DOL CAP Audit Series
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”). Here is some guidance that can assist you with understanding and preparing for the possibility or actuality of a CAP audit.
The CAP was developed by the Office of Labor-Management Standards (“OLMS”) to assess compliance with 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. The main difference between the CAP and I-CAP programs is the union type: the CAP focuses on local unions and intermediate bodies, and the I-CAP focuses on international and national unions.
There are a couple of different issues that could cause a union to be chosen, including but not limited to:
- 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.
- significant issues discovered during a previous CAP audit
- Union size
- Union geographical jurisdiction
There are a small number of unions that are selected randomly for a CAP audit each year as well.
Compliance Versus Financial Statement Audits
It is easy to think that an audit is just an audit and they are all alike, but that is not true in this case. A CAP audit focuses on the financial and business aspects of a Union’s operations, but it is also designed to assess compliance with the LMRDA or CSRA. On the other hand, financial statement audits focus on the financial and business aspects of a Union’s operation, with the goal of testing selected balances to enable the auditor to gain comfort and issue a “clean” (unmodified) opinion on the audited financial statements.
The CAP audit team may rely on the Union’s financial statement auditors for their opinions on various union operational matters under consideration; however, that is not always the case. A CAP audit’s goal differs from a financial statement audit, so the CAP examinations are typically more detailed and broader in scope than a financial statement audit.
Contact Us
For more information on CAP Audits or to discuss your union’s needs, contact Withum’s Labor Unions Services Team.
