Article II - Custody of Funds
All money received must be placed directly into accounts insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). The accounts must be in the name of the affiliate. No monies other than funds belonging to the affiliate may be placed into any affiliate bank or investment account. Please refer to the Article IV, Section 6 and the Appendices for additional information on the various types of affiliate accounts.
Savings accounts may be maintained in any of the following:
- Banks in which deposits are insured by the Federal Deposit Insurance Corporation (FDIC).
- Savings and loan associations in which deposits are insured by the Federal Deposit Insurance Corporation (FDIC).
- Credit Unions chartered by the Federal Government or by the state in which the affiliate is located and in which shares are insured by National Credit Union Administration (NCUA).
Other investments may be made which are consistent with provisions of the constitution of the affiliate. Because only banks and some credit unions are federally insured, and then only to a maximum amount, it is suggested that any investments with other than federally insured institutions be closely examined.
Union officers and staff have a fiduciary responsibility to manage and invest union funds prudently, in accordance with the affiliate’s constitution and for the exclusive benefit of the affiliate and its members. Investments in instruments which have the potential for loss of principal (e.g. stocks) should be avoided. Great care should be taken when deciding where and how to invest union funds. The safest form of investments available as of adoption of this Code include treasury bills, certificates of deposit, and notes and bonds of government agencies. Other forms of investments currently available, such as money market account(s), can also be used, provided that the risk to principal is minimal.
Evidence of such investments shall be placed in a safety deposit box which shall be rented in the name of the affiliate, and access to such deposit box shall be available only to two authorized representatives of the affiliate jointly. Unless the constitution of the affiliate provides otherwise, those representatives should be the same as those who are authorized to sign checks for the affiliate. Investment certificates may also be placed with a bank, brokerage or investment manager acting as custodian. Affiliates should establish an investment policy.
"Investment houses", such as brokerages and mutual fund managers, offer short-term money market instruments with immediate liquidity that offer a higher rate of return on funds invested. With long-term investments, the investment house will invest in staggered maturities of treasury bills, notes and bonds. Other options providing maximum safe yields are debt instruments backed by the U. S. Government or its agencies such as the Government National Mortgage Association (GNMA).
Ownership of investments made through investment houses are normally evidenced by monthly statements, rather than actual certificates of shares or bonds. All investment manager reports and/or statements evidencing ownership of investments, dividends, activity or summary status reports must be retained in the affiliate’s files.
It is recommended that petty cash funds established for affiliates, other than Councils, not exceed $100.00. For Councils, the amount should not exceed that amount considered necessary for normal operations. Expenditures from petty cash funds must be supported by receipts.
Petty cash funds shall be reimbursed by check, for the amount expended since the previous reimbursement, at which time the receipts, vouchers, and listings of expenditures shall be submitted to the principal financial officer of the affiliate, who shall retain such records. No cash received shall ever be placed directly in any petty cash fund.
All checks issued to replenish petty cash funds must be made payable to the custodian of the petty cash. Petty cash checks are to be made out only in the amount of the funds being replenished for which proper documentation has been submitted as support for the reimbursement. The petty cash custodian is responsible for accounting for the balance of petty cash as well as all funds disbursed from that account. Checks issued to persons other than the petty cash custodian are considered to be an advance of expenses, which must be supported by a valid expense report.