Article XI - Audits
At least once each year or semi-annually or more if required by the affiliate’s constitution, an audit of the affiliate must be conducted by officers elected for that purpose (Trustees) or by an independent Certified Public Accountant, (CPA), not otherwise connected with the union, its officers or its staff. Affiliates may also perform an audit of the financial records whenever there is a change in the financial officers. Audits may also be performed at other times should a need be determined by the officers, members or Trustees.
Many affiliates utilize Trustees to perform the required audits. Although elected officers, Trustees are not voting members of the Executive Board; Trustees may have neither voice nor vote in the deliberations of the Board. The sole purpose for Trustees is to audit or to see that an audit is performed. An arms-length relationship between the Trustees and the Executive Board must be preserved to ensure the most objective possible audit.
All Councils and any Local Union having 2,000 or more members must have an annual audit prepared by a Certified Public Accountant, (CPA), performed in accordance with Generally Accepted Auditing Standards. All other affiliates are encouraged to use a CPA to perform an audit, review or compilation of the financial records.
Whether performed by Trustees or a CPA, the audit must include an examination of the records required to be maintained by this Code and a written report must be made to the Executive Board and to the membership. Trustees may follow the procedures outlined in the Trustees Audit Guide when performing an audit.
Upon completion of an engagement performed by a CPA, officers and/or Trustees must obtain copies of the CPA’s Engagement Letter, Statement on Auditing Standards 115 letter (correspondence in which any internal control problems are discussed) and the Management Letter (letter where operational or other issues that may require remedial action to be taken are noted by auditors.)
If the audit is performed by a CPA, the findings must be reported to the general membership, either by the financial officer or by a committee designated by the union for that purpose. If the audit is performed by the Trustees, the findings must be reported to the Executive Board and to the general membership by the Trustees.
The CPA or the Trustees must make a written report of any material deviation from the Financial Standards Code found in the course of their audit. The officers must report to the Executive Board and to the membership the action taken to correct any discrepancies noted in the audit.
The audit report must be attached to the minutes of the meeting at which it was presented and maintained as a permanent record in the affiliate’s files.