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UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
 

Washington, DC 20415
 

Office of the 

Inspector General 

AUDIT REPORT 

AUDIT OF THE 2004 AND 2005
 

COMBINED FEDERAL CAMPAIGNS OF
 

NEW YORK CITY
 

NEW YORK, NEW YORK
 

Report No. 3A-CF-OO-07-039 Date: February 4, 2009 

ichael R. Esser 

Assistant lnspector 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 AND 2005
 

COMBINED FEDERAL CAMPAIGNS OF
 

NEW YORK CITY
 

NEW YORK, NEW YORK
 

Report No. 3A-CF-OO-o7-039 Date: February 4, 2009 

The Office ofthe Inspector General has completed a performance audit ofthe 2004 and 2005 

Combined Federal Campaigns (CFC) of New York City. The United Way ofNew York City, 

located in New York, New York, served as the Principal Combined Fund Organization (PCFO) 

during both campaigns. Our main objective was to determine ifthe CFC ofNew York City 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 10 instances of non-compliance with the regulations (5 CFR 950) governing the 

CFC. 

AUDIT GUIDE REVIEW 

• Agreed-Upon Procedures Not in Compliance 

The Independent Public Accountant did not identify a reportable condition or maintain 

sufficient documentation to verify if the agreed-upon procedures were satisfactorily 

completed. 

www,opm.gov www.usajobs.gov 
BUDGET AND CAMPAIGN EXPENSES
 

•	 PCFO Selection Not Properly Documented 

The LFCC did not provide documentation to support that it selected a PCFO by the 

deadline set by the Federal regulations; however, based on the information provided we 

were able to determine that the selection was made after the deadline date. 

CAMPAIGN RECEIPTS AND DISBURSEMENTS 

•	 Undistributed Campaign Receipts 

The PCFO did not distribute $2,843 in eFC receipts received for the 2005 campaign. 

•	 Campaign Expenses Charged to the Incorrect Campaign Year 

The PCFO inappropriately charged $26,250 to the 2005 Campaign for administrative 

expenses that were charged to the incorrect campaign year. 

•	 Campaign Expense Reimbursement Not Authorized by LFCC 

The PCFO's campaign expenses were not approved by the LFee before reimbursement. 

•	 Incorrect Cut-off Date for CFC Payroll Receipts 

The PCFO used the incorrect cut-off dates for Cl-C payroll receipts and did not identify the 

deposits by payroll office. 

• .- -Uneashed Check Procedures Not Implemented 

The PCFO did not follow the guidance foruncashed checks as set forth by the Office of 

Combined Federal Campaign Operations. 

•	 Commingling of CFC Funds 

The PCFO commingled CFC cash receipts with cash receipts from other charitable 

campaigns. 

•	 Untimely CFC Distributions 

The PCFO did not make distributions of CFC receipts to all participating agencies and 

federations in accordance with the Federal regulations. 

u 
ELIGIBILITY
 

• Laclf.of Support for LFCC Eligibility Decisions 

The LFCC did not maintain sufficient documentation to support that it made the eligibility 

decisions of local organizations' applications. 

iii 
CONTENTS
 

PAGE
 

EXECUTIVE SUMMARy i
 

L INTRODUCTION AND BACKGROUND 1
 

II. OBJECTIVES, SCOPE, AND METHODOLOGY 3
 

III.· AUDIT FINDINGS AND RECOMEMNDATIONS 7
 

A. AUDIT GUIDE REVIEW	 7
 

I. Agreed-Upon Procedures Not in Compliance	 7
 

B. BUDGET AND CAMPAIGN EXPENSES	 8
 

1. PCFO Selection Not Properly Documented	 8
 

C. CAMPAIGN RECEIPTS AND DISBURSEMENTS	 9
 

I. Undistributed Campaign Receipts	 9
 

2. Campaign Expenses Charged to the Incorrect Campaign Year 9
 

3. Campaign Expense Reimbursement Not Authorized by LFCC II
 

4. Incorrect Cut-offDate for CFC Payroll Receipts	 12
 

5. Uncashed Check Procedures Not Implemented	 12
 

6. Commingling of CFC Funds	 13
 

7. Untimely CFC Distributions 14
 

. I), ELIGIBILITy 15
 

I. Lack of Support for LFCC Eligibility Decisions	 15
 

II.	 MAJOR CONTRIBUTORS TO THIS REPORT 17
 

APPENDIX (The PCFO response, dated June 5,2008, to the draft audit report)
 
I. INTRODUCTION AND BACKGROUND
 

Introduction 

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

the New York City Combined Federal Campaigns (CFe) for 2004 and 2005. The audit was 

performed by the Office of Personnel Management's (OPM) Office ofthe 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 at Federal installations throughout 

the world. It consists of 299 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 aPM has the responsibility for 

management ofthe 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, deciding on the eligibility oflocal 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 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 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 consulting with federated groups on the 

operation of the local campaign. 

