Archive for the ‘Recordkeeping’ Category

Local Recordkeeping 2010

Monday, January 25th, 2010

For local officers, the New Year brings opportunities to start the year resolute to once again serve the membership at the highest level, and also, to refine the duty of recordkeeping and reporting. This article will provide information and reminders to locals, which may assist with this duty.

In compliance with the Labor Management Reporting and Disclosure Act (LMRDA) of 1959, as amended, unions have the responsibility to file certain documents and records with the Department of Labor’s Office of Labor Management Standards (OLMS). The annual LM report for US locals (LM 2, 3, or 4), and the local’s constitution and bylaws, are two of the most important documents that locals are required to file regularly with the OLMS. Additionally, locals are required to file any changes and updates to the local bylaws with the OLMS. This document is a public record, and as such, must be up to date and accurate. For US locals, the form 990 or e-card are also required reporting documents to be filed in a timely manner with the IRS.

It is important to ensure that locals’ LM reports are filed in a timely manner with the OLMS. Failure to do so sets up red flags and is an invitation for a compliance audit with the Department of Labor (DOL). It is equally important to maintain accuracy in annual reporting and from one year’s LM report to the next. For instance, if your local ended last year’s report with a balance of $5,000 in an operating account, it is important that your records reflect an identical opening balance for that account. Other actions that can bring negative attention to the LM report are simple math mistakes on the LM forms. It is advisable to always have a second set of eyes proof the LM report prior to sending it to the government. Accuracy and veracity are a priority in filing LM reports and the form 990 or e-card. All records backing up any LM or 990 reporting must be maintained for a minimum of five years, in order to verify the reports with the DOL or IRS if need be.

For more information on LM reporting and other compliance and labor matters, visit the Department of Labor website at: www.dol.gov. This site contains a wealth of information helpful to locals.

In order to have the information necessary to file accurate LM reports, it is highly recommended that locals maintain accurate day-to-day, week-to-week, and month-to-month records. Every transaction, whether an expenditure or a receipt of funds, should be immediately notated, outlining the purpose for the expense or receipt of funds. A special note should be made regarding cash transactions, since cash transactions can be problematic if they are not properly notated. Anytime cash is received as payment, a receipt must be provided to the employee or officer on the spot, with clear notation for the records. Likewise, if cash is provided as a method of payment, be sure to obtain a receipt from the vendor to whom payment was made. Cash should be kept in a safe, and not in an office drawer or other unsecure location.

Another unnecessary pitfall among some locals is the practice of one local officer signing a blank check and leaving it with another officer to use in the course of business. Just as a reminder, this is not an acceptable practice and is an invitation for misuse of local union funds. Checks should never contain a signature unless fully executed in all other lines. All checks should require a dual signature. This is a common sense check and balance for financial responsibilities.

Additional elements germane to good recordkeeping and to safeguard your local are:

  • Reconcile bank statements monthly.
  • Prepare a quarterly financial statement and share it with your board.
  • Do not use ATM cards (debit cards) for any local purchases.
  • Make copies of checks for your records prior to any deposit.
  • Keep detailed records of any credit card purchases.
  • Do not mix personal and business accounts and expenditures.
  • Keep hard copy files to back up electronic files.

For more information or assistance, your AFM International Representative (IR) is available via phone, Internet, fax, and if necessary, in-person visits. If your local is contacted by the DOL for a compliance audit, please contact your IR right away. Click here for IR contact information.