US OFFICE OF PERSONNEL MANAGEMENT 

OFFICE OF THE INSPECTOR GENERAL 

OFFICE OFAUDITS 

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ReportNo. 3A-CF'"()070R·035 

Date:' AprillQ;. 2009 

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reportmay COlltaiu proprietary data wIJicbisprote('led.byFederalla'w (lSH.S.C. 1905); therefore.while this audit report is available 

under the Freedorll of Informatien Act; cautioaaeeds to be exercised before reicasing the report to the general public, 
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
 

Washington, DC 20415
 

Office of the 

. Inspector General 

AUDIT REPORT 

AUDIT OF THE 2004 THROUGH 2006
 

NORTHERN CALIFORNIA
 

COMBINED FEDERAL CAMPAIGNS
 

REDDING, CALIFORNIA
 

ReportNo, 3A-CF-OO-08-035 Date: Apr; 1 10, 2009 

Michael R. Esser 

Assistant Inspector General 

for Audits 

www.opm.gov www.usajobs.gov 
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
 

Washington, DC 20415
 

Office of the 

Inspector General 

EXECUTIVE SUMMARY
 

AUDIT OF THE 2004 THROUGH 2006
 

NORTHERN CALIFORNIA
 

COMBINED FEDERAL CAMPAIGNS
 

REDDING, CALIFORNIA
 

Report No. 3A-CF-OO-08-035 Date: April 10, 2009 

The Office of the Inspector General has completed an audit of the Northern California Combined 

Federal Campaigns (CFC) for 2004 through 2006. The Unite.d Way ofNorthern California, 

located in Redding, California, served as the Principal Combined Fund Organization (PCFO) 

during each campaign year. Our main objective was to determine if the Northern California CFC 

was in compliance with Title 5, Code ofFederal Regulations, Part 950 (5 CFR 950), including 

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

We are unable to express an opinion on whether the PCFO administered the 2004, 2005, and 

2006 CFCs in accordance with 5 CFR 950 due to difficulties encountered obtaining 

documentation during our audit. 

www.opm.goY www.usajobs.goY 
CONTENTS
 

PAGE 

EXECUTIVE SUMMARY i
 

I. INTRODUCTION AND BACKGROUND 1
 

II. OBJECTIVES, SCOPE) AND METHODOLOGY 2
 

III. AUDIT RESULTS 4
 

IV. MAJOR CONTRIBUTORS TO THIS REPORT 5
 
I. INTRODUCTION AND BACKGROUND
 

INTRODUCTION 

This report details the results from our audit ofthe Northern California Combined Federal 

Campaigns (CFC) for 2004 through 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 CFC, determining eligibility of local voluntary organizations, selecting and supervising the 

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

noncompliance with the policies and procedures ofthe 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 CFC 

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 consultingwith 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 Part 950 (5 CFR 950), the regulations governing CFC operations, sets forth 

ground rules under which charitable organizations receive federal employee donations. ­

Compliance with these regulations is the responsibility of the 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 December 17, 2008. This was the first audit of the Northern California CFC. 

1
 
II. OBJECTIVES, SCOPE, AND METHODOLOGY
 

OBJECTIVES
 

The primary purpose of the audit ofthe Northern California CFC was to determine compliance 

with 5 CFR 950. OUT specific audit objectives for the 2004 through 2006 campaigns were as 

follows: 

Budget and Campaign Expenses 

•	 To determine ifthe 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 ofthe approved budget, and were properly allocated. 

Campaign Receipts and Disbursements 

•	 To determine ifthe total amount offunds received for the campaign, plus interest 

income and Jess expenses, was properly distributed to the designated organizations. 

•	 To determine ifthe total amount of undesignated funds was properly allocated and 

distributed to the various CFC participants. 

SCOPE. 

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. 

The audit covered campaign years 2004 through 2006. The United Way ofNorthern California 

(UWNCA) served as PCFO during the campaign years reviewed. The audit fieldwork was 

conducted at the PCFO's office in Redding, California from December 15 through 17,2008. 