Executive Orders 12353 and 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 CFC operations, set forth ground rules under 

which charitable organizations receive federal employee donations. Compliance with these 

regulations is the responsibility ofthe PCFO and LFCC. Management ofthe PCFO is also 

responsible for establishing and maintaining a system of internal controls. 

Our previous audit ofthe CFC ofNew York City was completed on December 5,2003, covering 

the 2000 and 2001 campaigns. The audit report identified 13 areas ofnon-compliance with 5 

CFR 950. All findings have been resolved. 

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

conference held on July 27, 2007. A draft report was issued to the PCFO and LFCC on 

1
 
April 24, 2008. The PCFO's response to the draft report was considered in preparation ofthis 

final report and is included as an Appendix. 

2
 
II. OBJECTIVES, SCOPE, AND METHODOLOGY
 

Objectives 

The primary purpose ofthe audit was to determine ifthe New York City CFC was in compliance 

with Title 5, Code of Federal Regulations, Part 950. Our specific audit objectives for the 2005 

campaign were as follows: 

Eligibility 

•	 To determine ifthe 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 ifthe PCFO's budget was prepared in accordance with 

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 ifthe total amount of funds received for the campaign, plus 

interest income and less 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. 

PCFO As a Federation 

•	 To determine ifthe PCFO distributed funds only to member agencies. 

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

reasonable manner. 

Additionally, our audit objective for the 2004 campaign was; 

AllQit Guide Review 

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

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

Greater] (Audit Guide) for the 2004 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 

3
 
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 and 2005. The United Way ofNew York City, located 

in New York, New York, served as the PCFO during both campaigns. The audit fieldwork was 

conducted at the United Way ofNew York City from July 23 through July 27, 2007. Additional 

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

The New York City CFC received campaign pledges, collected campaign receipts, and incurred 

campaign administrative expenses for the 2004 and 2005 campaigns as shown below: 

Campaign Campaign Campaign Administrative
 

Year Pledges Receipts Expenses
 

2004 $2,820,060 $2,424,766 $279,306
 

2005 $2,802,309 $2,566,262 $308,077
 

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

our limited reviews of samples of campaign expenses and supporting data, pledge card entries, 

and the distribution of campaign contributions and related bank statements to verify that the 

computer-generated data used is reliable. Nothing came to out attention during our review of the 

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 CFC 

-mern:orandums. 

In order to determine that the LFCC and PCFO were in compliance with CFC 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. 

4 
•	 Reviewed supporting documentation for a judgmental sample of actual expenses from 10 

expense accounts (out of a total of20 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 110 percent 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 out of 27,833 pledge cards (selected 15 pledge cards with 

total pledges greater than $1,000, 4 high dollar pledge cards with more than 5 designated 

codes per card, and 6 high dollar pledge cards donated on behalf of an organization) 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 ofoutstanding 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 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 PCFa for the 2005 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 the 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 ofNew York City) we reviewed the following: 

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

whether receipts were properly recorded. 

•	 The CFC Disbursement Schedule to ensure that the United Way ofNew York City did 

not disburse any funds to member agencies not participating in the 2005 CFC. 

•	 The United Way of New York City's contract with its member agencies to determine if 

the fees were reasonable and supported. 

5
 
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. 

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

Guide and determined the type of audit to be completed by the IPA for the 2004 campaign. We 

also completed the AUP checklist to verify that the IPA completed and documented the AUP 

steps. 

6
 
III. AUDIT FINDINGS AND RECOMMENDATIONS
 

A. AUDIT GUIDE REVIEW 

1. Agreed-Upon Procedures Not in Compliance 

We found that the PCFO's IPA did not comply with all aspects of the January 2006 

CFC Audit Guide's AUPs. 

