit results and any reports to the parent organization. Some unions use accountants to audit their records or prepare LM Reports. Those reports and work papers must be retained for five years from the date that the report was filed. The union is responsible for those records. Workpapers are considered records of the accountant, not the client, under the Guidelines of the American Institute of Certified Public Accountants

39 Other Records Fund transfer
(continued) Fund transfer Although they are not reported as either a receipt or a disbursement, the union must retain all records relating to the transfer of funds between accounts, such as bank documents, financial reports, and meeting minutes. Although they are not reported as either receipt or a disbursement, the union must retain all records relating to the transfer of funds between accounts. Some records might include financial reports, meeting minutes and bank documents.

40 Other Records Computer records and software
(continued) Computer records and software If the union maintains its records in an electronic or digital format, these records and the software that is necessary to use/access the records must be maintained for at least five years from the date the LM report is filed. If the union maintains it’s records in an electronic or digital format, these records and the software that is necessary to use/access the records must be maintained for at least five years from the date of the filed LM report.

41 Other Records Election records
(continued) Election records All election records must be maintained for one year after the election. This includes, for example, voted ballots, unused ballots, ballot envelopes, notice of election, lists used to verify eligibility, and tally sheets. As we have discussed, the requirements of Section 206 requires that financial records be maintained for five years from the date that the report was filed. Section 401(e) of the LMRDA requires that union “shall preserve for one year the ballots and all other records pertaining to the election.” All election records must be retained for one year after the election.

42 Problem Areas Payment receipts for goods and services provided by outside merchants/vendors Sometimes unions fail to obtain or keep original receipts documenting payments to outside merchants/vendors. Some examples include failing to maintain receipts from stores for payments for office supplies, meeting refreshments, petty cash purchases, and receipts from individuals providing services to the union, such as landscaping and janitorial services. These slides identify problem areas relating to union recordkeeping. These include the types of records that unions sometimes fail to keep. Sometimes unions fail to obtain or keep receipts documenting payments to outside merchants/vendors. Some examples include failing to maintain receipts from stores for payments for office supplies, meeting refreshments, petty cash purchases, and receipts from individuals providing services to the union, such as landscaping and janitorial services. Always keep the original record.

43 Problem Areas Payment receipts should contain the following information: Date Description of goods and/or services Amount Nature or purpose of union business “union business” is not an adequate description Name, address & telephone number of entity providing goods/services Receipts which document and explain the disbursement of union funds must be obtained and maintained. These receipts must sufficiently describe the date the expense was incurred, the name and address of the entity providing goods or services, the goods or services received, the amount, and, if not self-explanatory, the nature or purpose of the union business requiring the expense and vendor contact information. Overly general descriptions, e.g., “union business” are not adequate. In most instances, the vendor’s own receipt will suffice. The receipt does not have to be professionally generated. It can be on something as simple as a blank sheet of paper as long as it contains all of the above information. If the receipt provided is not sufficiently descriptive, a note can be written on it providing the additional information. OLMS recommends that the information required be recorded at the time the expense is incurred. This will help to ensure that accurate information is recorded. If a vendor does not provide documentation for an expense, the above information should be clearly identified on a separate record and it should be noted that a receipt was not provided for the expense. This information is required whether the union pays the bill directly or an individual pays it and later submits a claim for reimbursement. In the event a disbursement needs to be verified, ensure that vendor contact details are provided on the receipt or invoice.

44 Problem Areas Payment Receipts
If the vender’s receipt is not sufficiently descriptive, additional information should be added to the back, such as the names of individuals at a restaurant meal. A receipt is required whether the union pays the bill directly or an individual pays it and later submits a claim for reimbursement.

45 Problem Areas Credit card expenses
Credit card slips and itemized receipts for each charge must be maintained; the union’s or individual’s monthly statement alone is not adequate. The credit card charge slip will generally provide accurate information relating to the expense. Again, if these records do not provide the necessary details such as the date the expense was incurred, the name and address of the entity providing goods or services, the goods or services received, the amount, and the nature or purpose of the union business requiring the expense, this information must be added to the record. Credit card slips and itemized receipts for each charge must be maintained. The union or individual’s monthly statement alone is not adequate. The credit card charge slip will generally provide accurate information relating to the expense. Again, if these records do not provide the necessary details such as the date the expense was incurred, the name and address of the entity providing goods or services, the goods or services received, the amount, and the nature or purpose of the union business requiring the expense, this information must be added to the record for this expense.

