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Report No. 3A-CF-OO""08-'033 
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
 

Washington, DC 20415
 

Office of the 

Inspector General 

AUDIT REPORT
 

2005 AND 2006
 

MIDLANDS AREA
 

COMBINED FEDERAL CAMPAIGNS
 

COLUMBIA, SOUTH CAROLINA
 

Report No. 3A-CF-OO-08-033 Dak:October 29, 2008 

Michael R. Esser 

Assistant Inspector General 

for Audits 

www.oprn.gcv www.usajobs.gov 
UNITED STATES OFFfCE OF PERSONNEL MANAGEMENT
 

Washington, DC 20415
 

Office of the 

Inspector General 

EXECUTIVE SUMMARY
 

2005 AND 2006
 

MIDLANDS AREA
 

COMBINED FEDERAL CAMPAIGNS
 

COLUMBIA, SOUTH CAROLINA
 

Report No. 3A-CF-OO-08-033 Date:October 29, 2008 

The Office of the Inspector General has completed an audit of the Midlands Area Combined 

Federal Campaigns (eFC) for 2005 and 2006. The United Way of the Midlands, located in 

Columbia, South Carolina, served as the Principal Combined Fund Organization (PCFO) during 

both campaigns. Our main objective was to determine if the Midlands Area CFC was in . 

compliance with Title 5, Code of Federal Regulations, Part 950 (5 CFR 950), including the 

responsibilities of both the PCFO and Local Federal Coordinating Committee (LFCC). The 

audit identified five instances of non-compliance with the regulations (5 CFR 950) governing the 

CFe. 

BUDGET AND CAt\'lPAIGN EXPENSES 

• PCFO Expense Reimbursement Not P.-operlv Approved 

The PCFO's campaign expenses were not properly approved and documented by the LFCC 

before reimbursement. 

• Inappropriate Reimbursement fo.' Audit Fees 

The PCFO incorrectly charged the 2006 ere for audit fees related to theAgreed-Upon 

Procedures for the 2004 Cl'C. The reimbursement was not appropriate because the PCFO 

was not matching the audit fees with the appropriate campaign. 

--~._-

www.oprn.goY www.usajobs.goY 
CAMPAIGN RECEIPTS AND DISBURSEMENTS 

• One-Time Disbursements Exceed Established Threshold 

The PCFO incorrectly made one-time disbursements for the 2006 campaign to 13 member 

agencies/federations which had designations in excess of the threshold set by the LFCC. 

• One-Time Disbursements Reduced by Incorrect Pledge Loss Percentage 

The PCFO did not reduce one-time disbursement amounts by the appropriate pledge loss 

percentage for the 2006 campaign. 

ELIGIBILITY 

• Local Eligibility Determinations 

The LFCC did not directly make and communicate local eligibility determinations to the 

agencies and federations applying for inclusion in the 2006 campaign as required by the 

Federal regulations. 

11 
CONTENTS 

PAGE 

EXECUTIVE SUMMARY	 : : i
 

I. INTRODUCTION AND BACKGROUND	 1
 

II. OBJECTIVES, SCOPE, AND METHODOLOGY	 2
 

III. AUDIT FINDINGS AND RECOMMENDATIONS	 , 6
 

A. BUDGET AND CAMPAIGN EXPENSES	 6
 

1. PCFO Expense Reimbursement Not Properly Approved	 6
 

2. Inappropriate Reimbursement for Audit Fees	 __ 7
 

B. CAMPAIGN RECEIPTS AND DISBURSEMENTS	 7
 

1. One-Time Disbursements Exceed Established Threshold	 7
 

2. One-Time Disbursements Reduced by Incorrect Pledge Loss Percentage 8
 

C. ELIGIBILITy	 9
 

1. Local Eligibility Determinations	 9
 

IV. MAJOR CONTRIBUTORS TO THIS REPORT	 11
 

APPENDIX	 (The PCFO and LFCC's response, dated July 29,2008, to the draft audit 

report) 
I. INTRODUCTION AND BACKGROUND
 

Introduction 

This report details the findings, conclusions, and recommendations resulting from our audit of 

the Midlands Area Combined Federal Campaigns (CFC) for 2005 and 2006. The audit was 

performed by the Office of Personnel Management's (OPM) Office of the Inspector General 

(OIG), as authorized by the Inspector General Act of 1978, as amended. 

