Common Violations Discovered During Compliance Audits

Unions’ lack of proper bonding is a common problem discovered during OLMS compliance audits. So, why does a union need to be bonded? The required bonds are a type of insurance agreement which guarantees reimbursement to the union for any financial losses caused by fraudulent or dishonest acts by officers or employees, such as theft, embezzlement, or forgery. The bonding requirements are not based on the idea that particular individuals or organizations are inherently dishonest. Rather, bonding is required because experience has shown that when people are entrusted with the money or property of another, there will be instances when individuals will cause a loss through fraud or dishonesty. Bonding is therefore required to insure the union against such a loss. (Source: OLMS)

Examples of Compliance Audit Closing Letter Notices

United Food and Commercial Workers Local 34-D

During the audit it was discovered that Local 34 had a practice of having officers endorse checks by signing another officer’s name. This practice has been in place for an unknown time period. The act of signing someone else’s name makes the check a false record. Section 209 (c) of the MRDA makes it a criminal act for any person to willfully make a false record or to destroy any required record.

United Auto Workers Local 2132

Financial Secretary Ryan advised me that Local 2132 was an amalgamated union many years ago when it represented employees at Nercon Engineering and Manufacturing Inc. Ms. Ryan stated that you and Vice President McIntosh receive double salary payments because of your dual positions as officers and members of the SNC bargaining committee and that Recording Secretary Wachholz received double salary payments because of the union’s representation of employees at both SNC and Nercon. Local 2132 has not represented any employees at Nercon for many years. Local 2132’s bylaws do not properly detail the authorized compensation currently paid officers.

Communication Workers Union Local 14514

The local reported zero fixed assets in Item 29. The compliance audit disclosed that the local owns a building which contains a union hall, an office, a storage facility, seven apartments that are rented out, and a bar, which have a total value of well over $100,000. The bar is a wholly owned subsidiary organization as discussed below. In addition, the local owns the contents of the building, union hall, office, apartments, and bar…

During the audit, it was noted that Vice President David Cumming signs blank checks in advance.

International Brotherhood of Electrical Workers Local 1805

Local 1805’s records will be reviewed by this office again within the next six months to one year to ensure that the above record keeping violations have been corrected. If, at that time, it is determined that union personnel are still not retaining adequate documentation, I will strongly recommend that those individuals responsible for the maintenance of union records be criminally prosecuted for willful failure to maintain records.

National Association of Letter Carrier Branch 3745

Former union officers failed to maintain five years of financial records. Some employer checkoff reports, dues check stubs, and supporting documentation such as bills and invoices were missing from the 2003 financial records. You advised that former officers failed to maintain records, and that some financial records are missing for past years.

United Transportation Union Local 1741

During the audit, I advised you that authorization of the salary paid for the position of Secretary-Treasurer could not be found in union records…Furthermore, it was discovered that the union officer who was also the payee on the check, often times co-signed his/her own check.

Brotherhood of Locomotive Engineers Local 65

Union officers and employees failed to retain adequate documentation for all reimbursed expenses.

Rural Letter Carriers Local 14

The union failed to maintain all of the bank statements for the audit period. The union failed to maintain all of its receipts for the past five years.

United Association of Plumbers and Pipefitters Local 274

Item 13 on Page 2 asks “During the Reporting Period Did Your Organization: Acquire of dispose of any goods or property in any manner other than by purchase or sale?” The box for “no” was improperly checked. The “yes” box should have been checked. During the reporting period — calendar year 2003 — an automobile purchased by Local 274 for $23,948 in a prior year was given to retiring Business Manager Thomas Stiles.

United Steelworkers Local 9-456

The beginning and ending balances for fiscal year 2004 as carried in the local union books were substantially less than the union’s actual balances as confirmed by the bank statements.

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