46 Problem Areas Lodging, airfare, other travel expenses
In addition to obtaining an invoice or receipt, additional information identifying the purpose or reason for the travel must be recorded. Lodging, airfare and other travel expense receipts. Besides simply obtaining an invoice or receipt for these disbursements, additional information identifying the purpose or reason for the travel must be recorded on at least one union record. This includes tickets and lodging paid directly by the union or obtained by an individual and reimbursed by the union.

47 Problem Areas Meal and beverage records should contain:
Names of individuals present Names/addresses of restaurants or bars Nature of the union business Restaurant receipts often do not provide all of this information. Anyone claiming reimbursement for this type of expense should write the missing information on the back of the receipt at the time of the expense to ensure the accuracy of this receipt for the union’s records. Receipts for meals and beverages sometimes lack adequate detail to explain the nature of the expense. Again, in addition to the dates and amounts of the expense, receipts must also include the names of individuals present, the location and names of restaurant or bar where expense was incurred, and the nature of the union business requiring expenses. Restaurant “guest” check stubs often do not provide all of this information. Anyone claiming reimbursement for this type of expense should write the missing information on the stub at the time of the expense to ensure accuracy of this receipt for the union’s records. Require this same information from anybody requesting reimbursement from the union who submits this type of receipt.

48 Problem Areas Union business - use of personal automobiles
Dates of travel Names and locations traveled to and from Number of miles driven Business purpose of each use The approved basis for reimbursement must be noted in the union’s bylaws, membership meeting minutes, or another union record. Use of personal automobiles when conducting union business. Unions must maintain records when they reimburse officers or employees when they use their personal automobile to conduct union business. When a union officer or employee submits a claim for reimbursed mileage expenses for a personal vehicle used for union business travel, records must be maintained which identify the dates of travel, names and locations traveled to and from, the number of miles driven, and the union purpose of each use. The approved basis for reimbursement must be noted in the union’s bylaws, membership meeting minutes, or another union record.

49 Problem Areas (continued) Union business - telephone calls from home, cell phone, etc. If an officer or employee uses his or her home phone or cell phone to make union calls and is reimbursed by the union, the original copy of the individual’s phone bill must be retained by the union. Union business calls should be circled or otherwise designated on the bill. Reimbursement for telephone calls. If an officer or employee uses his or her home telephone phone or cell phone to make union calls and is reimbursed by the union, then the original copy of the individual’s phone bill must be retained by the union. Union business calls should be circled or otherwise designated on the bill.

50 Problem Areas Lost time/lost wages Dates incurred
Specific times and number of hours claimed Rate per hour Purpose of lost time “Union business” or “miscellaneous” are insufficient descriptions and not acceptable. If a union authorizes and pays lost time, the constitution and bylaws should clearly spell out the circumstances under which lost time will be paid. Many unions use lost time vouchers to reimburse officers and members who lose time/wages from the employer when they are on union business. To properly maintain this record the union should require anyone requesting lost time to complete all of the information on the form. At a minimum, claims for lost time submitted by individuals must indicate the date(s) lost time was incurred; the specific times and number of hours claimed; the rate per hour claimed; and the reason or purpose for incurring lost time. “Union business” or “miscellaneous” are insufficient descriptions and not acceptable under Title II. If your union authorizes and pays lost time, then the constitution and bylaws should clearly spell out all of the circumstances under which lost time will be paid.

