Article II - Custody of Funds
All money received by an affiliate 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 Article IV, Section 5 and Appendix E for additional information on the various types of affiliate accounts.
Checking and 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).
If the affiliate elects to use a credit union account, the affiliate must be sure the credit union can honor dual signature requests and provide front and back copies of canceled checks.
Investments may be made if they are consistent with provisions of the constitution of the affiliate. The signers on the investment accounts should be the same officers who are authorized to sign checks. It is suggested that any investments with greater than federally issued limits or with other than federally insured institutions be closely monitored.
Affiliates should establish an investment policy and this policy should be approved by the Executive Board. Officers and employees have a fiduciary responsibility to manage and invest union funds prudently, in accordance with the affiliate’s constitution and established investment policies for the exclusive benefit of the affiliate and its members. Investments in instruments that 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. Generally, the safest form of investments includes treasury bills, certificates of deposit, and notes and bonds of government agencies. Other forms of investments, such as money market accounts, can also be used, provided that risk to principal is minimal.
Evidence of each investment should be stored in a safety deposit box or other secured location. The safety deposit box shall be rented in the name of the affiliate, and access to such deposit box or secured storage location shall be available only to 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.
Ownership of investments made through banks or brokerages are normally evidenced by monthly or quarterly statements. All investment 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 and large locals, not exceed $100.00. Councils and large locals should not exceed that amount considered necessary for normal operations. Expenditures from petty cash funds must be supported by original receipts.
Petty cash funds shall be replenished by check and only for the amount expended since the previous reimbursement. The receipts, vouchers, and listings of expenditures supporting the replenishment shall be submitted to the principal financial officer of the affiliate and retained as support of the check. No payments received should ever be placed directly in any petty cash fund.
All checks issued to replenish the petty cash fund are to be made payable to the custodian of the 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.