U.S. Department of Labor
Office of Labor-Management Standards
Nashville District Office
233 Cumberland Bend Drive, Suite 110
Nashville, TN 37228
(615) 736-5906 Fax: (615) 736-7148
June 16, 2011
Mr. Bobby Gregory, President
Steelworkers AFL-CIO
Local Union 9-784
P. O. Box 411
Gordonsville, TN 38653
Case Number:
LM Number: 541-376
Dear Mr. Gregory:
This office has recently completed an audit of Steelworkers Local 9-784 under the Compliance
Audit Program (CAP) to determine your organization’s compliance with the provisions of the
Labor-Management Reporting and Disclosure Act of 1959 (LMRDA). As discussed during the
exit interview with you, Financial Secretary Tony Hackett, and James Gregory on June 6, 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 requires, among other things, that labor organizations maintain adequate records for at least
five years by which each receipt and disbursement of funds, as well as all account balances, can
be verified, explained, and clarified. As a general rule, labor organizations must maintain 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 Local 9-784’s 2010 records revealed the following recordkeeping violations:
1. Disposition of Property
Mr. Bobby Gregory
June 16, 2011
Page 2 of 4
Local 9-784 did not maintain an inventory of hats, jackets, and other property it purchased,
sold, or gave away. The union must report the value of any union property on hand at the
beginning and end of each year in Item 30 (Other Assets) of the LM-3. The union must
retain an inventory or similar record of property on hand to verify, clarify, and explain the
information that must be reported in Item 30.
The union must record in at least one record the date and amount received from each sale
of union hats, jackets and other items.
2. Receipt Dates not Recorded
Entries in Local 9-784’s cash book reflect the date the union deposited money, but not the
date money was received. Union receipts records must show the date of receipt. The date
of receipt is required to verify, explain, or clarify amounts required to be reported in
Statement B (Receipts and Disbursements) of the LM-3. The LM-3 instructions for
Statement B state that the labor organization must record receipts when it actually receives
money and disbursements when it actually pays out money. Failure to record the date
money was received could result in the union reporting some receipts for a different year
than when it actually received them.
Based on your assurance that Local 9-784 will retain adequate documentation in the future,
OLMS will take no further enforcement action at this time regarding the above violations.
Reporting Violations
The audit disclosed a violation of LMRDA Section 201(b), which requires labor organizations to
file annual financial reports accurately disclosing their financial condition and operations. The
Labor Organization Annual Report LM-3 filed by Local 9-784 for the fiscal year ended
December 31, 2010 was deficient in the following areas:
1. Acquire/Dispose of Property
Item 13 [LM-3] (During the reporting period did your organization acquire or dispose of
any assets in any manner other than by purchase or sale?) should have been answered,
"Yes," because the union gave away hats, gift cards, a computer, and a TV totaling more
than $4,000 during the year. The union must identify the type and value of any property
received or given away in the additional information section of the LM report along with
the identity of the recipient(s) or donor(s) of such property. The union does not have to
itemize every recipient of such giveaways by name. The union can describe the recipients
by broad categories if appropriate such as “members” or “new retirees.” In addition, the
union must report the cost, book value, and trade-in allowance for assets that it traded in.
Mr. Bobby Gregory
June 16, 2011
Page 3 of 4
2. Disbursements to Officers
Local 9-784 did not include some reimbursements to officers totaling at least $2,264.48 in
the amounts reported Item 24 (All Officers and Disbursements to Officers). It appears the
union erroneously reported these payments in Item 54.
The union must report most direct disbursements to Local 9-784 officers and some indirect
disbursements made on behalf of its officers in Item 24. A "direct disbursement" to an
officer is a payment made to an officer in the form of cash, property, goods, services, or
other things of value. See the instructions for Item 24 for a discussion of certain direct
disbursements to officers that do not have to be reported in Item 24. An "indirect
disbursement" to an officer is a payment to another party (including a credit card company)
for cash, property, goods, services, or other things of value received by or on behalf of an
officer. However, indirect disbursements for temporary lodging (such as a union check
issued to a hotel) or for transportation by a public carrier (such as an airline) for an officer
traveling on union business should be reported in Item 48 (Office and Administrative
Expense).
3. Fixed Assets
Local 9-784 did not record in Item 29 (Fixed Assets) assets the organization owns such as
furniture and office equipment. According to the LM-3 instructions, enter in Columns (A)
and (B), respectively, the book value at the start and end of the reporting period of all fixed
assets, such as land, buildings, automobiles, and office furniture and equipment owned by
your organization.
Local 9-784 must file an amended Form LM-3 for the fiscal year ended December 31, 2010, to
correct the deficient items discussed above. I provided you with a blank form and instructions,
and advised you that the reporting forms and instructions are available on the OLMS website
(www.olms.dol.gov). The amended Form LM-3 should be submitted to this office at the above
address as soon as possible, but not later than June 28, 2010. Before filing, review the report
thoroughly to be sure it is complete, accurate, and signed properly with original signatures.
Other Issue
Signing Blank Checks
During the audit, you advised that President Bobby Gregory signs blank checks. Your union’s
bylaws require that all checks be signed by the president and treasurer. The two signature
requirement is an effective internal control of union funds. Its purpose is to attest to the
authenticity of a completed document already signed. However, signing a blank check in
advance does not attest to the authenticity of a completed check, and negates the purpose of the
two signature requirement. OLMS recommends that Local 9-784 review these procedures to
improve internal control of union funds.
Mr. Bobby Gregory
June 16, 2011
Page 4 of 4
I want to extend my personal appreciation to Steelworkers Local 9-784 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. Tony Hackett, Financial Secretary