2009-10-15 mooney letter (ex 1)

8/14/2019 2009-10-15 Mooney Letter (Ex 1)

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TERRENCE R. MOONEY C.P.A.

Certified Public Accountant

247 NEW JERSEY AVENUE

ABSECON, NEW JERSEY 08201

MEMBER OF

NEW JERSEY SOCIE1Y OF

CERTIFIED PUBLIC ACCOUNTANTS

AMERICAN INSTITUTE OF

CERTIFIED PUBLIC ACCOUNTAi'lTS

To the Internationat Brotherhood ofCarpenters and Joiners

Attn: Frank Spencer, Supervisor

14 Kings Highway West

Haddonfield, NJ 08033

September 23,2009

Dear Mr. Spencer,

I was engaged to perform an audit to verify the liability and management

practices as they relates to New York District Council Carpenters of the International

Brotherhood ofCarpenters and Joiners ofAmerica.

Objectives

The objectives of the audit were to:

..Determine if the District Council's administrative procedures were effective,• Determine if there were any outstanding liabilities.

• Provide recommendations to enhance the District Council's current financial

system

Scope of the Audit

The scope of the audit was limited to

Background Information

1, 2006 to August 2009.

New York IS a Council New

York New York. The Council members perform jobs primarily thr'oughout

of New Officers and Trustees ofthe District Council are mandated to

act by standards of care established both International Brotherhood of Carpenters

and Joiners and the United States ofLabor under

TEL: 609-407-0056; FAX: 609-407-9956: EMAIL TMOONEY@TRMCPACOM

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Source Documents

I Inspected the following documents:

1. I reviewed the District Council 's minutes for the Executive Board, Delegates,

PAC and Special meetings from January 2007 through August 2009.

2. I reviewed the District Council's personnel policy for Its employees dated

April 10, 2000

3. I reviewed the Bank Accounts and Investments from August I, 2006 to

August 10,2009.

4. I reviewed the Federal Fonn 990, LM-3 and Bond report for 06/30/06, 06/30/07

and 06/30/08.

5. I reviewed the LM reports for Local 157 for the period ended 10/02/08.

6. I reviewed the LM report for Local 608 for the period ended 06/30/08.

7. I reviewed invoices, checks and bank transaction from August 1, 2006 to

August 10,2009.

8. I inspected the documents of the safe located on the ninth floor of the Districts

Council office.

9. I Inspected deeds of property and titles to vehicles on hand at the council's office

Summary of Procedures Performed

1. Reviewed minutes as to all matters of discussion as they relate to management

and materiality.

2. Reviewed correspondence as It relates to management and materiality.

3. Review of banking transactions as they relate to standards of care and protection

of the District Council's assets.

4. Review of invoices as they relate to standards care and protection of theDistrict Council's assets

5. Review of the District Council's annual reporting to the International, Internal

Revenue Service and the Department of Labor to establish If all Infonnation was

presented fairly and accurately.

Theon'

That the District Council 's did not provide the Standard of Care established by

both the International Brotherhood of Carpenters Joiners and the United States

Department ofLabor under

Findings

Deficiencies ofDepartment ofLabor Practices

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Accounting

During the period of July 1, 2006 through August 6, 2009 various accountingprocedures that were performed were not conformity with Department of Labor

Standards ofPractice. The findings are as follows:

I-During the inspection of a safe on premises of the District Council it was

determined that there were un-deposited funds and therefore unreported cash transactionsby the Council. are as follows:

A- Dues received 1996 and 1997 for Local 135 members were labeled andplaced in envelopes inside the safe. These funds were not recorded or

reported.Cash proceeds from the sale of 50/50 tickets for a charity softball

tournament were not recorded or reported.

2-The District Council's policy on fines from tickets is to pay the related ticket,due to fleet obligations and then deduct the related liability from the member's paycheck.

policy was not adhered to 100%; therefore members received benefits that they werenot entitled to.

3- The District Council's Petty Cash policy is ineffective. Although minimal indollars the accounting procedures did not reflect the correct reporting of thesetransactions.

4- The District Council's procedures to secure deeds of property were ineffective.The Council was only able to identify one deed out of three for property owned by thecouncil.

5- The District Council's accounting procedures as to the netting of both incomeand expenses understates the reporting of such transactions. Although these transactionsdo not change the final net earnings of the council, for any period reported, the methodcreates an underreporting issue on the standards established by the Department ofLabor.

