TERRENCE R. MOONEY C.P.A.

Certified Public Accountant
247 NEW JERSEY AVENUE ABSECON, NEW JERSEY 08201

MEMBER OF NEW JERSEY SOCIE1Y OF CERTIFIED PUBLIC ACCOUNTANTS

AMERICAN INSTITUTE OF 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

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Scope of the Audit The scope of the audit was limited to 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 of Labor under and Joiners and the United States
TEL: 609-407-0056; FAX: 609-407-9956: EMAIL TMOONEY@TRMCPACOM

1, 2006 to August

2009.

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Source Documents I Inspected the following documents:
1. I reviewed the District Council's minutes for the Executive Board, Delegates,

2. 3.
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5. 6. 7.
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PAC and Special meetings from January 2007 through August 2009. I reviewed the District Council's personnel policy for Its employees dated April 10, 2000 I reviewed the Bank Accounts and Investments from August I, 2006 to August 10,2009. I reviewed the Federal Fonn 990, LM-3 and Bond report for 06/30/06, 06/30/07 and 06/30/08. I reviewed the LM reports for Local 157 for the period ended 10/02/08. I reviewed the LM report for Local 608 for the period ended 06/30/08. I reviewed invoices, checks and bank transaction from August 1, 2006 to August 10,2009. I inspected the documents of the safe located on the ninth floor of the Districts Council office. 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 current insurance is timely for these individuals. we do not verify 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 provided to any employee of the has a liability to report anything Council in the production of his duties. When the District council is
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It is my

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

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