Hey guys bare with me for another min but I want to illustrate just how important the above concepts really are.
Say for example a new grocery store opens in 2003 and it costs 100,000 to build, pay saleries, overhead etc. But that new company doesn't actually recieve any cash for service's rendered until the following fical year in 2004. This is how it plays out....
Activity; year 1 build the store, pay employee's and opperating expence's
Year 1:
Accrual basis; revenue=$200,000
expense=$100,000
Net Income= $100,000
Cash basis; revenue= $ .00
expense= $100,000
Net loss= [$100,000]
Year 2: activity; business is paid for service's rendered.
Accrual basis; revenue=$ .00
expense=$ .00
Net Income= $ .00
Cash basis; revenue=$100,000
expense=$ .00
Net Income= $100,000
Do you see how that could be a huge problem during contract negotiations? lets even pretend the union leaders are honest....employer knows most unions and working people use the cash basis, they shift numbers around to cry poor, show the books and presto, the unions selling it's members on a consessionary contract. Even worse, what if the unions in on the snow job?
How important is union finance transparency?
Well I figure this accounting class has me sawing logs like a lumberjack so you all should share in my pain 
I remember the old GMM when Jack Allard [sec-tres]would discuss the unions finances by begining with his trademark speech "now the figures go up and down like a roller coaster because sometimes we don't collect our dues in time for the financial statement."
Roller coaster indeed. From one month or quarter to the next it could vary more than a hundred thousand.[that's 100,000.00] That tells me the union use's the "cash basis of accounting" in which revenue is recorded when cash is recieved, and expenses are recorded when cash is paid.
quote:
The cash basis often leads to misleading financial statements. It fails to record revenue which has been earned if the cash has not been recieved. This violates the revenue recognition principle. In addition, expences are not matched with revenues, which violates the matching principle. The cash basis of accounting is not in accordance with generally accepted accounting principles. see; accounting principles vol 1, second Canadian edition
It goes on to say that the cash basis of accounting is justified only when business's have few recievables and payables. Do unions fall into this category?
I suppose they have few recievables [employers pay the union dues on a monthly basis] and I don't think the union has a great deal of payables, but what I'm concerned with is given the huge fluxuations in the books is there more than meets the eye with regards to why unions apply the "cash basis of accounting principle" to how they manage the unions books? or are they just like me and didn't know there was a more accurate method of book keeping? 
Scott, I don't think it's their method of accounting as much as it is their method of reporting.
Most unions set up a record of accounts that tell you little of which you could make an informed decision about. The account titles say things like "Education" but no one at the meeting get to see the cheque register or gets an explanation or shown examples of the types of things and the people who get paid from that account.
Few if any members are accountants, so when they hear that a "call centre" has been set up in the "Education Centre" they don't bat an eye. Who paid the three grand for the phone lines? Could it have been the employers through their contributions to their employees "education"? Is Glen Toombs and his faithful minions get paid out of that fund? How is the building financed? Do business agents get flown to conventions and are they paid for by the Ed and Training Fund just because they are supposedly "learning" something at the convention? I don't know and neither do any of the members.
What types of expenses were incurred for conventions? How much was spent on alcohol, dinners, hospitality suites and hor d'oeuvres?
What's the breakdown for actual monies spent on each officer and employee.
Remember the San Diego junket taken by a couple of staffer two years ago. What title did that sweet trip fall under? How was it paid for?
I think the Loman guys have a legitimate gripe. They see wads of dough pumping out of the coffers for some pretty lavish treatment of the chosen few and the tap shut tight for the needy.
When you read this tread and and all too many reports of similar union "Book Cooking" I think the answer to "How important is union finance transparency" is pretty damned obvious.
Even the union's accountants can't figure out where the money went. That's why the union has hired "Forensic Accountants" to chase the paper trail.
When union leaders tell the members that the financial statements have been audited, all as that means is that a Chartered Accountant has verified that the books balance and that Generally Accepted Accounting Principals have been applied.
Most of these CAs don't get off their asses to check to see if the union offices got a new roof or whether the work was done renovating the President's summer cottage.
Read Haunted Houses of Labour again and be afraid--be afraid for what you don't know and what you may never know about how your money is spent and on whom.
Assets = liabilities + Owners Equity
I remember when we were told by the 1518 "action team" that the check registry was none of the members business. How Lenor Peck stood up and spouted off about how she was "elected" to look after the members best interest and how she was offended that we didn't trust her judgement that she looked at the books and found nothing wrong with them. These guys just kill me 
Everytime they talk about the unions finances they say "the books balanced" Well no shit Sherlock Assets = Liabilities + Owners Equity.