51 Problem Areas Authorizations
(continued) Authorizations Special care should be taken with authorizations for: Officer/employee compensation such as salary, fringe benefits including bonuses and/or vacation benefits, use of a union car, pensions, life, health or other insurance, other allowances, and expenses. These authorizations must be clear and unequivocal and normally will be in the form of constitution and bylaw provisions or executive board and membership resolutions recorded in meeting minutes. Large or unusual transactions OLMS investigations typically find problems with two kinds of authorizations. The first type of authorization deals with the level of salary, fringe benefits including bonuses and or vacation benefits, use of a union car, pensions, life, health or other insurance, other allowances, and expenses to which officers and employees are entitled. These authorizations must be clear and unequivocal and must be in the form of constitution and bylaw provisions or executive board and membership resolutions recorded in meeting minutes. The union must keep meeting minutes for current, continuing expenses, even if they are older than five years. An earlier example we used was for officer compensation that was authorized at a membership meeting and documented in those minutes eight years earlier. Those minutes must be retained indefinitely as they are the basis for the current salary paid to the union’s officers. A union might consider obtaining membership and executive board approval of officer and employee compensation on an annual basis, and recording it into the membership meeting minutes each year. Authorizations for large or unusual transactions must be properly documented and should be retained for at least the 5 year statutory period.

52 Problem Areas Membership/Executive Board meeting minutes
(continued) Membership/Executive Board meeting minutes Unions must keep all membership and Executive Board meeting minutes if they contain information necessary to verify any information on the union’s annual financial report. Audio or audio/visual recordings of meetings are also records that must be maintained for at least five years from the date that the report was filed. Executive board and general membership meeting minutes. Unions must keep all membership and Executive Board meeting minutes regardless of whether they contain any of the authorizations just mentioned. Meeting minutes are a required record that must retained for at least five years. If audio or audio/visual recordings of meetings are made, then these must be maintained for at least five years from the date that the report was filed.

53 Miscellaneous Personal responsibility of the president and treasurer.
The union’s president and treasurer, or corresponding principal officers, are responsible for ensuring that the union retains these records and complies with the provisions of Title II. By now is should be clear that all types of financial records and other related records that clarify or verify financial transactions must be maintained for five years. The union’s president and treasurer, or corresponding principal officers, are responsible for ensuring that the union retains these records and complies with the provisions of Title II. It is in the best interest of the union for these officers to meet with the other union officers and employees to explain what is expected of them regarding the Title II recordkeeping requirements of the LMRDA. Remember, that the president, financial officer and all other officers, agents, shop stewards and other representatives of the union occupy positions of trust within the labor organizations. Under LMRDA Section 501(a) they are required to safeguard the finances of the union.

54 Miscellaneous Criminal prosecution or civil suits
Any person willfully failing to maintain required records, making false entries in records, and concealing or withholding or destroying these records can be criminally prosecuted. These penalties can include fines up to $100,000 and/or one (1) year in prison. These penalties not only apply to the union’s officers who are responsible for the union’s finances and records, but also to anyone (member, employee, accountant, lawyer) who causes a false record to be created. The Secretary of Labor can also bring a civil action if it appears that a person has violated or is about to violate the recordkeeping requirements. Remember, there are criminal and civil provisions of the LMRDA that relate to record-keeping violations. Any person willfully failing to maintain required records, making false entries in records, and concealing or withholding or destroying these records can be criminally prosecuted under the provisions listed in Section These penalties can include fines up to $10,000, possibly up to $100,000 and/or one (1) year in prison. These penalties may not only apply to the union’s officers who are responsible for the union’s finances and records, but also to anyone (member, employee, accountant, lawyer) who causes a false record to be created. The Secretary of Labor can also bring a civil action for relief if it appears that a person has violated or is about to violate the provisions of Title II. The best way to avoid recordkeeping problems is to meet with the union’s officers and employees and advise them of the Section 206 requirements. Establish and enforce internal procedures to comply with the provisions of Title II and the recordkeeping requirements. OLMS has prosecuted violations of Title II not related to Title V violations.

55 Miscellaneous Member’s right to review books/ records
Section 201(c) of the LMRDA gives members the right to examine any of the union’s books and records that are necessary to verify a report filed with OLMS. This is enforceable by the filing of a civil suit in federal district court by a member showing “just cause” for examination. Section 201(c) of the LMRDA gives members the right to review the union’s financial books and records. This is enforceable by the filing of a civil suit in federal district court by a member showing “just cause” for examination. The court may, in its discretion, add to any judgment awarded, a reasonable attorney’s fee and costs of the action.

56 Contact OLMS Online at: http://www.olms.dol.gov
The Department of Labor Call Center at: USA-DOL You may also send questions via to


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