Understanding Financial Accountability for Unions

On September 24, 2015


Just the mere mention of the words ‘IRS’ or ‘audit’ are enough to send individuals into a panic mode and introduce a thread of fear into the process. However, the truth is that there is a very real need for this process to take place in corporations, businesses and labor unions all over the country. The goal is to minimize the risk of penalties and fines and to ensure compliance with the existing rules. In some cases, the institutions themselves have put internal audit procedures into place to provide the necessary accountability in the organization.

Labor unions receive a large amount of money from its members and contractors which are intended for the use of maintaining the union and supplying benefits to the members. As with any organization, unions fall under the guideline of tax codes and are required to file and pay these every year. Problems take place when this process is not followed correctly, the wrong forms are used or there are inconsistencies found in the numbers. This kind of behavior can trigger a government audit from the IRS and true to bureaucracy there can be fines and penalties inflicted that quickly accumulate.

Since labor unions are designed to act in the best interest of their members it was determined that an internal audit process needed to be created and enforced in order to check for issues and correct them in advance. This reduces the risk of government involvement and financial fees but also makes the IRS audit move along that much quicker. It is never a bad idea to have a system in place that keeps individuals accountable for the money they are entrusted with and acts as a reassurance to those putting in the money.

If you are part of labor union audits then you can discuss this process with your representative and find out how, who and when this is accomplished for your chapter. The typical time frame is every three years and it is good to know whether the findings are available to members for review. This keeps everything transparent and avoids situations where difficult questions have to be asked and answered. When you understand the process then you have the ability to ask informed questions especially if you are interested in becoming a delegate or representative for your union.

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