Background 

The CFC is the sole authorized fund-raising drive conducted in Federal installations throughout 

the world. It consists of 278 separate local campaign organizations located throughout the 

United States, including Puerto Rico, the Virgin Islands, and Foreign assignments. The Office of 

Combined Federal Campaign Operations (OCFCO) at OPM has the responsibility for 

management of the CFC. This includes publishing regulations, memorandums, and other forms 

of guidance to Federal officials and private organizations to ensure that all campaign objectives 

are achieved. 

CFC's are conducted by a Local Federal Coordinating Committee (LFCC) and administered by a 

Principal Combined Fund Organization (PCFO). The LFCC is responsible for organizing the 

local CFe, deciding on the eligibility of local voluntary organizations, selecting and supervising 

the activities of the PCFO, and acting upon any problems relating to a voluntary agency's 

noncompliance with the policies and procedures of the CFC. The PCFO is responsible for 

training employee key-workers and volunteers; preparing pledge cards and brochures; 

distributing campaign receipts; submitting to an extensive and thorough audit of its Cf'C 

operations by an Independent Certified Public Accountant (IPA) in accordance with generally 

accepted auditing standards; cooperating fully with OIG audit staff during audits and 

evaluations; responding in a timely and appropriate manner to all inquiries from participating 

organizations, the LFCC, and the Director of OPM; and consulting with federated groups on the 

operation of the local campaign. 

Executive Orders No. 12353 and No. 12404 established a system for administering an annual 

charitable solicitation drive among federal civilian and military employees. Title 5, Code of 

Federal Regulations (CFR) 950, the regulations governing eFC operations, sets forth ground 

rules under which charitable organizations receive federal employee donations. Compliance 

with these regulations is the responsibility ofthe PCFO and LFCC. Management of the PCFO is 

also responsible for establishing and maintaining a system of internal controls. . 

The initial results of our audit were discussed with PCFO and LFCC officials during an exit 

conference held on June 6, 2008. A draft report was provided to the PCFO and the LFCC on 

June 23, 2008 for review and comment. The PCFO and LFCC's response to the draft report was 

considered in preparation of this final report and is included as an Appendix. 

1
 
II. OBJECTIVES, SCOPE, AND METHODOLOGY
 

OBJECTIVES
 

The primary purpose of the audit of the Midlands Area CFC was to determine compliance with 

Title 5, Code of Federal Regulations, Part 950. Our specific audit objectives for the 2006 

campaign were as follows: 

Eligibility 

•	 To determine if the charitable organization application process was open for the 

required 30 day period; if applications were appropriately reviewed, evaluated, 

and approved; and if the appeals process for rejected applicants was followed. 

, 

Budget and Campaign Expenses 

•	 To determine if the PCFO's budget was in accordance with the regulations. 

•	 To determine if expenses charged to the campaign were actual, reasonable, did 

not exceed 110 percent of the approved budget, and were properly allocated. 

Campaign Receipts and Disbursements 

•	 To determine if the total amount of funds received for the campaign, plus interest 

income, and less expenses, was properly distributed to the designated 

organizations. 

•	 To determine if the total amount of undesignated funds was properly allocated 

and distributed to the various CFC participants. 

PCFO as a Federation 

•	 To determine if the PCFO distributed funds only to member agencies. 

•	 To determine if the PCFO charged its member agencies for expenses in a 

reasonable manner. 

Additionally, our audit objective for the 2005 campaign was: 

Audit Guide Review 

•	 To determine if the IPA completed the Agreed-Upon Procedures (AUP) as 

outlined in the CFC Audit Guide (For Campaigns with Pledges $1 Million and 

Greater) for the 2005 campaign. 

