U.S. Department of Labor
Office of Labor-Management Standards
Denver District Office
1999 Broadway, Suite 1150
Denver, CO 80202-5712
(720) 264-3232 Fax: (720) 264-3230
July 21, 2011
Mr. Richard Foster, President
NATCA Local DEN
P.O. Box 49384
Denver, CO 80249
Case Number:
LM Number: 528326
Dear Mr. Foster:
This office has recently completed an audit of NATCA Local DEN under the Compliance Audit
Program (CAP) to determine your organization’s compliance with the provisions of the Civil
Service Reform Act of 1978 (CSRA), 5 U.S.C. 7120, and the Department's regulations, 29 CFR
458. As discussed during the exit interview with you and Treasurer H. Schuck on July 20, 2011,
the following problems were disclosed during the CAP. The matters listed below are not an
exhaustive list of all possible problem areas since the audit conducted was limited in scope.
Recordkeeping Violations
Title II of the LMRDA establishes certain reporting and recordkeeping requirements. Section
206 of the LMRDA and Title 29 of the Code of Federal Regulations (C.F.R.) Section 403.7
require, among other things, that labor organizations maintain adequate records for at least five
years after reports are filed by which the information on the reports can be verified, explained
and clarified. Pursuant to 29 C.F.R. Section 458.3, this recordkeeping provision of the LMRDA
applies to labor organizations subject to the requirements of the Civil Service Reform Act of
1978 (CSRA) as well. Therefore, as a general rule, labor organization must retain all records
used or received in the course of union business.
For disbursements, this includes not only original bills, invoices, receipts, vouchers, and
applicable resolutions, but also documentation showing the nature of the union business
requiring the disbursement, the goods or services received, and the identity of the recipient(s) of
the goods or services. In most instances, this documentation requirement can be satisfied with a
sufficiently descriptive expense receipt or invoice. If an expense receipt is not sufficiently
descriptive, a union officer or employee should write a note on it providing the additional
information. For money it receives, the labor organization must keep at least one record showing
the date, amount, purpose, and source of that money. The labor organization must also retain
bank records for all accounts.
The audit of NATCA Local DEN’s 2010 records revealed the following recordkeeping
violations:
1. General Reimbursed and Credit Card Expenses
The local did not retain adequate documentation for all reimbursed expenses incurred by
union officers and members. For example, on September 8, 2010, President Foster used
Mr. Richard Foster
July 21, 2011
Page 2 of 3
the local’s ATM card but failed to keep a receipt.
As previously noted above, labor organizations must retain original receipts, bills, and
vouchers for all disbursements. The president and treasurer (or corresponding principal
officers) of your union, who are required to sign your union’s LM report, are responsible
for properly maintaining union records.
2. Meal Expenses
The local did not require officers and employees to submit itemized receipts for meal
expenses totaling approximately $550. The union must maintain itemized receipts
provided by restaurants to officers and employees. These itemized receipts are necessary
to determine if such disbursements are for union business purposes and to sufficiently
fulfill the recordkeeping requirement of LMRDA Section 206.
Based on your assurance that the local will retain adequate documentation in the future, OLMS
will take no further enforcement action at this time regarding the above violations.
Reporting Violations
Pursuant to 29 C.F.R., Section 458.3, the reporting requirement under 29 C.F.R. Section 403.2
(see Section 201(b) of the Labor-Management Reporting and Disclosure Act (LMRDA)) is made
applicable to labor organizations subject to the requirements of the CSRA. This provision
requires labor organizations to file annual financial reports that accurately disclose their financial
condition and operations. The audit disclosed a violation of this requirement. The Labor
Organization Annual Report (Form LM-2 / LM-3) filed by the local for fiscal year ending
December 31, 2010, was deficient in the following areas:
1. Cash Reconciliation
NATCA’s 2010 LM-3 report filed on April 4, 2011 was deficient in that the cash
reconciliation was off by $5,664.
2. Failure to File Bylaws
Pursuant to 29 C.F.R. Section 458.3, the requirement under 29 C.F.R. Section 402.4
implementing LMRDA Section 201(a) is made applicable to labor organizations subject to
the requirements of the CSRA. This provision requires labor organizations to file copies of
any revised constitution and bylaws when it files its annual financial report. The audit
disclosed a violation of this requirement. The local amended its constitution and bylaws in
2002, but did not file the required copies with its LM report for that year.
The local has now filed an amended LM-3 report for fiscal year ended December 31, 2011 and a
copy of its constitution.
Mr. Richard Foster
July 21, 2011
Page 3 of 3
Other Issues
1. Financial Safeguards
As I discussed during the exit interview with you and Treasurer Schuck, the audit revealed
that the local does not have proper financial safeguards in place because the same person
that is in charge of keeping the local’s accounting records also prepares checks, signs
checks, approves vouchers, and reconciles the bank accounts. OLMS recommends that
unions practice segregation of duties as a way of preventing financial fraud.
2. Failure to follow NATCA Constitution
NATCA Local DEN 2002 Constitution, Article VI, Section 4 states that the treasurer shall
be the officer in charge of all financial transactions, all monetary matters, filing the LM
reports, and keeping adequate records. Currently, the president and not the treasurer are
performing these duties. OLMS recommends that NATCA follow its constitution.
I want to extend my personal appreciation to NATCA Local DEN for the cooperation and
courtesy extended during this compliance audit. I strongly recommend that you make sure this
letter and the compliance assistance materials provided to you are passed on to future officers. If
we can provide any additional assistance, please do not hesitate to call.
Sincerely,
Investigator
cc: Mr. H. Schuck, Treasurer