Submitted by Mark Gruenberg and Amy Lampkin
PLEASE NOTE: While names were called for votes in these minutes, according to the by-laws, individual votes are NOT recorded at GM meetings, but they are at EC meetings. Therefore, vote totals only will be reported here. Also please note that a rollcall of present and absent officers is NOT taken at GM meetings.
Meeting called to order by President Struckman at 10:20 am.
Struckman says due to presence of special guest, WBNG auditor Bill Monroe of Haley and Associates, for the discussion of whether to undertake a forensic audit for the last five fiscal years, the group would immediately move to that item on the agenda.
Monroe explains the different types of audits the firm does. States that in the 15 years his firm has audited WBNG, its regular yearly audits have produced unqualified (i.e. no problems) decisions that the audit materially and fairly represents the local’s finances. Higher levels of auditing are done if there are problems.
Those audits include sampling of transactions, including credit card and check transactions. They do not include recommendations for internal policies and practices, such as recommendations – not orders – from DOL for unions. Monroe distributes the DOL recommendations.
Monroe explains forensic audit “is a detailed in-depth audit when you suspect fraud and/or theft of funds and you want to identify how much is missing and whether it went for personal gain. There is no evidence on my end that anything happened here that warrants that” audit.
A forensic audit “goes outside the house” on individual transactions, he told questioning member Matt Losak.
“What’s more common is an ‘exit audit,’ for the safety and security of an incoming and outgoing sets of officers. The auditor certifies and verifies the presence of assets” and debts for the protection of both. By coincidence, the annual audit last year, which covered the fiscal years 2016 (ending Sept. 30, 2016) and 2017 (ending Sept. 30, 2017) coincided with an election and so can serve as the exit audit, Monroe later told Treasurer Tim Fitzgerald.
An exit audit can then make recommendations going forward which an active finance/audit committee, meeting every three months, can implement or not as it chooses. During his presentation, Monroe was asked if he had ever been asked to make recommendations to the staff and he replied he was asked, at the beginning of his service for WBNG, and “recommended getting more specific on policy and procedures” to former bookkeeper Bertha. “It was not done. There have been no further requests.”
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At the request of the local, the auditor can also make recommendations regarding fiscal and financial policies and procedures to supplement the local’s by laws.
By phone, member Selwyn Carter expresses “a tremendous feeling of disenfranchisement of those outside Washington, D.C.” He also later states that requests for the past five years of financial records were first denied, then later answered with the information that two years of records are kept onsite at the WBNG office and the rest offsite.
Carter repeated the points several times during the discussion, and – much later – member Mikhail Romanov, a past secretary, by phone reiterated them and elaborated about the discussions and e-mails surrounding the availability of the last five years of records. “As local secretary I should have had access to them.”
Treasurer Tim Fitzgerald later stated all five years were available at the DC office. He told Romanov there is no written contract covering the offsite storage, which includes financial and other WBNG records, though there is a “storage” line item in the budget.
“You are unique that your members are all spread out over the country,” Monroe said. “You can still have transparency” despite that geographic spread, he added, but did not elaborate.
At this point, Monroe discussed DOL’s recommendations – not orders – for unions to follow in financial procedures under the LMDRA (Landrum-Griffin Act). “From our audits and sample testing of your records – the last time regarding credit cards was in 20-14 – I have not seen major variances,” he said. The DOL recommendations, “which are not mandatory, are to establish a policies and procedures manual.”
Member Jazmin Gargoum then asks about costs of the audits. Monroe replies a forensic audit would cost $20,000. A “targeted audit” is more in line with a forensic audit. The exit audit, he said, would cost $5,000-$6,000, with just consultations on procedures, short of an audit, $1,500-$2,000.
In answer to a question from President Struckman, Monroe said recordkeeping requirements and disclosure requirements differ, depending on the DOL report involved. “You have to retain records backing the LM-2s” – DOL-required detailed yearly reports of union finances – “for five years, in case a member asks. WBNG has them for even longer than that.” Monroe noted the LM-2s are public records.
Member Shaun O’Brien asked whether financial statements “review internal controls?” Monroe replied “we review the internal control structure and we have to test it to know whether to rely on it” when conducting the annual audit. “We would diagram how the structure works and look at places where it might be restructured. That fits hand-in-glove with establishing policies and
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Scott Reynolds said “the internal political situation” at WBNG results in members “not being provided five years of records.” The member then asked about credit card charges as a percentage of total spending and Monroe replies it is $40,000-$50,000 yearly or 2.4-2.5% of overall expenses.