The Audit Guide states that the IPA performs "specified agreed-upon procedures 

(AUP) over the PCFO's compliance with CFC regulations and OPM guidance, and 

the effectiveness ofthe PCFO's internal controls over its compliance as ofthe end of 

the Fall 2004 campaign period and prepares an AUP report on the results .... " 

Chapter In of the guide outlines the specific AUP for the IPA to perform in its annual 

audit ofthe campaign. 

Our review consisted of verifying that the IPA performed the required audit steps 

identified in the AUP and re-testing of certain transactions relating to campaign 

expenses and pledge card verification. As a result ofour review, we identified three 

steps which were not completed in compliance with the AUP: 

•	 Pledge Card Tracking System, step two, required the IPA to determine if 

the information entered onto the pledge card agreed with the information 

in the PCFO's pledge records. The IPA's review ofthe pledge cards did 

not identify and report that there was one pledge card that had the 

incorrect agency code and designation amount. 

•	 PCFO Budget and Administrative Expenses, step two, required the IPA to 

review available information (LFCC meeting minutes and/or 

correspondence from the LFCC to the PCFO) to determine ifthe LFCC 

selected the PCFO by the March 15th deadline. The IPA did not maintain 

copies of the information reviewed to complete this step; therefore, we 

could not determine if it completed this step adequately. 

•	 PCFO Budget and Administrative Expenses, step five, required the IPA to 

select a sample of 10 CFC expenses and trace those selected back to the 

supporting documentation to determine ifthe costs were accurate and 

CFC-related. We requested supporting documentation from the PCFO for 

five ofthe expenses reviewed by the IPA and one was not located by the 

PCFO. The supporting documentation maintained by the IPA did not 

include any of the expense samples reviewed; therefore, we could not 

determine if the IPA completed this step adequately. 

As a result of not reporting a pledge card error and not maintaining documentation to 

support its review, the IPA's audit of the 2004 CFC Campaign is not in compliance 

with the Audit Guide requirements. 

7
 
PCFO Response:
 

The PCFO stated that it forwarded the finding to its IPA for review and comment.
 

OIG Response:
 

The PCFO did not provide any comments and/or documentation from its IPA is
 

response to this finding.
 

Recommendation 1
 

We recommend that the OCFCO and the LFCC work with the PCFO and their IPA to
 

ensure that the AUP are completed correctly and that sufficient documentation is
 

maintained to support the work completed.
 

B. BUDGET AND CAMPAIGN EXPENSES 

1. PCFO Selection Not Properly Documented 

The LFCC did not provide documentation to support that it selected a PCFO by the 

deadline set by the Federal regulations. 

According to 5 CFR 950.801(a)(3), the LFCC "must select a PCFO no later than 

March 15th." 

We reviewed the LFCC meeting minutes to determine ifthe PCFO was selected by 

the March ] s" deadline. Review ofthe March 7, 2005 LFCC meeting minutes 

indicated that the LFCC would review the PCFO application but did not state that the 

.	 PCFO application was approved. The PCFO and LFCC were unable to provide a 

copy ofthe 2005 PCFO selection letter or any other documentation to support when 

the PCFO was selected. 

As a result, we were unable to determine ifthe LFCC selected the PCFO by the 

deadline set in the Federal regulations. 

PCFO Response: 

The PCFO agrees with the audit finding. 

Recommendation 2 

We recommend that the ocFCO ensures that the LFCC selects the PCFO by the date 

set forth in the Federal regulations, maintains documentation to support the selection, 

and understands its responsibilities under the Federal regulations regarding the 

selection of a PCFO for future campaigns. 

8 
c. CAMPAIGN RECEIPTS AND DISBURSEMENTS 

1. Undistributed Campaign Receipts	 $2,843 

The PCFO did not distribute $2,843 in CFC receipts received to the CFC campaign's 

member agencies. 

5 CFR 950.901 (i)(2) states "The PCFO is responsible for the accuracy of 

disbursements it transmits to recipients." It further states that at "the close of each 

disbursement period, the PCFOrs CFC account shall have a balance of zero." 

Our review consisted of comparing the PCFO's CFC cash receipts and disbursements. 

Specifically, we identified the following errors: 

•	 A $1,635 balance in the PCFO's cash receipts and disbursements schedule 

that was not disbursed. 

•	 Errors in recording payroll receipts totaling $1,208. 

As a result of the PCFO not properly closing out the CFC account, the CFC's member 

agencies did not receive their proportional share of $2,843. 

