AFSCME’s Financial Standards Code

Taking Care of Business

Workshop Objectives

Recognize the purpose and importance of the Financial Standards Code

Be aware of key components of the Code

Be able to locate the resources to carry out the

requirements of the Code

Fiduciary Responsibility

Fiduciary = Holding in trust for another; involving a confidence or trust

It’s NOT Your Money

AFSCME Financial Standards Code

• Establishes minimum financial standards for the handling of funds and records maintenance

• Adopted by the International Executive Board and is part of the AFSCME Constitution

• Compliance with the code is required for all AFSCME affiliates

ARTICLE I - PURPOSE AND SCOPE

Workshop Objectives Recognize the purpose and importance of the Financial Standards Code

Be aware of key components of the Code

Be able to locate the resources to carry out the

requirements of the Code

Custody of Funds

Bank Accounts Should Be…

• In federally insured institutions

• In the name of the union• Contain only union

funds

Paid Bill and Voided Checks Records

• Paid Bills or Invoices When signing checks, write the Date Paid, Amount Paid, and Check Number on your copy of the bill or invoice

• Check Stubs and Voided Checks Before storing a voided check, write “VOID” across the check in ink and tear off the signature portion

• Retain All Voided Checks

Reimbursement Records

• All Officer and Employee Expense Reimbursements need approved expense reports

• Union business purpose MUST be explained as part of the supporting documentation

Financial Records

Keep Copies of:• Financial Reports prepared for the membership or the

Executive Board

• Federal Reports filed with the Internal Revenue Service (IRS), including payroll, or U.S. Department of Labor

• Copies of Financial Reports filed with the International Union: - Surety Bond Report - Local Union Annual Financial Report (LUAFR)

• Minutes of any Executive Board, Membership or Committee Meetings

Financial Records

• All Financial Records(including the minutes of Executive Board and Membership Meetings) must be kept for a minimum of six years

• Retention Period is determined by the previous six years plus the current year

Income

• Retain Copies of transmittal, remittance advice or membership documents

• Make Deposits Promptly and keep a copy of the check with the deposit slip

• Record deposits in Cash Receipts Journal

Authorization of Expenditures

• Union money can only

be spent with proper authorization.

• Authorization should only be given for expenditures that serve a legitimate Union Purpose.

Unauthorized Expenses

Authorization of Expenditures

Four Types of Authorizations:

• Required by Law - Payroll Taxes or IRS Fines

• Required by Constitution - Council and International Per Capita Taxes

• Required by Contract - Lease for office rental

• Vote - Must be approved by the Executive Board or Membership1

Annual Budget

• Estimate income and expenses

• Required for all large affiliates

• Strongly Recommended for all affiliates

BUDGET

Knowledge Check1. Which of the following statements about union bank

accounts is NOT true?o They must be in federally insured institutions.o They can be in the name of the union or its officers.o They can only contain union funds.

2. Which financial records must be retained by every local union?o Reports to government agencies, such as the IRS and Department

of Laboro AFSCME Surety Bond and Local Union Annual Financial Report

(LUAFR) Reportso Minutes of monthly meetings regarding financial matters o All of the above

3. True or False: All of the local’s financial records must be kept for a minimum of 5 years. o Trueo False

Answers

1. Correct answer – it is not true that union bank accounts can be in the name of the union or its officers.

2. Correct answer is all of the above – Financial records prepared for the membership and the executive board must be retained in the union records. Keep copies of any federal reports filed with the Internal Revenue Service, such as payroll Form W-2’s, Form 941’s, 940’s or IRS Form 990’s.You should also have copies of the reports filed annually with the International

3. Correct answer is false – All Financial records must be retained for a minimum of six years plus the current year

Authorization of Expenditures

Before You Write a

Check, You Need:

• Authorization

• Documentation

• Explanation

Writing Checks

• Checks should never be written payable to CASHCASH

• Checks should be written payable to vendors or individuals.

• All checks must be signed by two (2) officers of the Union..

• Never pre-sign checks or use a rubber stamp for

check signing purposes.• Never use an ATM card.0

Documentation of Expenditures

• Receipts and Invoices must be

maintained to support all disbursements

• Union Purpose must be clearly

explained

• Expense Reports are required to

document all reimbursements to

Officers and Members

Minutes of Meetings

• Serve as a permanent record of actions and decisions

• Document financial authorizations

• Financial Reports are attached to the minutes

Financial Reports Must….

• Be prepared monthly

• Be reviewed by the Executive Board and Membership

• Be attached as a permanent part of the local’s minutes

• Include the following components: income and expenses for the periodexcess or deficit for the periodbeginning and ending cash balances listing of unpaid bills

Government Reporting

You may be required to fileone or more of the following:

Form Due Date IRS Form 990, 990-EZ May 15

or 990-N IRS Form 1120-POL March 15 DOL Form LM-2/3/4 March 31

These dates are for calendar-year filers.

Knowledge Check

1. Which of he following statements about writing checks is correct?o Checks can be made out to cash.o Funds can be withdrawn by using an ATM card.o All checks must be signed by two officers of the union.

2. Which of the following are required before writing a check?o Authorization, such as approval by the board or membershipo Documentation (such as a bill, invoice, or expense report) for the

paymento An explanation of the purpose of the paymento All of the above

3. Financial reports must be:o Prepared monthlyo Reported to the executive board and the membershipo Attached as part of the local union’s minuteso All of the above

Answers1. Correct answer is the last choice – All checks must be

signed by two officers of the union.

2. Correct answer – All of the aboveBefore you write any check, you need to be clear about the following things:

• The authorization for the expenditure-was it approved in the budget, by the board or membership? Is this approval documented in the minutes?

• Documentation-you should never sign a check for an expenditure that does not have complete supporting documentation. This documentation may consist of a bill or invoice for a payment to a vendor or an expense report for a payment to an officer or member. The supporting documentation for each and every expenditure must include an explanation of the union business purpose.

• An Explanation-what is the purpose of this payment? Expenditures should be made solely for the benefit of the union members, and not just for a few officers.

3. Correct answer – All of the above• Prepared monthly• Reported to the executive board and the membership• Attached s part of the local union’s minutes

AFSCME Reporting

Every Affiliate Must File:

• Surety Bond Report is due by March 1st each year

• Local Union Annual Financial Report (LUAFR) is due May 15 (or 4½ months after Fiscal Year ends)

AFSCME Reporting

Large Affiliates (2000+) must file:

• Monthly report showing actual income and expenses vs. budgeted income and expenses for the month and year-to-date

• Quarterly financial statements and annual budgets on a timely basis

• An annual audit performed by a CPA

Audits

• Required at least once each year

• Consult your local constitution

• Audits are performed by Trustees or Independent Auditors not otherwiseconnected with the Union

• All Councils and any Local Unions over 2,000 Members must have an annual CPA audit

Audits

Written report:

• Details material deviations from the Financial Standards Code

• Includes action taken to correct audit discrepancies

• Must be reported to Executive Board and Membership

• Is attached to Minutes of the Meeting at which it Was Presented

Workshop Objectives

Recognize the purpose and importance of the Financial Standards Code

Be aware of key components of the Code

Be able to locate the resources to carry out the requirements of the Code

AFSCME Secretary-Treasurer’s Training

• Secretary-Treasurer’s Training is highly recommended for all union officers

• Contact your Council or Local to have them schedule a training in your area

For More Information

AFSCME Financial Standards Code web page:http://www.afscme.org/publications/1717.cfm

AFSCME Auditing Department 202-429-5032