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AFGE. Financial Officers Duties & Responsibilities How to Get Them Accomplished. Who Are The Financial Officers ? . President Vice-President Treasurer Executive Board Or individuals that make financial decisions or reviews for the Local Audit Committee Budget Committee .

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who are the financial officers
Who Are The Financial Officers ?
  • President
  • Vice-President
  • Treasurer
  • Executive Board
  • Or individuals that make financial decisions or reviews for the Local
    • Audit Committee
    • Budget Committee
goals of this class
Goals of this Class
  • To keep the Financial Officers out of Jail !!
  • Make the Financial Officer a financially savvy individual
general responsibilities
General Responsibilities

A Local’s Financial Officer must have a strong sense of

responsibility. He or she is entrusted by the

Membership with the faithful performance of vital duties:

  • Safeguarding the property of the Local and its Members
  • Collecting and disbursing Local funds
  • Accurately recording all financial transactions
  • Reporting to Federal & State Government Agencies
  • Reporting to AFGE National
fiduciary responsibilities
Fiduciary Responsibilities

Local Officers manage and handle funds which belong to the Local and its Members, they hold positions of trust known as “Fiduciary Positions”.

“Fiduciary Duties” are imposed upon Union

Officers by law:

  • These Federally-imposed “Fiduciary Duties” are set forth in Section 501 of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), which provides that Union Officers must:
Fiduciary ResponsibilitiesUnder Section 501 of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA)
  • Hold Union’s money and property solely for the benefit of the Union and its Members.
  • Manage, invest, and disburse funds and property only as authorized by the Union’s Constitution and By-Laws or by proper resolution of its Membership.
  • Refrain from financial or personal interests which conflict with those of the Union; account to the Union and pay to the Union any profits received from transacting Union business.
    • Union officials who violate these federally created fiduciary duties are subject to civil lawsuits in federal or state court for money damages or other appropriate relief. In addition, there are criminal penalties for embezzling or stealing Local property—fines up to $10,000, imprisonment for up to five years, or both.

Article II Section 3

          • Independent Local
      • The Local is an autonomous organization.
          • Article IV Section 1
          • Dues & Initiation Fees
  • Dues shall be established and adjusted as may be necessary to ensure that they allow adequate funds for the payment of Per Capita Tax and sufficient funds for the operating expenses of the Local.
Article V Section 2

Check Signing

The Treasurer shall sign and the President shall countersign checks covering proper expenditures for the Local. In the absence of these Officers, such other Officers as defined by the Local’s Bylaws may sign.

Article V Section 3


The Officers, agents, shop stewards, employees or other representatives of the Local who handle funds or property of the Local shall be bonded.

Article V Section 4

Annual Audits

In order for the bond to be effective, the Local shall file an Annual Audit Report (to include a copy of the DOL LM Form and an approved Annual Budget) with the National Secretary Treasurer (NST).

Article V Section 5

Open Records

All books, records, and financial accounts shall be open to the inspection of the National Executive Council or any duly authorized representative.


Article VI Section 1(a)

Local Officers

The general Officers shall be elected by the total Membership and shall

constitute the Executive Board and shall consist of the President,

Treasurer, Secretary and others as the Local’s bylaws may prescribe.

Article VI Section 3

Presidents Duties

The President shall be the Executive Officer of the Local. He/she

shall exercise general supervision over the affairs of the Local and

insure that all other Officers comply with their responsibilities

and constitutional duties.

Article VI Section 3

Filling in for the President

If the President is unable to perform his or her duties. The President

will delegate the responsibilities of the office based on the Local’s


Article VI Section 5

Treasurer’s Duties

The Treasurer shall maintain a Bookkeeping System as prescribed by the

National Secretary-Treasurer. The Treasurer must make a financial

report at each regular meeting; keep an up-to-date roll of the Membership;

make monthly Membership changes (adds & drops); make address

changes and report such to the NST. Perform additional financial duties as


Article VIII Section 2

Executive Board Duties

It shall be the duty of the Executive Board to devise and initiate actions

that may be necessary in the interim between the Local’s meetings. All

actions shall be subject to Local approval.

Article VIII Section 3


Expenditures by the E-Board in excess of $500 per month must have

prior approval of the Membership, or be an approved budget item.. Any

expenditure authhorized by the E-Board must be reported in writing at the next

Membership meeting


Article VIII Section 4

          • Annual Budget
  • The Executive Board of the Local shall prepare an Annual Budget (subject
  • to the Membership's approval) insuring that revenues are sufficient to
  • meet its financial obligations.
what agencies and individuals must financial officers report to
What Agencies and Individuals must Financial Officers report to?

