Taking Care of Business
AFSCME’s Financial
Standards Code
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
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
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
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 local’s financial records must be kept for
a minimum of 5 years.
o True
o 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
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
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 period
 excess or deficit for the period
 beginning and ending cash balances
 listing of unpaid bills
Government Reporting
You may be required to file
one or more of the following:
Form
 IRS Form 990, 990-EZ
or 990-N
 IRS Form 1120-POL
 DOL Form LM-2/3/4
Due Date
May 15
March 15
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
o
o
o
Authorization, such as approval by the board or membership
Documentation (such as a bill, invoice, or expense report) for the payment
An explanation of the purpose of the payment
All of the above
3. Financial reports must be:
o
o
o
o
Prepared monthly
Reported to the executive board and the membership
Attached as part of the local union’s minutes
All of the above
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 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 otherwise
connected 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 SecretaryTreasurer’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