Assets; all the resources owned by a business
Liabilities; debt or obligations owed to creditors
O. E.; residual equity or equity owed to the owner
The books balance because in accounting debits must equal credits for each transaction. It's called the "double-entry system. Debits [or left side entry's] increase assets and decrease liabilities. Credits [or right side entry's] decrease assets and increase liabilities.
Say a UFCW President decides to throw a party for his buddies and withdraws $10,000 to pay for it and charges it to office supplies. Without detailed explanations and proof [receits] for each and every expence there is no way to tell that office supplies were not purchased with the money. Instead, all the auditors would see is [this program won't let me do graphs so I'll just write it out]
- A debit to the office supplies account for $10,000 which will increase the total assets [left side of the accounting equation or + A] of the union.
- And a credit to the Cash account for the same $10,000 that in turn increase's the liabilities [or right side of the accounting equation + L]
Do the books balance? yes.
Enron executives were billing the company $ 6,000 for clip boards etc. the books balanced there too until uncle Sam went in for a closer look. And imagine what they found 
The union's check registry is every members business because it's the members who by law represent "Owners Equity" in the accounting equation. That money and all the assets belong to the members and any union that tells you different has got a damn good reason they don't want you to find out about!
By the way, a physical inventory for period end should make it clear if 10 large was in fact used to pay for office supplies, provided those who do the counting only count the existing inventory once and provide honest results. We've all taken part in counting stock in the stores...same thing.
At the Sept 10th meeting a copy of the financial report was requested and the member was told they could view it only. You can look but don't touch. Is there a valid reason a member couldn't have a copy?
they won't let you audit the books because all the money is in their houses and vacations to hawaii.
quote:
At the Sept 10th meeting a copy of the financial report was requested and the member was told they could view it only. You can look but don't touch. Is there a valid reason a member couldn't have a copy?
Reminds me of the last UA election campaign. When Tommy Preuett and his lawyer finally were allowed to view the UA records, the incumbents asked if he was going to place the records on the internet. His answer was, "Absolutely"! They then decided he could not copy or remove any of the records and told him he could view only. The ole "What happens in the House of Labor, Stays in the House of Labor" approach. The old guard always seems to have something to hide and they will tell you if their records are made public, anti-labor will use this information in their fight against organized labor. If the officials believe in justice and know the difference between right and wrong, and they operate within the union according to these principles, there should be nothing to hide. If it's dirty, clean it up! If it's clean, polish it up! Let it shine for all to see!
quote:
If the officials believe in justice and know the difference between right and wrong, and they operate within the union according to these principles, there should be nothing to hide. If it's dirty, clean it up! If it's clean, polish it up! Let it shine for all to see!
Well said brother! 
It's virtually impossable to tell just by "looking" at the books if everything is on the up and up. My hunch is people are kept in the dark because union officials are misusing union funds. Why else would they keep them under guard? The laws on how unions operate, spend and communicate the spending of union funds have to be updated. Write your MLA's and MP's and let them know if they want your vote in the next election they will have to demonstrate a strong stand on union finance transparency. IF members won't start forcing the issue they can expect theifs to continue to come along and steal their money.
In answer to the question this thread poses, I say transparency and access are imperative for union members to know what's going on at any given time.
As many of you know, I left employement with the UFCW on July 4, 1995 (Independence Day). I was in a bit of a tangle with Cliff and his crew over what I considered irregularities. I wrote this letter and wound up suing when, as usual, my requests were ignored by everyone including Doug Dority.
quote:
May 29, 1995
Mr. Gilbert Murray Whitlock
Trustee
UFCW Local 777 Education
and Training Fund Trust
3012 Boundary Road
Burnaby, British Columbia
V5M 4A1
By Double Registered Mail
Dear Sir:
I am writing to you as a former Trustee of the UFCW Education and Training Fund Trust. Likewise as a Local 777 Vice President who's term expired on December 31, 1993, and as a dues-paying, rank-and-file Local 777 member.
Prior to my resignation as a Trustee, in accordance with my letter of March 22, 1995 I specifically asked you to, "please order an independent audit of the UFCW Local 777 Education and Training Fund Trust, and supply me with all audits, if any, performed for previous years--immediately. Likewise, please supply me with all documentation concerning cheque #0026 dated June 22, 1994 in the amount of $150,000 and cheque #0023 dated November 29, 1993 in the amount of $25,000. I would also like all documentation regarding the purchase of the 3010/3012 Boundary Road property." To date you have not responded to my request, nor acknowledged receipt of my double-registered letter.