Internal Revenue Service (IRS)

Department of Labor (DOL)

Your Local Membership &

AFGE Headquarters

irs requirements
IRS Requirements

AFGE Locals are exempt from federal income taxes by the Internal Revenue Service by being a 501c (5) organization. AFGE’s Group Exemption Number is 0194. Generally AFGE Locals are not exempt from Sales Taxes.

  • Locals must pay employment taxes on salaries, lost time or annual leave reimbursements paid to their officers or members. The members receiving these types of payments must report the income and pay taxes.
  • Locals must report all income to the Internal Revenue Service whether it is taxable or not. The exemption from tax does not extend to all types of Local income. Certain types of income are taxable and must be reported to the IRS on form 990T.
when do i have to report to the irs
When do I have to report to the IRS ?

A Local with Annual Gross Receipts over $25,000 must

file an “Annual Informational Return” with the IRS.

  • If your gross receipts are less then $100,000 you are required to file a Form 990EZ
  • If your gross receipts are greater than $100,000 you are required to file a Form 990
  • If they are less then $25,000 you need NOT FILE
when are the form 990s due
When are the Form 990s Due ?
  • You must file the 990 or 990EZ Form by the 15th day of the 5th month, after your Local’s Year End. For a calendar year you will report on 5/15.
  • A Penalty of $20 @ day up to $10,000 may be charged if the Form is filed late or an incomplete return is submitted.
  • You can get an extension of 3 months by submitting an IRS “Extension to File Form” 8868
where do i get the irs forms
Where do I get the IRS Forms?

You can get the forms from the IRS Web Site at :

When on the Web Site enter the Form you are looking for in the “Search Box” at the top of the screen. Example 990 or 990EZ or 8868

You may also go to the AFGE Web Site under

NST Financial Officers Resources and get the Forms

when is the local an employer and when must you pay payroll taxes
When is the Local an Employer and when must you pay Payroll Taxes?

Remember the Local is an Employer when it makes

payments to Officers, Stewards, Staff or others

to perform duties or services for the Local:

  • Salaries
  • Payment for Lost Time (LWOP)
  • Annual Leave Reimbursements
  • Stipends
irs s description of an employee
IRS’s Description of an Employee

Here are several factors tending to indicate that an individual isan employee under tax law (only one need exist) :

  • The member’s compensation is measured by the hour, week, or month rather than by the job.
  • The member is required to perform the services personally, without the ability to delegate the task to somebody else.
  • There is a continuing working relationship between the member and the Local.
  • The Local supplies materials or facilities used by the member in performing the services, such as an office, office supplies, a telephone, etc.
  • The Local provides instructions or training to the member; andthe member performs the services in question solely for the Local (and not for others).
labor department reporting
Labor Department Reporting

The LMRDA requires Locals to file an “Annual Financial Report” with the U. S. Department of Labor.

If your Local has Gross Receipts of:

  • More than $250,000, you must file an LM-2 Report
  • Less than $250,000 and more then $10,000, you must file an LM-3 Report
  • Less than $10,000, you must file an LM-4 Report
  • DC Government Locals are not required to file a LM Report with DOL
when are the labor department reports due
When are the Labor Department Reports Due?

The LM Forms are due 90 Daysafter the Local’s

Year End

  • If you are on a Calendar Year this is 3/31
  • If you are on a Fiscal Year, it is 90 days from the close of your Year End
where do i get labor department forms
Where do I get Labor Department Forms ?

The best place is the Labor Department Web Site at :

reporting to your local membership
Reporting to your Local Membership

The Financial Officers have a responsibility to

keep the Membership informed of:

  • All Income received by the Local (Dues and Other Income)
  • All Expenditures and Payments made on behalf of the Local
  • All Assets and Accounts held on behalf of the Local
  • The creating and reporting of Budget items allocated by the Local
other areas for consideration responsibilities
Other Areas for Consideration &Responsibilities
  • Bonding Requirements for your Local
  • Retention of Documents and Other Items
  • Conducting Local Audits
  • Use of a Credit Card
  • Filing the AFGE Annual Audit Form 41
  • Completing the IRS 1099 requirements
  • Making Loans to Members
bonding requirements for your local
Bonding Requirements for your Local

Bonding is a type of insurance policy that insures an organization

against financial loss caused by persons who handle the finances for the Local. The insurance policy is called a “bond”—often a “security bond” or “fidelity bond.”