PCFO Response: 

The PCFO agreed with $1,208 ofthe questioned amount and did not respond to the 

remaining questioned amount. 

OIG Response: 

The original finding in the draft report questioned $1,635 simply as undistributed 

CFC receipts. The documentation provided by the PCFO and LFCC did not address 

this amount and the changes made to our review as a result of the documentation 

provided did not affect it. Therefore, the amount remains questioned and is rolled 

into the total amount questioned. 

Recommendation 3 

We recommend that the OCFCO and LFCC ensure that the PCFO distributes $2,843 

to the member agencies of the 2005 campaign due to the PCFO not closing out its 

CFC account properly after the end of the campaign. 

2. Campaign Expenses Charged to the Incorrect Campaign Year 

The PCFO inappropriately charged $26,250 to the 2005 Campaign for expenses 

related to an earlier campaign. 

9 
5 CFR 950. 106(b) states, "The PCFO may only recover campaign expenses from 

receipts collected for that campaign year. Expenses incurred preparing for and 

conducting the CFC cannot be recovered from receipts collected in the previous 

year's campaign." Likewise, prior campaign year expenses should not be recovered 

from the receipts of a future year's campaign. 

During our review of the administrative expenses we judgmentally selected 13 CFC 

expense transactions, totaling $231,728 in CFC costs charged to the 2005 campaign, 

to determine ifthe expenses were actual, reasonable, and properly allocated. Our 

review determined that $26,250 charged to the 2005 campaign was related to an audit 

ofthe 2003 CFC campaign. Any audit fees related to the current campaign (2005) 

would likely be incurred after the close ofthe campaign. However, these fees were 

incurred and billed during the 2005 campaign and thereby could not be related to the 

2005 campaign. The PCFO stated that the audit expenses were "accounted for on a 

cash basis rather than an accrual basis" and that it felt the difference was "not 

significant." 

As a result of charging campaign expenses to the wrong campaign, the PCFO is not 

properly matching expenses with receipts for that campaign period. 

PCFO Response: 

The PCFO does not agree with this finding and stated that any audit of a given CFC 

campaign cannot begin untilalJ funds collected have been paid to the charities. The 

PCFO has found it reasonable to estimate the amount chargeable to any given 

campaign to be the actual amounts paid during the given year. The PCFO stated that 

the $26,250 was reserved for the 2005 audit based on the cost incurred from the 2003 

audit. 

OIG Response: 

The PCFO did not provide any documentation to support its assertion that the costs 

identified were reserved for audits related to the 2005 campaign year. Our review 

determined that the questioned costs were related to actual invoices and were paid to 

the IPA out of 2005 campaign year funds and were not "reserved." 

Additionally, the OCFCO has recently updated its guidance to clarify this issue and 

further support our position. It states that because IPA audit expense is "paid after the 

close of the campaign, the amount should be accrued and withheld from the last 

distribution. We encourage campaigns to negotiate a fixed cost agreement with the 

Independent Public Accountant (lPA) so that the actual amount can be known prior to 

the close of the campaign. If campaigns are unable to negotiate a fixed cost 

agreement, an estimated amount should be withheld based on prior experience and 

discussions with the auditor." According to discussions with the OeFCO, although 

the memorandum (eFC Memorandum 2008-09, dated November 14,2008) was 

10
 
issued after the date of our audit, this has been the opinion ofthe OCFCO since the 

inception of the CFC Audit Guide. 

Recommendation 4 

We recommend that the OCFCO direct the PCFO to follow the guidelines set forth in 

eFC Memorandum 2008-09 in regards to CFC Audit Expense Reimbursement for 

future campaigns. 

3. Campaign Expense Reimbursement Not Authorized by LFCC 

The LFCC did not authorize the PCFO reimbursement for 2005 CFC campaign 

expenses as required by the Federal regulations. . 

5 CFR 950.1 04(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." 

We reviewed the LFCC meeting minutes to determine ifthe LFCC authorized the 

PCFO to reimburse itselffor expenses pertaining to operating the 2005 campaign. 

Our review of those minutes did not identify where the LFCC authorized the PCFO's 

2005 campaign expenses for reimbursement. Per discussion with the LFCC it was 

determined that it believed that the approval of the PCFO application and budget also 

approved the PCFO's expenses and that no other approval was necessary. 