Member Celeste Drake then asks that if an exit audit showed there are “sloppy policies, people could use them to hold somebody accountable for not putting them (better ones?) in place?” The answer was “yes.”
In answer to member Sheila Lindsay, Monroe adds the annual audit just covers the just-ended fiscal year/years and “the prior year is put in there for comparative purposes. But a member could decide to drill down” among the audit’s items, Monroe said.
Member Ryan Burke stated, by phone, that “I think he (Monroe) stated the forensic audit is not the way to go. Questions about processes and DOL recommendations may fall into different areas?” he asked. Monroe replied “yes.” He added “that’s internal with your organization, but it is required by DOL to substantiate the LM-2.” He then told member Marcus Trammell that even though WBNG had not followed DOL’s recommended – not mandatory – policies and procedures, “There was enough other evidence to substantiate and say there were no misstatements of material fact” in WBNG’s financial reports.
Member Scott Reynolds then restated the point about lack of available records. “We requested five years in July. In September, we were provided with two,” he said.
That led member Christian Norton to ask “Do we have any reason to suspect asset theft or fraud?” and President Struckman replies, “I don’t have any reason,” followed by Monroe adding: “I have no suspicion of misuse or theft of assets or fraud.” Struckman then declared: “I do want to clarify: The more information we get, the better. But if I thought there was theft, I’d call the cops.”
Member Gargoum made the point that president Struckman, while seeking office, had suggested the forensic audit. Referring to prior council sessions, she said “We said from the first that a forensic audit is when you suspect mishandling of funds or criminal activity. People do not understand the purpose of a forensic audit.”
Member Losak then stated “it’s about an extensive audit – and concern about lack of transparency and standard practices for any organization and its leadership.”
Member Lindsay, referring to the prior years when she served as president, stated that “we are
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talking about a need and what best practices would be. There have not been requests for financial audits” (beyond the annual audits). “We asked questions based on the statements provided by Bill’s office. And nine times out of ten, there has been ‘found money.’ An exit audit would save money and put in place practices and procedures.”
Vice President Bryant, by phone, states “I’m clear about a more in-depth audit. An exit audit with internal controls would be very helpful.” Treasurer Fitzgerald then added “A financial statement audit is an extensive audit. And this audit was unqualified” (i.e. in non-auditor’s language, showed a clean record.)
Member Steve Cook asks Monroe about practices by other locals and recommendations his firm makes to them. Monroe answers “it varies by size” of local. “We have provided DOL policies and procedures manuals to supplement their by-laws.” He then said that had there been a 6-month gap between the regular audit and a request for an exit audit, a new audit would have been appropriate, but it was not needed, given the simultaneous election of a new set of officers. He did say, however, that exit audit “would also be a good time to adopt a policies and procedures manual.”
Carter then reiterated his point about unavailability of prior financial records. “The auditor opened up by knocking down the idea of a forensic audit,” he said. “But there are members who had problems with the way financial accountability was handled – records were not provided when requested.”
Trammell again asks “why no policies and procedures manual?” After Monroe replied he brought it up “14 or 15 years ago,” but even after no action “there has been enough verification for us to be comfortable” as auditors with WBNG records. “I’ve been advocating that (policies and procedures) for a long time,” member Gargoum stated. In response to a question by phone from member Jeremy Sprinkle, Monroe stated that, following the TNG accounting system, records are in check-number order.
“With a financial statement audit, we review internal controls to establish a level of assurance for our testing” of union financial records, Monroe concluded.
After a 15-minute break, the meeting continued:
FINANCIALS: Executive Director Cet Parks reported revenues for December 2017 were $111,143.87, expenses were $141,205.13, leaving a surplus of $1806.74 and January 2018 revenue were $138,854.34, and expenses of $155,832.32, leaving a deficit of $16,978.44, and a year-to-date deficit of $33,263.05. Parks explains that budgets “are a marathon, not a sprint, and that we started this way last year, too before we wound up with a surplus..
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Member Pattison moves, member Lindsay and others second approving December financial report. PASSED VOICE VOTE, INCLUDING BY PHONE. ALL YEA, NO NAY, NO ABSTENTIONS.
Member Pattison moves, member Lindsay seconds approving January financial report. PASSED VOICE VOTE, INCLUDING BY PHONE. ALL YEA, NO NAY, NO ABSTENTIONS.