  • Federal Labor Law requires bonding to protect Unions from financial losses caused by “fraudulent or dishonest acts” by Union Officers or Employees
  • All AFGE Locals are covered under a blanket bond and charged annually for the coverage
  • In order for your bond to be in effect you must conduct an Annual Audit and submit to AFGE “Annual Audit Form 41” with a copy of your LM Report and the approved Annual Budget attached.
  • The Labor-Management Reporting and Disclosure Act (LMRDA) establishes specific bonding requirements:
lmrda bonding requirements
(LMRDA) Bonding Requirements

A bond, like any insurance policy, has a maximum recovery amount. Per the Department of Labor the bond mustbe equal to at least 10percentof funds or property handled.

A quick formula for computing required coverage:

Funds Handled are:

LiquidAssets at start of year (Cash, Investments) + Annual Receipts for the year

* 10% = Amount of Coverage Required Funds Handled = $75,000

Bond Required = $7,500

AFGE recommends that your coverage be 100% of your total assets.

recommended retention of documents and other items
Recommended Retention of Documents and other Items

General Local Files:

  • By-laws and Amendments -------Permanent
  • Correspondence -------------------5 Years
  • Election Records-------------------2 Years beyond the term of office
  • Local Memorandums of


  • Minutes of Meetings--------------Permanent

(Membership & E-Board)

  • Items that Document the

Local’s History --------------------Permanent

recommended retention of documents and other items33
Recommended Retention of Documents and other Items

Local Membership Records

    • Dues Deduction Forms (1187, 1188, etc.) -------------3 Years
    • EEO Case Files --------------------------------------------5 Years
    • Grievance Case Files--------------------------------------5 Years
    • (MSPB) Case Files ----------------------------------------5 Years
    • Workers’ Compensation Case Files---------------------5 Years

Financial Records

    • Correspondence -------------------------------------------5 Years
    • IRS Forms--------------------------------------------------5 Years
    • LM Forms--------------------------------------------------5 Years
    • Financial Statements & Reports---------------------- Permanent
    • Officer Bonds ------------------------------------------- Permanent
  • Many of these Retentions are mandated by the Department of Labor and IRS

AFGE Annual Audit

Each local is required to conduct an Audit at least once a year and make a certification using ”Annual Audit Certification - Form 41” to the National Secretary-Treasurer showing that an audit has been completed.

It is mandatory that you conduct an Audit:

  • At the close of each Year End
  • When there is a change in Financial Officers
  • Or when there is a suspicion of any wrong doing
conducting local audits
Conducting Local Audits

Who should be on the Audit Committee or conduct the Audit:

Annual Internal Audit

  • The President should appoint an odd number of members (3-5) that do not have signature authority on any accounts

Annual External Audit

  • You may hire outside Accountants or Bookkeepers to perform the audit also

Monthly Audits by the Financial Officers

  • AFGE suggests that the Financial Officers conduct an audit of the Savings, Checking, Investment and Credit Card Account Statements on a monthly basis to insure that all items have been reconciled. A review of the checkbook and dues deduction listings is also recommended
records needed to perform an audit

Savings, Checking, and Investment Account Statements, Cancelled Checks, Deposit Slips, and Credit Card Statements

Dues Deduction Listings

Local Constitution and By-Laws

Minutes of Local Meetings

Minutes of E-Board Meetings

LM-2, LM-3, OR LM-4 Reports for Past Two (2) Years

IRS 990 for Past Two (2) Years

Annual Budgets

Prior Audit Committee Reports

Form W4’s for Past Two (2) Years (Payroll)

Current Financial Roster

Inventory of all Fixed assets (i.e.., Computer, Office Furniture)

Payroll Tax Returns, Forms 940, 941, W-2’s and 1099’s

Records Needed to Perform an Audit
red flag items during an audit
RED Flag Items During an Audit
  • One Signature Checks
  • Pre-signed Checks by ONE OFFICER
  • Checks Written Out of Sequence
  • Checks Written to CASH
  • Checks written to INDIVIDUALS
  • Advance Payment of Salary to Employees
  • Unbalanced Checkbooks with no Deposit Records
local credit cards
Local Credit Cards

A Local cannot effectively conduct Financial Business without the use of a Credit Card, but there are some inherent problems with Credit Card usage.