As a result of not reviewing and approving the PCFO's reimbursed expenses, the 

LFCC runs the risk of the CFC being charged for expenses that are not legitimate 

CFC costs. 

PCFO Response: 

The PCFO disagrees with the finding arid states that the LFCC has been reviewing the 

year-end expenses incurred by the PCFO since 2006 (for campaign year 2005-2006). 

DIG Response: 

The PCFO did not provide any documentation to support that the LFCC reviewed and 

approved the PCFO's 2005 campaign expenses prior to reimbursement, as is required 

by the regulations. . 

Recommendation 5 

We recommend that the OCFCO ensures that the LFCC understands its 

responsibilities in regards to authorizing reimbursement of legitimate and adequately 

documented campaign expenses and that it does so in the future. 

11
 
4. Incorrect Cut-off Date for CFC Payroll Receipts 

The PCFO incorrectly used January 15th as its cutoff date for determining which 

campaign to allocate incoming receipts to and does not track each receipt individually 

by payroll office as recommended by the OCFCO. 

CFC Memorandum 2003-11 states, "Any checks received on or before January 31 

without supporting documentation should be applied to the prior campaign. Checks 

received after January 31 should be applied to the current campaign." 

CFC Memorandum 2006-5 states that, "all campaigns should be tracking receipts by 

payroll office. Discrepancies should be brought to the attention of the payroll office 

and/or DCFCO as soon as possible so that resolutions can be made ina timely· 

manner." 

We reviewed the PCFO's responses to the policies and procedures questionnaire to 

determine how they handle cut-off dates for deposits. In addition, we interviewed 

personnel to gain an understanding of the cut-off dates used by the PCFO. 

Per our discussions with the PCFO it was determined that it uses January 15th as its 

cut-off date because many payroll offices do not provide the needed documentation to 

determine which campaign year the distributions belong to. However, the PCFO did 

state that the payroll offices began improving recently and that the issue may resolve 

itselfin the future. 

As a result of not tracking each receipt by payroll office as recommended by the 

OCFCO and using an incorrect cut-off date, the PCFD runs the risk ofmisapplying 

incoming CFC payroll receipts to the wrong campaign year. 

PCFO Response: 

The PCFO agrees with the audit finding. 

Recommendation 6 

We recommend that the DCFCO and the LFCC ensure that the PCFO follow the 

guidance outlined in CFC Memorandums 2006-5 and 2003-11. 

5. Uncashed Check Procedures Not Implemented 

The PCFO did not follow the guidance set forth by the OCFeO in CFC Memorandum 

2006-5 and implement policies and procedures for uncashed checks. 

12
 
CFC Memorandum 2006-5 Part C states that the "PCFO must develop and follow 

policies and procedures regarding uncashed checks." The memorandum also provided 

suggested procedures to be followed for checks uncashed for more than six months. 

We reviewed the PCFO's responses to the policies and procedures questionnaire 

regarding uncashed checks. Also, we reviewed the PCFO's outstanding check log to 

determine if any CFC distribution checks older than six months were outstanding at 

the time ofthe audit. 

Discussions with the PCFO determined that it has no formal policy in place other than 

reissuing the check after it is one year old. It also stated that if the Finance 

Department noticed a significant uncashed check, it may try to call the agency, but 

that those calls were not documented. 

If CFC disbursement checks are allowed to go uncashed without following 

procedures similar to those recommended by the OCFCO, the PCFO runs the risk of 

not properly disbursing CFC funds as required by the regulations. 

PCFO Response: 

The PCFO agrees with the audit finding. 

Recommendation 7 

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

policies arid procedures necessary to adequately handle uncashed CFC checks as 

suggested in Part C of CFC Memorandum 2006-5. 

6. Commingling of CFC Funds 

The PCFO commingled CFC cash receipts with cash receipts from other charitable 

campaigns, 

5 CFR 950.105 (d)(8) states that the PCFO is responsible for "Keeping and 

maintaining CFC financial records and interest-bearing accounts separate from the 

PCFO's internal organizational financial records and bank accounts." 

We reviewed all bank transactions related to the 2005 CFC campaign to determine if 

the monies were properly accounted for, received and disbursed. We determined that 

the PCFO used a separate account to deposit cash donations. The PCFO stated that 

the account was used "for internal control, safety and security purposes. The amounts 

[CFC funds] are then drawn and sent to the appropriate campaign account." 

Our review noted that CFC cash donations were deposited into the account; however, 

we were unableto ascertain the transfer of these monies into the CFC checking . 