No report from Vice President Bryant. Treasurer Fitzgerald reports WBNG hired a new bookkeeper as Paulson Therapatla is retiring. Shirley Cherry, who has bookkeeping experience with the Bricklayers, started April 2, with Therapatla staying until April 27 for transition.
President Bob Struckman says that a motion put forward by petition by member Joel Gratz is next on agenda. Asks Joel to read his motion.
Member Joel Gratz reads motion from the resolution and petition appealing WBNG EC’s decision not to conduct a forensic audit, and offers the resolution to do so. President Struckman notes “there were 73 seconds” – signatures – “to the petition.”
Member Losak offers what he calls a friendly amendment, saying the president, in consultation with the other officers, “should choose an auditor with fresh eyes” to conduct the forensic audit. Gratz says he “has gotten similar suggestions and would be open to that idea.”
Member Selwyn Carter says the friendly amendment would delete point #3 of the petition (which has the Monroe firm doing the forensic audit). “There needs to be an in-depth review to make everyone happy. I’m concerned the recommendations made 15 years ago were not followed and no policies and procedures were ever brought up again.”
Member Gargoum thanks auditor Monroe for coming in to talk (Monroe said at one point that though he charges $200 hourly, he will not charge for this session). “I wanted to hear from him about what a forensic audit and an exit audit would entail. It is within our hands and abilities to move forward working together and getting more transparency. It concerns me that some members still feel there is a need for a forensic audit, which is done in cases of fraud or misconduct when Bob (Struckman) has indicated that is not the case. I don’t think it’s a fiscally responsible thing to do when no one is indicating any wrongdoing.
“If people feel we need to look at someone else, it makes sense. But I don’t feel that is the best use of our resources. The best is to move forward with the policies and procedures. Anybody who asks for the fivce years of financial records can get access to them. I want us to be in line with what DOL recommends. Rather than looking backwards where there’s no reason, we can move forward with the policies and procedures.”
Member Liz Evans, by phone, recounted what occurred when the York, Pa., TNG Local, which she headed then, merged into WBNG. “We went through a similar thing. What it came down to is there was no malfeasance and no crime committed. One administration thought it was OK to spend the money and the other did not. I think a $5000-$6000 audit is in order.”
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“It’s mind-blowing we’re still discussing a forensic audit,” Treasurer Fitzgerald states.
“He said clearly a forensic audit is unnecessary and the exit audit is also, due to the time frame.”
Member Ramon Zapeda from North Carolina said he is part of a new unit “and as a new EC member, it was shocking to see the petition. I still think we need to have a review of policies and procedures. And on the petition, I don’t think we should name specific individuals.”
Member Justin Moyer calls the question, to which President Struckman agrees after the 16 people who already indicated they wanted to speak have done so. After their remarks, from Steve Cook, Dana Kastner, Dan Gabor, Christian Norton, Sheila Lindsay, Jeremy Sprinkle, Celeste Drake, petition sponsor Joe Gratz, Vice President Elise Bryant, member Mikhail Romanov, Executive Director Cet Parks and others, the question was called and the vote was taken. MOTION PASSED 28-12. Before the vote, Parks noted #6 in the petition orders suspension of the local’s use of its credit cards on May 31. “If we get to May 31 and nothing is done, that could put a hardship on units in bargaining,” Parks said.
A VOTE WAS THEN TAKEN ON THE MAIN MOTION, AS AMENDED BY LOSAK’S ACCEPTED FRIENDLY AMENDMENT. YES 21, NO 16, ABSTAIN 2. MOTION PASSED.
Gargoum says a prior e-mail from President Struckman unjustly cast aspersions on prior administrations and chided him for it. AFLCIO Vice Chair for the Field Marcus Trammell “would challenge the local and the staff to pout in place a robust enfranchisement system. This system is sloppy and I’d be happy to help improve it.”
Former president Lindsay replied that during her term “we talked about the costs and expenses” of an expanded communications system . “Many membvers presented on how to do this, and how to get members to come out and participate. I don’t want anyone to think we did not open up the lines. We utilized the unit chairs for communications, but I can’t say whether they transmitted it to the membership.” She offered to serve on any committees formed to improve communications.
Member Liz Evans added that “when we merged (York) into WBNG, Sheila and Cet worked hard to include us, including an EC (it was actually a general membership) meeting. We just have to move forward and stop the accusations.” And member Juanita Sanchez said “Everybody needs to get over it. We have a structure and that structure didn’t work. Now we’ll hold this leadership accountable.”
Meeting adjourned 2 pm
Mark Gruenberg, acting as co-secretary, WBNG