SCOPE AND METHODOLOGY 

We conducted this performance audit in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the audit to obtain 

sufficient and appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on the audit objectives. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based on the audit objectives. 

2
 
The audit covered campaign years 2005 and 2006. The United Way of the Midlands, located in 

Columbia, South Carolina, served as the PCFO during both campaigns. The audit fieldwork was 

conducted at the offices ofthe United Way of the Midlands from June 2 through June 6, 2008. 

Additional audit work was completed at our Washington, D.C. office. 

The Midlands Area CFC received campaign pledges, collected campaign receipts, and incurred 

campaign administrative expenses for the 2005 and 2006 campaigns as shown below: 

Campaign Total Total Administrative 

Year Pledges Receipts Expenses 

2005 $1,451,583	 $1,287,120 $267,991 

2006 $1,485,384	 $1,286,900 $193,062 

In conducting the audit we relied to varying degrees on computer-generated data. Due to time 

constraints, we did not verify the reliability of the data generated by the various systems 

involved. However, our review did identify a software error that resulted in overpayments 

related to one-time disbursements. This audit issue is described in detail in the "Audit Findings 

and Recommendations" section of this report. Except for the audit issue mentioned above, 

nothing else came to our attention during our audit testing utilizing the computer-generated data 

to cause us to doubt its reliability. 

We considered the campaign's internal control structure in planning the audit procedures. We 

gained an understanding ofmanagement procedures and controls to the extent necessary to 

achieve our audit objectives. We relied primarily on substantive testing rather than tests of 

internal controls. The audit included such tests ofthe accounting records and such other auditing 

procedures as we considered necessary to determine compliance with 5 CFR 950 and CFe 

Memorandums. 

In order to determine that the LFce and PCFO were in compliance with CFe regulations in 

regards to eligibility, we reviewed the following: 

•	 The public notice to prospective charitable organizations to determine if the LFCC 

accepted applications from organizations for at least 30 days. 

•	 The process and procedures for the application evaluation process. 

•	 Sample eligibility letters to verify they were properly sent by the LFCC. 

•	 The LFCC's processes and procedures for responding to appeals from organizations. 

In regard to our objectives concerning the budget and campaign expenses, we accomplished the 

following: 

•	 Reviewed the PCFO application and completed the PCFO application checklist. 

•	 Reviewed a copy of the public notice to prospective PCFO's, and LFCC meeting minutes 

related to the selection of the PCFO. 

•	 Traced and reconciled amounts on the PCFO's Schedule of Actual Expenses to the 

PCFO's general ledger. 

3
 
•	 Reviewed supporting documentation for a judgmental sample ofactual expenses from 13 

expense accounts (out of a total of 31 expense accounts). Accounts were selected based 

on a nomenclature review, as well as high dollar amounts paid. 

•	 Reviewed the LFCC meeting minutes and verified that the LFCC authorized the PCFO's 

reimbursement of campaign expenses. 

•	 Compared the budgeted expenses to actual expenses and determined if actual expenses 

exceeded 110percent ofthe approved budget. 

To determine if the campaign receipts and disbursements were handled in accordance with CFC 

regulations, we reviewed the following: 

•	 A judgmental sample of 25 pledge cards out of 8,426 pledge cards (selected the Slh 

pledge card from the first 25 pages of the Pledge Card Detail Schedule) and compared 

them to the Pledge Card Report prepared by the PCFO. 

•	 Cancelled distribution checks to verify that the appropriate amount was distributed in a 

timely manner. 

•	 One-time payments to verify that the PCFO properly calculated pledge loss and disbursed 

the funds in accordance with the ceiling amount established by the LFCC. 

•	 The PCFO's most recent listing of outstanding checks to verify that the PCFO was 

following its policy for such checks. 

•	 The Pledge Notification Letters to verify that the PCFO notified the CFC agencies ofthe 

designated and undesignated amounts due them before the March 15,2006 deadline. 

•	 The donor list letters sent by the PCFO to organizations to verify the letters properly 

notify the organization of the donors who wish to be recognized. 