13
 
account. In addition, we determined that the account where CFC cash donations were 

deposited included other monies unrelated to the CFC campaign. 

As a result ofdepositing CFC cash donations in a non-CFC dedicated account, the 

PCFO runs the risk ofnot properly accounting for and disbursing all CFC donations 

as is required by the Federal regulations. The commingling of funds by the PCFO 

could have had an impact on the $2,843 in undistributed CFC funds noted in the 

"Undistributed Campaign Receipts" finding on page 9 ofthis report. 

PCFO Response: 

The PCFO agrees with the audit finding and stated that a CFC-only bank account has 

been set up for this purpose. 

Recommendation 8 

We recommend that the OCFCO and LFCC ensure that the account(s) set-up by the 

PCFO removes all potential risk of commingling CFC and PCFO funds. 

7. Untimely CFC Distributions 

The PCFO did not distribute all CFC receipts to participating agencies and
 

federations in accordance with the regulations.
 

5 CFR 950.901 (i)(2) states, "For campaigns with gross receipts in excess of 

$500,000, the PCFO will distribute all CFC receipts beginning April 1, and monthly 

thereafter." 

We reviewed the PCFO's Distribution Schedule and cancelled distribution checks to 

determine if the PCFO distributed funds by April 1 and monthly thereafter. 

Our review identified three instances where the PCFO did not adhere to the 

regulations. Specifically, we found that: 

•	 The PCFO did not make initial payments to 212 member agencies or 

federations by April 1, 2006, as required by the regulations. 

•	 The PCFO did not make monthly payments to 239 member agencies or 

federations as specifically required by the regulations. 

•	 The PCFO did not make disbursements ofCFC receipts to any ofthe 344 

member agencies or federations receiving designations in June or 

November 2006. 

It should be noted that the CFC regulations (5 CFR 950) were revised November 20, 

2006. This revision effected the regulation cited in this finding to state that the PCFO 

shall transmit disbursements to member agencies and federations at least quarterly 

beginning April 1. 

]4 
As a result of not making distributions ofCFC receipts in accordance with the Federal 

regulations, the agencies and federations may not be able to effectively manage their 

operations. 

PCFO Response: 

The PCFO agrees with the audit finding. 

Recommendation 9 

We recommend that the OCFCO and the LFCC ensure that the PCFO distributes all 

CFC receipts beginning April 1, and quarterly thereafter. 

D. ELIGIBILITY 

1. Lack of Support for LFCC Eligibility Decisions 

The LFCC did not maintain sufficient documentation to support that it made the 

eligibility decisions oflocal organizations' applications. 

5 CFR 950.104(b)(3) states that the LFCC is responsible for "Determining the 

eligibility oflocal organizations that apply to participate with the local campaign." 

According to 5 CFR 950.1 04(b)(1), the LFCC is responsible for "Maintaining 

minutes of the LFCC meetings ...." 

During our review of the LFCC's local organization application evaluation process, 

we reviewed the LFCC's meeting minutes to determine if it made the local eligibility 

decisions, and not the PCFO. From our review ofthe minutes, we were unable to 

discern ifthe LFCC made the eligibility decisions. Per discussions with the LFCC 

and PCFO, there were some meetings (conference calls) where no meeting minutes 

were taken. As a result, the minutes provided were incomplete. 

As a result of not documenting or maintaining detailed LFCC meeting minutes 

regarding eligibility decisions, we could not determine that the LFCC made those 

decisions as required by the regulations. 

PCFO Response: 

The PCFO agrees with the audit finding. 

Recommendation 10 

We recommend that the oeFCO ensures that the LFCC puts policies and procedures 

in place to document and maintain support for its decisions regarding the eligibility of 

local organizations that apply to participate in the local campaign. 

15
 
Recommendation 11 

We recommend that the OCFCO ensures that the LFCC understands its 

responsibilities regarding determining the eligibility of local organizations that apply 

to participate in the local campaign. 

16
 
IV. MAJOR CONTRIBUTORS TO THIS REPORT 

Special Audits Group 

Auditor-In-Charge 

Chief 

Senior Team Leader 

Jill S. Henderson, Deputy Assistant Inspector General for Management 

17
 
APPENDIX
 

The New York City Combined Federal Campaign
 

June 5,2008 

'ooJU" 16
 

Office of Personnel Management 

GIG, Special Audits Group 

1900 E Street NW 

Room 6400 

Washington, DC 20415 

Enclosed you will find the United Way of New York City (PCFO) response and 

attachments for the Audit draft conducted by the Office of the Inspector General, 

Special Audits Group. 

