Last updated on July 3rd, 2024
In the interest of transparency and accountability, there are stringent laws governing the use of credit cards and expense accounts for unions. These laws are intended to safeguard the funds of union members and ensure that all expenditures are in line with the interests of the union.
At the federal level, the Labor-Management Reporting and Disclosure Act (LMRDA) sets the foundation for these regulations. It mandates that unions maintain precise records of all income and expenditures, including credit card transactions and expense accounts. Any form of misuse or misappropriation of funds is considered a severe violation of this law and can result in hefty penalties or even imprisonment.
Still, expense accounts and credit cards provide a convenient and efficient method of paying for union activities.
A union expense account is designed to cover costs related to union activities. Permissible expenses include union meeting costs, training events, legal fees, and administrative expenses like office supplies and utilities. Funds can also be used for lobbying and campaigning initiatives that support the interests of the union members. However, there are strict limits on personal expenses. Funds cannot be used for personal trips, non-union-related meals, or personal items. Also, any kind of expenditure that could be seen as a conflict of interest, such as gifts to union officials, are strictly prohibited.
Credit cards, on the other hand, offer a convenient way to pay for union expenses, while offering the added benefit of providing detailed statements to track spending. However, they cannot be used for personal purposes or non-union expenses. It’s vital that cardholders adhere to guidelines set by the union to ensure financial transparency and responsible spending.
Compliance in managing these financial tools helps ensure a union’s financial stability by preventing unnecessary or excessive spending. It safeguards a union from potential legal implications related to misuse or fraudulent activity. It maintains trust among union members, as they can see their dues being used responsibly and transparently.
To promote compliance and reduce risks, union leaders should implement stringent policies and procedures around the use of expense accounts and credit cards by:
- Establishing Clear Policies: Develop comprehensive guidelines that outline what expenses are permissible, the approval process for expenses, and the consequences of misuse.
- Conducting Regular Audits: Regularly review and audit expense account and credit card statements to identify any irregularities.
- Training: Provide training to all union members who have access to these financial tools. They should understand the policies and procedures, and the importance of compliance.
- Limiting Access: Restrict the number of people who have access to union credit cards and expense accounts to minimize the risk of misuse.
- Promoting Transparency: Regularly share financial reports with union members to promote transparency and accountability.
If you need any assistance setting up financial controls for credit card and expense account use and approvals or conducting an internal audit, as well as any accounting, advisory, audit or tax support, you can count on RBT CPAs professionals. Contact us to learn how we can be Remarkably Better Together.
RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.