•	 Forms 1417 provided by the PCFO and the OCFCO to identify material differences, 

•	 The PCFO Distribution Schedule to verify whether monthly disbursements reconcile with 

the PCFO's Campaign Receipts and Disbursements Schedule. 

•	 All bank statements used by the PCFO for the 2006 campaign to verify that the PCFO 

was properly accounting for and distributing funds. 

• .' The PCFO's cutoff procedures and bank: statements to verify that funds were allocated to 

the appropriate campaign year. 

•	 The General Designation Options and Undesignated Funds Spreadsheet and the 

Allocations and Disbursements Spreadsheet to verify disbursements were accurate and 

proportionate to the PCFO's allocation rates. 

To determine if the PCFO was in compliance with the CFC regulations as a federation (The 

United Way ofthe Midlands), we reviewed the following: 

•	 Data reported on the CFC Receipts Schedule with supporting documentation to verify 

whether receipts were properly recorded. 

•	 The CFC Distribution Schedule to ensure that the United Way ofthe Midlands did not 

disburse any funds to me 111 bel' agencies not participating in the 2006 CFC. 

•	 The United Way of the Midlands contract with its member agencies to determine if the 

fees were reasonable and supported. 

The samples, mentioned above, that were selected and reviewed in performing the audit were not 

statistically based. Consequently, the results could not be projected to the universe since it is 

unlikely that the results are representative of the universe taken as a whole. 

4
 
Finally, to accomplish our objective for the Audit Guide Review, we reviewed the CFC Audit 

Guide (for campaigns with pledges greater than $1 million) and determined the type of audit to 

be completed by the IP A for the 2005 campaign. We also completed the AUP checklist to verify 

that the IPA completed and documented the AUP steps. 

5
 
III. AUDIT FINDINGS AND RECOMMENDATIONS
 

The PCFO and LFCC administered the 2005 and 2006 Midlands Area CFCs in compliance with 

all applicable CFe regulations with the exception of the following areas. 

A. BUDGET AND CAMPAIGN EXPENSES 

1. PCFO Expense Reimbursement Not Properly Approved 

The LFCe did not appropriately authorize payment of the 2006 campaign expenses to 

the PCFO as required by the Federal regulations. 

5 CFR 950.l04(b)(17) states that the LFCC is responsible for "Authorizing to the 

PCFO reimbursement of only those campaign expenses that are legitimate CFC costs 

and are adequately documented. Total reimbursable expenses may not exceed the 

approved campaign budget by more than 10 percent." This provision is a control 

designed to help ensure that the PCFO reimburses itself for only appropriate and 

supportable expenses. Furthermore, 5 CFR 950.106(a) states that the PCFO is to 

recover expenses that reflect the actual cost of administering the campaign and are 

approved by the LFCC. 

Our review of the LFCC meeting minutes did not identify whether the LFCC 

reviewed and/or approved the payment to the PCFO for its 2006 campaign-related 

expenses. Discussions with the PCFO determined that the actual campaign expenses 

were not submitted to the LFCC for approval because both the PCFO and LFCC 

believed that the approval of the budget for the 2006 campaign was sufficient 

approval for the reimbursement of the expenses. The PCFO said that, in the future, 

the actual campaign expenses will be submitted to the LFCC for approval and the 

approval will be documented in the LFCC meeting minutes. 

As a result of the LFCC not reviewing and approving the actual 2006 campaign 

expenses, the PFCO could have been reimbursed tor non-campaign related expenses 

or been reimbursed for more than 110 percent of the budgeted costs. 

PCFO and LFCC's Comments: 

The PCFO and the LFCC agree with this finding and stated that in the future they will 

ensure that the actual expenses are approved by the LFCC prior to reimbursement. 

Recommendation 1 

We recommend that the OCFCO ensure that the LFCC review, approve, and 

document its authorization of the PCFO's reimbursement tor campaign expenses. 

6 
Recommendation 2 

We recommend that the OeFeO work with the LFCC to ensure that it understands its 

responsibilities as related to 5 eFR 950.104. 