On behaif of the LFCC, we would like thank you for giving the NYC-CFC the 

opportunity to address areas of non-compliance. If you have any further inquiries 

on any of the items, please feel free to contact me or any member of the United 

-Wayof New York City staff. 

? P~rl< AVAnllA ?nrl Flnor N"w York. NY 10016· Teleohone: /2121 251-4015· Fax: (212) 251·2439 
A. F'ISCAL MANAGEMENT
 

1. Expenses Charged to the Incorrect Campaign Year $26,250 

PCFO Response: 

The audit of any given CFC campaign cannot commence until all funds collected 

have either been paid to the charities or disbursed to the PCFO for expenses paid in 

the name ofthe campaign. The PCFO must make an estimate ofthe amount ofthe 

audit by an independent CPA finn. UWNYC has found it reasonable to estimate the 

amount chargeable to any given campaign to be the actual amounts paid (or accrued) 

during the given year. In this way, each campaign bears the cost of one audit. The 

$26,250 was reserved for the 2005 audit based upon the cost incurred for the 2003 

audit. 

The final disbursements for the 2005 campaign were made March 21,2007. The 

independent CPA auditors completed their audit June 15,2007. The first progress 

billing in connection with the 2005 campaign was made in the amount of $17,000 on 

June 7,2007. The final billing (which UWNYC is obligated to pay) had not been 

rendered. 

2. Unaccounted and Unsupported Campaign Receipts $8,280 

PCFO Response: 

DELETED BY OIG 

NOT RELEVANT TO THE AUDIT REPORT 

• $1,175 error in recording payroll donations 

- Internal cash log was reconciled with the Amalgamated Bank Statements (0310). 

It was noted that there were two deposits that were not reported in the cash log. 

Specifically, from the April 2006 statements, a deposit for $758 was not reported; and 

from the May 2006 statements, a deposit for $450 was not reported. 

(Note: It is not clear where the amount of$I,175 derives since we are coming up with 

a total of$I,208. The $758 and $450 are highlighted on the cash log. The $450 was 

originally deposited 03/30/06. The bank returned the check which was re-deposited 

05/02/06) 

Cash Log Documentation Attached and relevant amounts are highlighted. 

DELETED BY GIG 

NOT RELEV ANT TO THE AUDIT REPORT 
DELETED BY OIG
 

NOT RELEVANT TO THE AUDIT REPORT
 

4.	 Campaign Expense Reimbursement 

PCFO Response 

The LFCC has been reviewing the year-end expenses incurred by the PCFO since 

2006 (for campaign year 2005-2006). This has been on-going to the present year. 

5.	 Incorrect Cut-off Date for Deposits 

PCFO Response: 

The PCFO concurs with the findings of non-compliance and accept the Auditors 

recommendation. 

-- 6.· Un-Cashed Check Procedures 

PCFO Response: 

The PCFO concurs with the findings of non-compliance and accept the Auditors 

recommendation. 

7.	 Commingling of CFC Funds 

PCFO Response: 

The PCFO has set-up another bank account specifically for this purpose. The PCFO 

concurs with the findings of non-compliance and accept the Auditors 

recommendation. 
8.	 Untimely Disbursements 

PCFO Response: 

The PCFO concurs with the findings of non-compliance and accept the Auditors 

recommendation. 

DELETED BY OIG
 

NOT RELEVANT TO THE AUDIT REPORT
 

B. ELIGIBILITY 

1.	 Unsupported PCFO Selection 

PCFO Response: 

The PCFO concurs with the findings of non-compliance and accept the Auditors 

recommendation. 

2.	 Lack of Support for LFCC Eligibility Decisions 

rCFO Response: 

The PCFO concurs with the findings of non-compliance and accept the Auditors 

recommendation. 

DELETED BY DIG
 

NOT RELEVANT TO THE AUDIT REPORT
 
D.	 AGREED UPON PROCEDURES 

1.	 Agreed Upon Procedures not in Compliance Procedural 

PCFO Response: 

The PCFO forwarded section D. Agreed Upon Procedures to 

PriceWaterhousef.oopers, the external auditors for review and comments.