Since my request I have been informed that you swore an affidavit stating that UFCW Local 777 is the owner of 3012 Boundary Road. Likewise, you swore that I ceased to be a trustee of the UFCW Local 777 Education and Training Fund Trust some two years ago.
First, I am astounded that you would try to tell the courts that you have achieved something that the laws of British Columbia expressly prohibit. The Land Title Act does not allow a trade union to be the registered owner of land.
I assume that is precisely why UFCW Local 777 Vice President, UFCW Local 777 Education and Training Fund Trustee and UFCW Local 401 Business Manager Jerry John Sullivan was appointed as the Nominee on January 31, 1995. As well, it was the Fund Trust that paid in excess of $500,000 for the unmortgaged portion of the purchase price. In fact public documents state: 2. The Nominee and the Union acknowledge and declare that: (a) the Fund is the sole beneficial owner of the Property and has sole control of and responsibility for the Property.
Second, Section 3.5 of the UFCW Local 777 Education and Training Fund Trust Agreement states that to remove a Trustee, the President must give "a notice of removal to such Trustee, to each of the other Trustees and to the Office of the Fund." That has never been done. In fact, the aforementioned Trust Agreement was filed on February 2, 1995 under the Land Titles Act as it related to the purchase of 3010/3012 Boundary Road. That filed public document lists Jerry John Sullivan and Gilbert Murray Whitlock as duly authorized officers of UFCW Local 777. Likewise, it lists Gilbert Murray Whitlock, Jerry John Sullivan and Hugh John Finnamore as Trustees of the Fund Trust.
Mr. Whitlock, you have dispersed funds of inordinately large amounts with your signature accompanied by Jim Smith or by Bonny Whitlock contrary to the Fund Trust Agreement. I again ask, please order and independent audit of the Fund Trust forthwith, and supply me with the requested information and documentation.
If you do not comply within seven days of delivery of this letter, I may apply to the Supreme Court of British Columbia and/or other agencies for such relief as may be appropriate in the circumstances.
Sincerely yours
Hugh Finnamore
(604) 878-0748
#4 - 5400 Patterson Ave.
Burnaby, B.C.
V5H 2M5
cc Tom Kukovica UFCW Canadian Director
Doug Dority UFCW International President
I launched another law suit, but I never did get the information. Evenutally, I received a golden handshake and agreed to not run for office in Local 777.
What is the most effecient method of reporting and ensuring union finance transparency? Does anyone have any suggestions?
The constitution and by-laws, local, National and International would make the most sense.
Any challenges made with regards to decisions must provide the challenger [ie member] with the ability and funds to take their challenge outside the union. What I mean by that is the UFCW Mickey mouse internal appeals process is a joke. The same "boys club" members voting on the validity of your challenge is rediculous. Nobody would have let Senior Enron Executives decide if the US investigators had legitimate evidence would they? so why do we let unions conduct their own internal trails? It's pure crap!
Union Transparency will only come with strong, harsh penalties for devience and the ability for even the most financially challenged member to bring such forces to bare on union executives that act contrary to established ethical practices.
One trustee in our union tried to get in forensic accounting for the Benefit Plans. He was lambasted from one end of the union hall to the other and the union officials (also the trustees for the most part)
spent $150.000.00 to hire lawyers to stop him. They managed it. They waited until they were in front of the Judge to tell him that the trustee hadn't exhausted internal union avenues. Didn't matter to them that the UA had put off the Trustee for years telling him that Trustees were not union officials and they had no jurisdiction. As long as the Judge didn't know that that's all they cared about. The trustee wound up footing the bill for his lawyer to the tune of $10,000.00 while the union officials paid theirs with union funds.
Joe Blow, does you union provide members with a copy of its financial statement? Has anyone ever tried to get one?
There are a few members who make a point of obtaining the finacial statements but to be blunt they aren't worth the powder to blow them to hell. Usually, expenses are lumped together. The only thing these statements contain are the bare minimum and we feel that the accountant is merely puting down what he is requested to put down and where he is requested to put it.
One member decided to run for a position on the Finance Committee. He make on complaint about a specific sum of money only to be told by the accountant that it really didn't make a differnce where the money was put it was only $5000.00.
Hell, a group of us even went as far as to investigate how much money the property that the new union building was erected on cost. We found a $100.000.00 decrepency between the amount that the union officials paid and how much was charged to the union aka, the membership.
quote:
We found a $100.000.00 decrepency between the amount that the union officials paid and how much was charged to the union aka, the membership.