2. Inappropriate Reimbursement for Audit Fees 

The PCFO incorrectly charged the 2006 campaign for audit fees related to the AUPs 

for the 2004 campaign. 

According to 5 CFR 950.1 06(b) "The PCFO may only recover campaign expenses 

from receipts collected for that campaign year." . 

Based on our review of 2006 campaign expenses, we determined that the PCFO 

incorrectly charged the 2006 campaign for expenses that should have been charged to 

the 2004 campaign. Specifically, we determined that the PCFO received and paid an 

invoice from its IPA for AUPs performed on the 2004 eFC in August 2006. 

Application of a 2004 audit fee to the 2006 Campaign is inappropriate because 

campaigns should only incur expenses related to that year's campaign. 

Application of expenses to the incorrect campaign year will adversely effect the net 

designations due to the charities and result in the wishes of the Cf'C donors to not be 

fully realized. 

PCFO and LFCC's Comments: 

The PCFO and the LFCC agree with this finding and stated that they are instituting 

procedures that will accrue the estimated audit fees for future campaigns, thereby 

properly matching the audit fees with the appropriate campaign year. 

Recommendation 3 

We recommend that the OCFCO and LFCC work with the PCFO to put procedures in 

place to ensure that it properly matches expenses with the related campaign year. 

B. CAMPAIGN RECEIl'TS AND DISBURSEMENTS 

1. One-Time Disbursements Exceed Established Threshold 

The PCFO made one-time disbursements to 13 agencies which had gross designations 

over the ceiling amount stipulated by the LFCC. 

5 CFR 950.901(i)(3) states, "The PCFO may make one-time disbursements to 

organizations receiving minimal donations from Federal employees. The LFCC must 

determine and authorize the amount of these one-time disbursements." 

7 
We reviewed all one-time disbursements made to agencies of the 2006 campaign to 

determine if any agencies with gross designations over the $500 limit authorized by 

the LFCC received such a payment. We identified 13 agencies with gross 

designations in excess of $500 which received one-time disbursements. According to 

the PCFO, it uses CFC Assistant (accounting software for CFCs) which automatically 

calculates what the one-time disbursements will be and the agencies which will 

receive them. However, there was an error with the software that allowed a number 

of agencies with gross designations over the ceiling amount to still receive one-time 

disbursements. The PCFO has tested the software, but could not determine how to 

correct the issue. 

As a result, these agencies' distributions were inappropriately reduced by the average 

of three years pledge loss, which may have increased or reduced the actual funds they 

should have received. 

PCFO and LFCC's Comments: 

The PCFO and the LFCC agree with this finding and state that in the future they will 

manually review the calculations for one-time disbursements to ensure that agencies 

with gross designations above the ceiling amount do not receive a one-time 

disbursement. 

Recommendation 4 

We recommend that the OCFeO and LFCC ensure that the PCFO has polices and 

procedures in place that guarantee only those agencies and federations meeting the 

approved one-time disbursement threshold receive them. 

2. One-Time Disbursements Reduced by Incorrect Pledge Loss Percentage 

The PCFO did not reduce one-time disbursement amounts by the appropriate pledge 

loss percentage for the 2006 campaign. 

5 CFR 950.901(i)(3) states, "The PCFO may deduct the proportionate amount of each 

organization's share of the campaign's administrative costs and the average of the 

previous 3 years pledge loss from the one-time disbursement" 

We reviewed all one-time disbursements made to agencies of the 2006 campaign to 

determine if the appropriate amount of pledge loss was withheld by the PCFO. Our 

review determined that the PCFO incorrectly calculated and applied pledge loss of 

9.9 percent to the disbursements for those agencies and federations receiving a onetime disbursement. The actual pledge loss which should have been deducted from the 

one-time disbursements was 12.9 percent. Per our discussions with the PCFO, it 

acknowledges the error and is working to correct the error for future campaigns. 