6- The District Council's books of record did not report the ownership of a FirstTrade Bank Certificate ofDeposit the amount of$133,000 for all periods audited.

7- The Council banking relationship with Amalgamated Bank created aconcentration of risk to the member's assets for excess coverage. Although noted

the auditor's report, no action by the Officers or Trustees is a fiduciary deficentcy.

I-Filings- Form 990, LM-3 and International's Bond ReportThe officers of the local are responsible for the completeness and accuracy

of these filings as to not mislead the reader as to the financial stability and or theactivity ofthe The are each annual and there related errors.

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Form LM-2, Form 990 ami Bond Report

Based on the accounting findings in I a, Ib, 2, 3, 5 and 6 above the filingsof these reports for the periods of audit are deficient. Due to the netting of incomeand expenses (salaries, leases, rent) as well as the non-reporting of accurate cashtransactions have understated both income and expenses.

2- Fiduciary ResponsibilitiesThe Officers and Trustees were appointed to positions of trust by the

members at their respective dates of election. The Trustees have not been adequatelyinstructed to perfonn their audit functions. Although the trustees did perfonn some duties

they were not adequate. Guidance in the correct procedures will satisfy this audit method.

Recommendations

1- Accounting Department will record all income and expenses at gross dollarsto represent all cash related transactions.

2- Accounting Department will provide accounting controls for all charityrelated work that recognize all the income and expenses in grosstransaction fonnat.

3- Accounting Department will adhere to the petty cash policy attached.4- Accounting Department will adhere to the credit card policy attached.

5- Accounting Department will keep their record of QuickBooks accurate andcomplete on a daily basis.

6- Accounting Department will develop a line item budget that is reviewed by

the officers on a monthly basis

7- Accounting Department will utilize both a wire funds capability of deposits as

well as a sweep account to increase cash flows and minimize the fraud

capability. This will increase interest income approximately $6,500 per year.8- The Officers of the District Council will monitor the cash balance activity and

make investment decisions on a minimum of a monthly basis. This will

provide additional interest income of a minimum $320,000 per year.9- The Officers of the District Council will utilize investment vehicles to

safeguard assets to FDIC insurance coverage and the District Councils

investment policy.10- Automobiles- currently the District Council provides cars for some of its

employees. Secondly, agents that work in designated locals are provided cars

by those locals although not an employee of that local or doing work for thatlocal. Third, agents that have serious driving offences are provided expense

reimbursement for gas, insurance etc to perfonn their duties. Currentlywe do not verify current insurance is timely for these individuals.

It is my that employees of the are agents

council. When individuals create automobile liability and the cars are notunder the umbrella of District Council I believe the liability will alsoextend to the locals providing the automobiles. Finally, the District Councilhas a liability to report anything provided to any employee of the

Council in the production of his duties. When the District council is

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not responsible for car cost we lose control over the responsibility of

reporting.

11- Automobiles - the council needs to review a purchase policy compared to a

lease policy due to the imputed cost and relative value at time of purchase.

12- Credit Cards- as stated in #10 above credit cards arc provided to some agents

by the local unions. As employees of the District Council the officers and

supervisors have lost control over the management of their employee

spending. In addition the council also has a reporting responsibility that may

not having been satisfied.

Council should review the credit card package currently provided by

American Express as to the availability of a rewards points program or a cash

back program.

The credit card policy stated in #4 must be adhered to with no exceptions.

13- The District Council has provided its employees with a Personnel Manual

dated April 2000. Section Seven (7) specifies that drugs and alcohol during

work hours are prohibited. With respect to drugs the policy should be restated

to "prohibit the use of all illegal drugs at anytime."

14- Insurances - On a bi-annual basis the total insurance package (car, liability,

workman's comp, etc.) should be put out to bid.

15- Time Sheets - Per the union must allocate expenses based on

the time spent on category such as general overhead, representation,

charitable, etc. to be in compliance their standards. Weekly time sheets

provided by representatives will accomplish this task.

Conclusion

The District Counell did not perform the necessary standard of care

established by the International Brotherhood of Carpenters and Joiners and the

United States Department of Labor under the LMRDA. I feel if the Councilinitiates the recommendation above in a timely manner the entity will satisfy all

requirements of the LMRDA as well as the responsibilities to the UBC and its

members.

Sincerely,

Terrence R. Mooney CPA

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