A visit from the Department of Labor (DOL) is enough to strike fear into the heart of any Union officer. There are several reasons that the DOL could decide to come and spend some time with your Union, but one of the most common relates to the Compliance Audit Program (CAP). The CAP is a program developed by the Office of Labor-Management Standards (OLMS) that assesses compliance with all aspects of the Labor-Management Reporting and Disclosure Act (LMRDA) and Civil Service Reform Act (CSRA.) To accomplish this assessment, specialized records review and other investigative techniques are used by OLMS investigators.
Of note, there is currently an I-CAP (International Compliance Audit Program) in place as well. However, it may be likely that the Biden administration will redeploy the departments resources to other priorities that would have a direct impact on the American workforce. The main difference between the CAP and I-CAP programs is the union type that is the audit focus- the CAP focuses on local unions and intermediate bodies and the I-CAP focuses on international and national unions.
So, how are unions selected for a CAP audit? There are a couple of different issues that could cause a union to be chosen, including failure to file required annual financial reports (for example Form LM-2 or Form LM-3) with OLMS in a timely manner, submitting incorrect or incomplete financial reports to OLMS, discrepancies in the financial reports submitted, or complaints made by union members or others to OLMS regarding the union. Unions that have had significant issues discovered during a previous CAP audit may be more likely to be selected again. There are a small number of unions that are selected randomly for a CAP audit each year as well. Additional considerations that are made when randomly selecting unions for audits include union size and geographical area.
Stay tuned for the next installment of our CAP article series, where we will discuss the logistics and anatomy of a CAP audit, and compare and contrast the CAP audit versus a financial statement audit.