Additional audit work was completed at our Washington, D.C. office. At the request of the 

OeFCO, our audit focused on the PCFO's budget and actual campaign expenses, and the receipt 

and distribution of campaign funds to the participating organizations to determine whether the 

PCFO accurately disbursed all campaign receipts (including interest and less allocated campaign 

expenses) to the appropriate recipients. 

METHODOLOGY 

In conducting the audit we typically rely to varying degrees on computer-generated data. 

However, the PCFO was unable to provide adequate documentation to base any reliance upon. 

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. Our audit plan relied primarily on substantive testing rather than 

tests of internal controls. The plan included such tests of the accounting records and such other 

2
 
auditing procedures as we considered necessary to determine compliance with 5 CFR 950 and 

CFC Memorandums. 

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

following: 

•	 The PCFO application to complete the PCFO application checklist; 

•	 A copy ofthe public notice to prospective PCFO's, and LFCC meeting minutes related to 

the selection ofthe PCFO; 

•	 The PCFO's Schedule of Actual Expenses to trace and reconcile amounts to the PCFO's 

general ledger; 

•	 The LFCC meeting minutes to verify if the LFCC authorized the PCFO's reimbursement 

of campaign expenses; and 

•	 The budgeted and actual expenses per campaign to determine if actual expenses exceeded 

110 percent of the approved budget. 

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

regulations, we requested the following: 

•	 The Pledge Card Detail Schedule and PCFO's Pledge Card Report to determine if the 

report and schedule reconcile and to select a sample of pledge cards for review; 

•	 The PCFO's distribution schedule for each campaign to select a sample of disbursement 

checks for review; 

•	 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 of the 

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

•	 The Form 1417 prepared by the PCFO and the OCFCO to identify material differences; 

•	 The PCFO Distribution Schedule to verify whether monthly disbursements reconciled 

with the PCFO's Campaign Receipts and Disbursements Schedule; 

•	 All bank statements used by the PCFO for the 2004, 2005, and 2006 campaigns to verify 

that the PCFO was properly accounting for and distributing funds; and 

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

the appropriate campaign year. 

The PCFO was unable to provide documentation supporting a majority ofthe above requests. As a 

result, we were unable to complete the audit and, therefore, could not render an opinion as to the 

PCFO's compliance"with 5 CFR Part 950. 
III. AUDIT RESULTS
 

Due to the difficulties encountered in obtaining adequate documentation during our audit, we 

cannot express an opinion on whether the PCFO administered the 2004, 2005, and 2006 CFCs in 

accordance with 5 CFR 950. 

The PCFO had significant turnover in personnel from the end ofthe 2006 campaign to the start 

of our audit. This turnover included the Chief Executive Officer (CEO) and financial staff 

involved in the administration ofthe campaigns under review. The new CEO and staffhad 

limited knowledge of how the campaign funds were handled and were unsuccessful in providing 

adequate receipt, distribution and campaign expense information requested by the OIG auditors. 

Therefore, due to inadequate documentation we were not able to complete our audit of the 2004, 

2005, and 2006 CFCs. 

The UWNCA is no longer the PCFO for the Northern California CFC. For the 2008 Campaign 

year, OPM's OCFCO merged the Northern California CFC with the Sacramento CFC to form 

the Sacramento/Northern California CFC. 

Recommendation 

The OIG recommends that should the UWNCA apply for a PCFO position for any future CFCs, 

that the UWNCA be required to submit to a full independent audit ofits operations. The LFCC, 

in concert with the OCFCO, should review the results of this audit to determine whether the 

UWNCA can effectively and efficiently function as a PCFO to administer a CFC in accordance 

with 5 CFR 950 and CFC guidance and directives from OPM. 

4
 
IV. MAJOR CONTRIBUTORS TO THIS REPORT 

Special Audits Group 

Auditor-In-Charge 

Group Chief 

Senior Team Leader 

5