Financial Standards Code

1
Taking Care of Business



AFSCMEs Financial Standards Code
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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

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Fiduciary Responsibility

• Fiduciary Holding in trust for another
  involving a confidence or trust
• Its NOT Your Money

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AFSCME Financial Standards Code
ARTICLE I - PURPOSE AND SCOPE

• 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

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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

6
Custody of Funds

• Bank Accounts Should Be
• In federally insured institutions
• In the name of the union
• Contain only union funds

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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

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Reimbursement Records

• All Officer and Employee Expense Reimbursements
  need approved expense reports
• Union business purpose MUST be explained as part
  of the supporting documentation

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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

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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

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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

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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
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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

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Annual Budget

• Estimate income and expenses
• Required for all large affiliates
• Strongly Recommended for all affiliates

BUDGET
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Knowledge Check

• 1. 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 Labor
• o AFSCME Surety Bond and Local Union Annual
  Financial Report (LUAFR) Reports
• o Minutes of monthly meetings regarding financial
  matters
• o All of the above
• 3. True or False All of the locals financial
  records must be kept for a minimum of 5 years.
• o True
• o False

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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-2s, Form 941s, 940s or IRS Form
  990s.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

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Authorization of Expenditures

• Before You Write a
• Check, You Need
• Authorization
• Documentation
• Explanation

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Writing Checks

• Checks should never be written payable to CASH
  
• 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

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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

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Minutes of Meetings

• Serve as a permanent record of actions and
  decisions
• Document financial authorizations
• Financial Reports are attached to the minutes

MINUTES
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Financial Reports Must.

• Be prepared monthly
• Be reviewed by the Executive Board and Membership
• Be attached as a permanent part of the locals
  minutes
• Include the following components
• income and expenses for the period
• excess or deficit for the period
• beginning and ending cash balances
• listing of unpaid bills

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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.

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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
  membership
• o Documentation (such as a bill, invoice, or
  expense report) for the payment
• o An explanation of the purpose of the payment
• o All of the above
• 3. Financial reports must be
• o Prepared monthly
• o Reported to the executive board and the
  membership
• o Attached as part of the local unions minutes
• o All of the above

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Answers

• 1. Correct answer is the last choice All checks
  must be signed by two officers of the union.
• 2. Correct answer All of the above
• Before 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 unions minutes

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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)

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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

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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

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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

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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

30
AFSCME Secretary-Treasurers Training

• Secretary-Treasurers Training is highly
  recommended for all union officers
• Contact your Council or Local to have them
  schedule a training in your area

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For More Information

• AFSCME Financial Standards Code web page
• http//www.afscme.org/publications/1717.cfm
• AFSCME Auditing Department
• ? 202-429-5032