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CAP AND I-CAP: Some Background and Tips from John Lund

The Calibre team sat down with Dr. John Lund, former Director of the Office of Labor Management Standards to find out more about two important Department of Labor (DOL) programs that labor union financial administrators should know about: CAP and I-CAP.

After beginning his career as a union representative, Lund joined the faculty of the University of Wisconsin’s School for Workers in 1985 where his teaching, research, and outreach work dealt extensively with union financial management and he authored numerous scholarly papers on the subject and wrote “Auditing Local Union Financial Records” published by Cornell ILR press and now in its second edition.  In early 2009, he was appointed by President Obama to serve as Director of the Office of Labor-Management Standards (OLMS) and served until 2013, when he was appointed Regional Representative for the Pacific Northwest and Great Plains states by Labor Secretary Tom Perez. Today, Lund is principal of Pacific Northwest Labor Research LLC, a Seattle area consultancy working with local, intermediate, and international unions.

What are CAP and I-CAP and what’s the difference between these programs?

The Compliance Audit Program (CAP) and International Compliance Audit Program (I-CAP) are related audit programs developed by OLMS to assess compliance with key aspects of the Labor-Management Reporting and Disclosure Act (LMRDA) or the Civil Service Reform Act (CSRA). I-CAP focuses on national and international unions whereas CAP is directed at local and intermediate unions.

How are unions selected for audits?

OLMS considers a variety of factors when selecting a national or IU for an audit, including size, geographic location, length of time since the last audit, and the availability of OLMS personnel resources. OLMS may also conduct an audit based on a complaint from member(s), or when it appears necessary to determine whether any person has violated or is about to violate provisions of LMDA or CSRA.  International unions subjected to I-CAP audits may be reaudited if significant problems are noted on the original audit.

What can a union expect when they are selected for an I-CAP or CAP audit?

Notification of selection is generally through a phone call for CAP audits and in writing for national/international unions. I-CAP notification is usually followed by a written questionnaire regarding financial practices, policies and procedures, and a request for the national/international union’s electronic general ledger.  CAP notification usually includes a brief questionnaire, which is followed by an opening conference with OLMS and union staff/officers. A variety of additional financial records may be requested and examined.  If the union has an office where the records are located, OLMS will review the records on-site. For smaller local unions without an office, OLMS will normally take the records back to their office for review.

What happens when OLMS has completed the audit?

Generally, OLMS will conduct a closing conference with union staff/officers at the conclusion of the I-CAP or CAP at which time its findings and recommendations will be reviewed, and compliance assistance tips offered. Following the closing conference, the union is sent a copy of the closing letter and a copy of that letter is posted on the OLMS website.

How can we prepare for the I-CAP audit?

  1. Carefully review and apply the OLMS Compliance Tip “Form LM-2 Common Reporting Errors” (https://www.dol.gov/olms/regs/compliance/catips/CompTip_LM2ReportingErrors_2015.pdf) and “Form LM-3 Common Reporting Errors” (https://www.dol.gov/olms/regs/compliance/catips/CompTip_LM3CommonReportingErrors_2018.pdf).  Even though LM-2 and -3 forms are filed electronically, not all reporting errors are corrected by the filing software.
  2. Use the OLMS bonding worksheet (https://www.dol.gov/olms/regs/compliance/bondappA.htm) to make sure you are correctly bonded and reporting the correct bonding amount on your LM report.
  3. Carefully review and apply the OLMS Compliance Tips on recordkeeping, travel policy, credit card use, etc. (https://www.dol.gov/olms/regs/compliance/catips to your own policies and procedures).

For more information about CAPs and I-CAPs, visit the OLMS website at https://www.dol.gov/olms/regs/compliance/CAP_FAQs.htm (CAPS) and https://www.dol.gov/olms/regs/compliance/ICAP_FAQs.htm (I-CAPs).  Copies of all closing letters can be found on these web pages as well.