Was there a follow up? Isn't someone(s) accountable for such a large discrepancy?
quote:
they aren't worth the powder to blow them to hell.
roofles!1! 
Access to union books and clear financial statements are non-existent in most unions. Even if one could access the books and registers, one would have a hard time finding corruption without a lot of other documentation accompanied by truthful explanations.
For example, a charge of $80,000 to a national education and training fund may look legitimate, but what happens to that money once it leaves the local? Computers, installation and service contracts may look like a legitimate expense. Sure it's a bit expensive, but the service contract is worth it-right? Who knows whether the computers were bought off a reseller who kicks back money to the union president? Who knows the relationship between the reseller and certain union officials? Who really owns the computer reseller? Who would know the difference if the computer reseller had to do extensive 'testing' not covered in the service contract? Testing what? Who would know if the reseller had to do phony upgrades and repairs? What about building maintenance. Do the gardeners give a cut rate to the union officers when their yards get maintained? Do phone repairs get done, or is the union grossly overcharged for work done and not done? Oh, yes the amounts look a tad high, but the excuse is that's what one has to pay to have qualified 'union' help do the work.
What about free legal work done for union officers? Is that work billed to other work or is it tantamount to a bribe by the law firm to keep the union's business. What about auto leasing? How does the president get such a great lease deal on his wife's car? Could it be because he gets it in return for shifting business agents' leasing through one company?
Little locals have a hard time doing this sort of crap, but the big locals can do just about anything without tipping off the members. The audit committee usually has a high turnover and those who do sit on it usually have no accounting experience or training at all. They usually get a copy of the financial statement that will be presented at the GMM. The Secretary Treasurer explains what it means and that's that.
Let's say the books show a plane ticket to Hawaii, and the E-Board is told that ticket was for the President to attend a union meeting. What they don't know is that the President's wife and other family members went too. They had one ticket charged to the Pension fund, one had a ticket charged to the Education and Training fund. Hey, perhaps it all went on the Union's account. The union dupes agree that the hard-working president should take his sweety on the trip, and of course they should both travel 'First Class.' The president takes the two first class tickets and trades them for five seat-sale tickets and takes the whole fam damily! In business, you go to jail for that sort of shit. In unions, it's an entitlement.
The short and sweet of it is that the Power Source doesn't have a clue about how or where their dues are spent, and union bylaws and constitutions and government legislation ensures that they will never find out.
If the government hadn't stepped in, who would have ever been the wiser?
quote:
The News-Gazette
Champaign-Urbana
Labor Officials Face Fraud Charges
Champaign Site Linked To Alleged Financing Scheme
By the Associated Press
CHICAGO The former head of a Chicago-area Laborers' Local has been indicted on racketeering and fraud charges. The charges include scheming to get a kickback for hotel portion of the Trade Centre South complex in Champaign. John Serpico, 68, of Lincolnwood was named by a federal grand jury Wednesday in an 11-count indictment that also charged two associates.
Serpico and Maria Busillo, 53, of Glenview, also a union official, were charged with a wide pattern of fraud, labor kick-backs, money laundering and camouflaging currency deals starting as far back as 1979.
The two are former officers of Local 8 of the Laborers International Union. Serpico resigned in 1996, as the union was gearing up a nationwide campaign to sweep out mob influence and corruption. Serpico is also the chairman of the Illinois International Port District, an appointed post unrelated to the charges in the indictment, prosecutors said.
The grand jury charges Gilbert Cataldo, 59, a former port district executive director, with scheming with Serpico to get kickbacks in return for making loan commitments from a union pension fund. An attorney for Busillo, Cynthia Giacchetti, said that she had not seen the indictment, which was made public late Wednesday, and would have no immediate comment. Attorneys for Serpico and Cataldo were not reached at their offices Wednesday.
The charges focused mainly on activities of the Central States Joint Board, a little-known Chicago-based labor group that operates two pension funds and a health and welfare fund on behalf of eight locals. Serpico was an officer of the board from 1975 until 1996 and continues to be a board consultant. Busillo is still on the board.
According to federal prosecutors, they were able to control the affairs of the board because the locals that sent members to serve on the board did not hold democratic elections. Besides his posts with the Laborers and the Joint Board, Serpico also was president of Chicago-based Local 10 of the International Union of Allied Novelty and Production Workers from 1976 until 1994. Busillo now serves as Local 10 president.