8 
As a result of applying a lower shrinkage percentage to agencies receiving one-time 

disbursements, those agencies received slightly higher disbursements and agencies 

receiving monthly disbursements received slightly less than they should have. 

PCFO and LFCC's Comments: 

The PCFO and the LFCC agree with this finding and indicated that the problem 

occurred as a result of an error by CFC Assistant, a software program used by the 

PCFO. The PCFO has not been able to replicate the error in the system, but will take 

extra steps to verify the calculation manually prior to making the one-time 

disbursements for future campaigns. 

Recommendation 5 

We recommend that the OCFCO and the LFCC ensure that the PCFO applies the 

appropriate pledge loss percentage to one-time payments in future campaigns. 

C. ELIGIBILITY 

1. Local Eligibility Determinations 

The LFCC did not directly make and communicate local eligibility determinations for 

the agencies and federations applying for inclusion in the 2006 campaign as required 

by the Federal regulations. 

5 CFR 950.1 04(b)(3) states that the LFCC is responsible for "Determining the 

eligibility of local organizations that apply to participate in the local campaign. 11 

Additionally, 5 CFR 950.204(e) states that "The LFCC shall communicate its 

eligibility decisions by a date to be determined by aPM ...." 

We reviewed the LFCC meeting minutes and eligibility notification letters to 

determine if the LFCC made and communicated the eligibility decisions for 

charitable organizations applying to participate in the campaign. As a result of our 

review, we determined that the LFCC did not make or communicate the decisions for 

the 2006 campaign. The LFCC set up an "Eligibility Committee" made up of five 

Federal employees to "establish an annual application process consistent with CFR 

950.204 and in accordance of the annual work calendar established by the Office of 

Personnel Management for organizations that wish to be listed in the Local Charity 

List in the annual Combined Federal Campaign brochure." The committee's 

responsibilities included: learning and enforcing all of the eligibility requirements 

according to CFR 950.204, reviewing local Federation and agency applications for 

inclusion in the upcoming campaign, and signing local application's acceptance and 

denial letters. Our review determined that none of the members of the Eligibility 

Committee were members of the LFCC and its decisions were not reviewed or 

approved ~y the LFCC. 

9 
It is the responsibility of the LFCC to make and communicate local eligibility 

decisions for the campaign. The LFCC may set up a committee, such as the 

Eligibility Committee now in place, to review the applications and appeals and make 

recommendations to the LFCC; however, the LFCC must make those decisions and 

communicate the acceptances and denials to the applying Federations and/or 

agencies. 

By not making these eligibility determinations directly, the LFCC runs the risk of 

ineligible Federations and/or agencies being improperly included in the CFC. 

PCFO and LFCC's Comments: 

The PCFO and the LFCC agree with this finding, On its CFC Organization Chait, the 

Eligibility Committee is seen as a group equal to the Federal Executive Cornmitee 

(FEC). Consequently, the LFCC did not believe having an FEC member serve on the 

Eligibility Committee to be necessary. For future campaigns, the LFCC will ensure 

that one of its members serves as the Chairman of the Eligibility Committee and 

presents the findings of the committee to the LFCC. 

Recommendation 6 

We recommend that the OCFCO ensure that the LFCC understands its 

responsibilities regarding local eligibility decisions and communication of those 

decisions to the applicants as outlined in 5 CFR 950.104(b)(3) and 5 CFR 950.204(e). 

10
 
IV. MAJOR CONTRIBUTORS TO THIS REPORT 

Special Audits Group 

Auditor-In-Charge 

Auditor 

Group Chief 

Senior Team Leader 

11
 
Appendix 

1800 Main Street 

Columbia, SC 29201 

lei 80)-733-5400 ~09 AUG 6RCVO

fax 803-779"]803 

www.uway.org 

UniledWay 

of the Midlands 

july 29, 2008 

. Office of Personnel Management
 

Office of the Inspector General
 

1900 E. Street, NW, Room 6400
 

Washington, DC 20415-1100
 

This is in response to your correspondence dated June 23. 2008 regarding a draft 

report detailing the results of the 2005 and 2006 Midlands Area Combined Federal I 

Campaign (CFe) audit conducted by the Office of Personnel Management.' 