How to avoid problems when using CreditCards :

  • Credit Cards should be in the name of the Individual Local Officer
  • Monthly dollar amount limits should be placed on Credit Cards
  • No ATM or Debit capability should be allowed
  • Credit Cards are to be used for Local business only. No personal charges by an officer.
  • A Credit Card Statement should not be considered authorization for payment—You must provide receipts, hotel statements, vouchers, etc.
  • Use of a Credit Card should be defined in the Local’s Bylaws.
payments that are not taxable
Payments that are Not-Taxable
  • Business Related Expenses
    • When:
      • Expense is for union business
      • Detail vouchers are provided showing: time, place, and business purpose
      • Documentation is submitted in a timely manner
      • Any unused funds are returned to the organization

All 4 factors must be met or payment is Taxable

payments that are not taxable43
Payments that are Not-Taxable
  • Officer Allowances
    • When:
      • Expense is for union business
      • Expense vouchers are provided
      • Documentation is submitted in a timely manner
      • Any unused funds are returned to the organization

All 4 factors must be met or payment is Taxable

payments that are not taxable44
Payments that are Not-Taxable
  • Reimbursed Travel Expenses
    • When:
      • Expense is for union business
      • Expense vouchers are provided showing: time, place, and business purpose
      • Documentation is submitted in a timely manner
      • Any unused funds are returned to the organization

All 4 factors must be met or payment is Taxable

when are you responsible for completing a 1099
When are you Responsible for Completing a 1099 ?

When non-payroll payments are made and exceed $599 annually for an individual or vendor

What type of payments require a 1099:

  • Membership Recruitment payments made to a member or officer
  • Payments made for services performed by: Arbitrators, Accountants, Legal Services, Consultants Etc.
  • Items or Equipment purchased for the Officers or Members i.e. personal cell phones, laptops Etc.
when must i complete the 1099
When Must I Complete the 1099?
  • 1099s must be given to the Individual or Vendor by January 31st
  • Copies of all 1099s must be filed with the IRS by February 28th along with an Annual Summary (Form 1096)
what must i include on the 1099
What must I Include on the 1099?

The Individual’s:

  • Name
  • Address
  • Social Security Number
  • Your Organization’s Federal Tax ID (EIN #)
  • The total amount paid to the Individual or Vendor

Box 1- Rent, Box 6- Medical & Health Care,

Box 7-Nonemployee Compensation and Box 14-Attorney Fees

Note: Payments made through payroll are reported on IRS Form W-2

what must i include on the 1096
What must I Include on the 1096?

Your Organization’s:

  • Name
  • Address
  • Federal Tax ID (EIN #)
  • A count of the total number of 1099s issued (Box 3)
  • The total dollar amount reported for all 1099s (from corresponding 1099 Boxes)
  • Contact Name and Phone #
  • Copies of all 1099s issued


AFGE does not recommend making Loans to Members.

Recovery of defaulted loans are costly and difficult.

If you do choose to:

  • They must be Approved by the Membership
  • The Executive Board CANNOT Approve Loans!
  • A Loan cannot be more than $2000 per Individual.
  • For any Loan, there should be a very clear Standard Criteria that the Local has adopted.
  • Remember what the Local does for ONE member, you must do for ALL members.
  • All outstanding advances in excess of $2000 are considered by DOL as a loan.
quick books pro financial system

Quick Books Pro Financial System

The suggested approach for AFGE Locals and Councils is the AFGE Customized Accounting System through the use of Quick Books Pro

afge s quick books pro financial officers training overview
AFGE’s Quick Books Pro Financial Officers Training Overview
  • Establishing your Local’s Quick Books File
  • Creating a Standardized Chart of Accounts
      • Establishing your Checking Account
      • Establishing your Petty Cash Account
      • Establishing your Saving Account
      • Allocating your Income & Expenses
  • Producing Checks
  • Making Fund Transfers
afge s quick books pro financial officers training overview54
AFGE’s Quick Books Pro Financial Officers Training Overview
  • Reconciling your Bank Statements
  • Creating Fixed Asset Accounts
  • Creating Reports
      • Treasurers Report
      • Treasurers Detail Report
      • LM and IRS Reporting
afge s quick books pro financial officers training overview55
AFGE’s Quick Books Pro Financial Officers Training Overview
  • Establishing a Local Payroll
      • Setting up your Employees
      • Paying your Employees
      • Paying Payroll Taxes
      • Producing your Payroll Tax Forms
        • Form 940
        • Form 941
        • W2’s
  • Establishing a Local Credit Card Account
afge s quick books pro financial officers training overview56
AFGE’s Quick Books Pro Financial Officers Training Overview
  • Satisfying your Regulatory Requirements
      • IRS 990 Reporting
      • Labor Department Reporting (LM 2, 3 & 4)
  • Creating a Budget
  • Protecting your Financial Records
      • Allowing access to your records
      • Backing up your financial records