Several of the loans they received were unsecured and some lightly secured, the indictment said. It said that in some cases loans were made to cover interest payments on other loans. Some loans covered 100 percent of the cost of real estate purchases and business startups, prosecutors said.
The indictment outlined a complex web of corruption involving a number of banks. It said that Serpico and Cataldo plotted to get $333,850 in kickbacks in return for inducing both pension plans and novelty and production workers to promise $6.5 million in financing in connection with a hotel in the Trade Centre South complex in Champaign.
Developers announced plans for the $20 Million, 120,000-square-foot, six-story office complex and 140-unit suites hotel south of Kirby Avenue between State and Neil Streets in 1989. The development was to include a restaurant owned by former Chicago Bears linebacker and University of Illinois alumnus Dick Butkus, although that part of the project was later dropped.
Butkus attended a press conference at the U of I's Levis Faculty Center to announce the project, after local restaurant owners objected to a planned announcement on the 50-yardline at Memorial Stadium. Champaign developers Ken Richardson and Randy Hughes, Dick Butkus Enterprises and the Management Group of Chicago were said to have pulled the project together under the umbrella of 51 Associates Limited Partnership, which was created to build Trade Centre South.
C.A. "Bud" Cataldo, president of the Management Group, attended the press conference with Butkus.
Hughes is the property manager for the office building at Trade Centre South. He said this morning that he was not involved in the original financing of the project and hadn't heard about the indictments. Richardson said there were two separate loans on the original project, with the Chicago-based member of 51 Associates handling the financing for the hotel and local financing obtained for the office building.
Nobody from the Champaign-Urbana area was involved in the financing of the hotel, he said.
Richardson still has an ownership interest on both buildings. He is a partner in 51 Associates, which still owns the hotel. He is also a partner in KDB Enterprises, which owns the office building.
Richardson said he was never suspicious of the hotel financing arrangements made in Chicago, and hadn't heard about the indictments until this morning. "Am I surprised? Yes, I am," he said.
The indictment also said that Busillo got a $125,000 loan to buy a condominium on Marco Island, Fla., in return for a deposit of funds from a pension plan maintained for the Joint Boardís staff. Busillo also bought property in the affluent suburb of Glenview with money provided through the scheme, according to the indictment.
Oh, you haven't heard of the International Union of Allied Novelty and Production Workers? They were alive and well in Canada. If you look at the address below, you'll see it's now occupied by Cliff Evan's son's law firm. More about that later.
quote:
But Mr. Corrigan has always concentrated his efforts on building his social and business contacts. Most recently, he has been linked to the setting up of the International Bank Ltd. in St. Kitts, which is being investigated by the St. Kitts authorities with the help of the RCMP.
For a quarter?century, Mr. Corrigan, 57, has controlled a medium?sized local of the Teamsters and the Canadian operations of two little?known U.S. unions the Textile Processors, Service Trades, Health Care, Professional and Technical Employees International Union and the International Union of Allied Novelty and Production Workers.
All three are housed in a handsome, renovated old mansion on Madison Avenue in Toronto, where Mr. Corrigan's office is decorated with pictures of him with Teamster leaders such as the late James Hoffa, as well as football pictures and photographs of Mr. Corrigan at black?tie dinners.
The building was purchased in 1982 for $600,000 in cash by LHWF Holding Ltd., a company owned by the Textile Processors.
And how much did a numbered company pay for the building in 2000?
$400,000.
In 1999 a numbered company registered to John Robert Evans (son of Clifford Evans), purchased 34 Madison Ave. for the aforementioned sum of $400,000 which, in Secret Agent's humble opinion, was quite a bargain.
Oh yes, the favourite is, "here's the 'audited' financial statements." Does labour have its own Arthur Anderson?
Here's a september 2, 2002 excerpt from th "Engineering News-Record:
quote:
Late last month, an outside accountant for the union pleaded guilty to assisting union leaders in hiding $1.5 million in entertainment and dining expenses on required annual Labor Dept. disclosure forms. Frank J. Massey, a partner in the Washington, D.C., office of accounting firm Thomas Havey Co., also agreed on Aug. 22 to cooperate in the government's wide-ranging criminal investigation of fraud and embezzlement at the union, which began in the mid- 1990s. Massey's attorney, Justin A. Thornton, says Massey was not named a co-conspirator. Massey resigned from Havey on Aug. 16.
quote:
agreed on Aug. 22 to cooperate in the government's wide-ranging criminal investigation
Nice when they co-operate.
Wouldn't it be more accurate to say he decided to come clean to save what's left of his ass? 