We appreciate your recommendations and have addressed each of the findings 

highlighted in your report. Enclosed is United Way of the Midlands' response. It was 

a pleasure working with you and during the audit process. 

If I can be of further assistance, please contact me by telephone, or 

-_~ .. by email, 

Director
 

Midlands Area CFC
 

-

Enclosure 

what matters." 
BUDGET AND CAMPAIGN EXPENSES
 

• PCFO Expense Reimbursement Not Properly Approved 

The PCFO's campaign expenses were not properly approved and documented by the LFCC 

before reimbursement. 

PCFO and LFCC's Comments: 

The PCFO and the LFCC agree with this finding. In our annual application, we typically 

have presented the previous year's budget and actual results. We also submit the proposed 

budget. Going forward, we will ensure that the actual expenses are approved by the LFCC 

prior to reimbursement. 

• Inappropriate Reimbursement for Audit Fees 

The PCFO incorrectly charged the 2006 CFC for audit fees related to the Agreed Upon 

Procedures for the 2004 CFC. The reimbursement was not appropriate because the PCFO 

was not matching the audit fees with the appropriate campaign. 

PCFO and LFCC's Comments: 

The PCFO and the LFCC agree with this finding. We are learning better how to match 

expenses with the actual campaign. Since we do not incur the audit fees relative to a given 

campaign until approximately two years after the fact, we will begin accruing these charges 

based on our best estimates in the future. We have accrued the most recent audit bill to the 

2007 campaign. However this billing, which was recently incurred, was for the 2006 

campaign. The audit bill for the 2007 campaign will not be incurred until sometime in 

2009. One remedy would be to accrue a double audit bill against the 2007 campaign. Until 

we hear further, we will accrue one year's audit billing. 

CAMPAIGN RECEIPTS AND DISBURSEMENTS 

• One-Time Disbursements Exceed Established Threshold 

The PCFO incorrectly made one-time disbursements for the 2006 campaign to thirteen 

member agencies/federations which had designations in excess ofthe threshold set by the 

LFCC. 

PCFO and LFCC's Comments: 

The PCFO and the LFCC agree wit this finding. The United Way ofthe Midlands uses 

CFC Assistant as its CFC Campaign Administrative software. When the one-time 

disbursement figure of $500 is input into the software, the software calculates a payout for 
every organization whose net paid amount after shrinkage and administrative expenses is 

less than $500. Unfortunately this results in the gross amount exceeding the $500 one time 

payout limit. In the future, we will fine tune this calculation to ensure that the gross pay 

amounts do not exceed $500. 

• One-Time Disbursements Reduced by Incorrect Shrinkage Percentage 

The PCFO did not reduce one-time disbursement amounts by the appropriate average three 

year pledge loss (shrinkage) percentage for the 2006 campaign. 

PCFO and LFCC's Comments: 

The PCFO and the LFCC agree with this finding. The CFe Assistant software apparently 

had a "glitch" in doing this calculation for the 2006 campaign. The percentage is based on 

a three year moving average. Manually, and re-executing this transaction in a test 

environment, we did determine that the percentage amount calculated was in error. We 

have not been able to replicate the error, but will take extra steps to verify the calculation 

manually prior to making the one-time disbursements next year. 

ELIGIBILITY 

• Local Eligibility Determinations 

The LFCC did not directly make and communicate local eligibility determinations to the 

agencies and federations applying for inclusion in the 2006 campaign as required by the 

Federal regulations. 

PCFO and LFCC's Comments: 

The PCFO and the LFCC agree with this finding. On our CFC Organization Chart, the 

Eligibility Committee is seen as a group equal to the Federal Executive Committee. 

Therefore, it was not seen as a requirement that a member of the FEC serve on the 

Eligibility Committee because they had equal authority on the organization chart, We have 

corrected this by securing a member of the FEC to serve as the Chairman of the Eligibility 

committee. The Chairman will make a presentation at the June FEe meeting.