Labor organizations have many responsibilities, the most important of which is to serve the needs of their members. The U.S. Department of Labor requires unions to utilize specific processes and reports, and these processes and reports trickle down to impact smaller labor organizations as well. As they are entrusted with handling member fees, union management must only use the union’s funds and assets in a way that benefits the union and its members. When solid Internal Controls are not in place in organizations such as these, there exists the opportunity for individuals to use organization funds for their own intentions or further muddy the waters by mixing the union’s funds with their own.
Even Small Unions Need Internal Controls
Most organizations such as banks, unions, and corporations install internal controls to handle their finances. The main reason for this is to prevent, or at the very least deter, embezzlement of their funds. The idea behind effective internal controls is to require a clear separation of job functions and responsibilities among several employees who are involved in the financial operations of the organization. This provides the “checks and balances” that keep everyone honest.
For smaller unions, separating the financial duties is not always feasible due to limited staff. But even in organizations that have just one person handling the finances, there are review processes and internal controls that can be established. An example of this is a local union management team taking action to:
- Require their financial management team to provide receipts to union members for money collected while also maintaining a member’s dues payment status
- Require their financial management team to maintain a journal of receipts and disbursements for recording all funds received and paid by the union
- Require two signatures for all checks drawn on the union’s bank account, ensuring the cosigners fully understands their fiduciary responsibilities
- Put internal union audit panels in place made up of people who have a solid understanding of financial compliance
Technology is Your Ally
An accounting solution like
- Reconciliation of bank statements and account balances
- Handling spot-check reconciliations of receipts with deposits
- Documentation of check stub and journal entry data for verification purposes
In addition, Microsoft Dynamics GP is built with GAAP compliance functionality for establishing internal controls and procedures that are in compliance with FASB rules and Department of Labor compliance standards.
No system or process is foolproof. However, establishing internal controls and utilizing a GAAP compliant accounting system will certainly deter and inhibit individuals from improperly using union funds. And minimizing the opportunity to misuse or embezzle union funds is the main internal control goal of any organization. Organized labor organizations of all sizes can leverage Microsoft Dynamics GP for better internal controls. Contact Steve Kane at 301-634-2404 or [email protected] to find out how BroadPoint Technologies, with extensive experience implementing
by BroadPoint Technologies,