TERRENCE R. MOONEY C.P.A.

Certified Public Accountant

247 NEW JERSEY AVENUE
ABSECON, NEW JERSEY 08201

MEMBER OF
NEW JERSEY SOCIE1Y OF AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS CERTIFIED PUBLIC ACCOUNTAi'lTS

To the Internationat Brotherhood of Carpenters 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 of Carpenters and Joiners of America.

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 1, 2006 to August 2009.

Background Information

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 of Labor 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 the
District 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 of Labor under

Findings

Deficiencies ofDepartment ofLabor Practices

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 Accounting

During the period of July 1, 2006 through August 6, 2009 various accounting
procedures that were performed were not conformity with Department of Labor
Standards of Practice. 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 transactions
by the Council. are as follows:

A- Dues received 1996 and 1997 for Local 135 members were labeled and
placed 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 were
not entitled to.

3- The District Council's Petty Cash policy is ineffective. Although minimal in

dollars the accounting procedures did not reflect the correct reporting of these
transactions.

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 the
council.

5- The District Council's accounting procedures as to the netting of both income

and expenses understates the reporting of such transactions. Although these transactions
do not change the final net earnings of the council, for any period reported, the method
creates an underreporting issue on the standards established by the Department of Labor.

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

7- The Council banking relationship with Amalgamated Bank created a

concentration 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 Report

The 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 the
activity 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 filings
of these reports for the periods of audit are deficient. Due to the netting of income
and expenses (salaries, leases, rent) as well as the non-reporting of accurate cash
transactions have understated both income and expenses.

2- Fiduciary Responsibilities
The Officers and Trustees were appointed to positions of trust by the
members at their respective dates of election. The Trustees have not been adequately
instructed 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 dollars
to represent all cash related transactions.
2- Accounting Department will provide accounting controls for all charity
related work that recognize all the income and expenses in gross
transaction 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 and
complete 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 that
local. Third, agents that have serious driving offences are provided expense
reimbursement for gas, insurance etc to perfonn their duties. Currently
we 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 not
under the umbrella of District Council I believe the liability will also
extend to the locals providing the automobiles. Finally, the District Council
has 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 Council
initiates 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