Tips for Financial Reporting

- Prepare for financial audit
- Preparing the statement of income &
expenditures
- Preparing the balance sheet
- Obtaining an Employer Identification
Number
- Preparing Forms 990 and 990-EZ
- Labor organizational bond coverage
- Preparing Department of Labor reports
- Establishing a payroll system
- Completing withholding forms and
filing requirements

Click on a topic to display associated tips.

Prepare for financial audit

It would take a considerable amount of time to examine each financial transaction in detail. The Trustees audit concentrates on reviewing key financial areas and is specifically designed to save time, and yet provide for meaningful systematic review of the local union’s financial books and records.

The audit’s four primary objectives are:

To ensure that union funds and other assets are properly accounted for and are used solely for the benefit of the union or its members.

To confirm that the local is complying with legal requirements for financial reporting, record keeping, bonding, and loans.

To determine as to whether the internal controls are adequate or need improvement.

To ascertain whether the local union is complying with established financial practices and procedures.

Ensuring that all of the money received by the local union has been deposited into the local’s bank account is a key component to a successful audit.
Confirming that established disbursement practices are being followed is essential to ensuring that the local union’s funds are being handled responsibly on behalf of all the members.
Assets include not only money in the bank accounts (liquid assets) but may also include various types of equipment (fixed assets). The value of these assets must be included and accounted for with accurate and reliable records.
LMRDA compliance requires that unions file annual financial reports, maintain records that are sufficient to clarify or support information shown on these reports, secure adequate bonding to provide protection against losses due to fraudulent or dishonest actions, and restrict the amount of loans made to officers and employees.

Preparing the balance sheet

Balance sheets are prepared at regular intervals (end of the month, quarter or year), reflecting a specific date rather than a specific time period.

Obtaining an Employer Identification Number

Never use your social security number in the place of the EIN as this could lead to unpleasant tax consequences for the officer involved.
The tax exempt status exempts unions from federal corporate income tax and that is all. Your Local Union is still subject to applicable federal and state payroll withholding and payroll taxes, as well as city and state sales, personal property and real estate taxes

Preparing Forms 990 and 990-EZ

You must file the IRS Form 990 and 990-EZ within four month and fifteen days of the closing of the fiscal year.
Late on submitting 990 or 990-EZ Form - Should you find it necessary to obtain an extension, you will need to submit IRS Form 8868 (PDF format - 107K), which must be mailed on or before the due date of the Form 990. This form must be signed by an officer of your local, a CPA or a person enrolled to practice before the IRS. This extension is ONLY granted in cases of undue hardship and will give you 90 additional days to file. Each extension must be filed before the close of the last. A maximum of six (6) months is all that will be granted.
There are penalties for late filing or failure to file Form 990 or 990-EZ. As an officer, the maximum penalty is $10 per day for every day that the report is late, to a maximum of $5,000. The organization can additionally be fined twice as harsh, $20 per day up to 5% of gross yearly receipts.
Should you or your organization be fined, contact the Secretary-Treasurer office before paying the fine.
Never use your social security number in place of the EIN as this could have unpleasant tax consequences for the officer involved.

Labor organizational bond coverage

It is important that bonds be in the correct amount required by the local union’s financial status. Each year the bonding coverage is checked when the Local files its LM report with the U.S. Department of Labor. Willful violations of the bonding requirements of LMRDA or ERISA are punishable by fines of $10,000, imprisonment for up to one year, or both.
The blanket bond covers the position in the Local (i.e. Treasurer, President, Accounting Clerk, etc.) not the individual.

Preparing Department of Labor reports

When preparing a labor report, you need to determine whether your local is exempt from filing or not. Locals are not exempt if they bargain for members employed in the private sector or by the federal government. Most locals are exempt if the members are employed in the public sector, such as employees of municipalities, county or state governments.
All reports are due 90 days after the end of the union's fiscal year.
For assistance or to order Labor Report forms and instructions, contact your regional Labor Office or consult the United States Government, Department of Labor web site.

Establishing a payroll system

The best route to establish a payroll system is to have a payroll service such as Paychex or ADP help you establish your payroll system. These firms will, for a modest fee, calculate and prepare payroll checks, make payroll tax payments and file reports required by state, federal and even local agencies.

Completing withholding forms and filing requirements

The best route to establish a payroll system is to have a payroll service such as Paychex or ADP help you establish your payroll system. These firms will, for a modest fee, calculate and prepare payroll checks, make payroll tax payments and file reports required by state, federal and even local agencies.