U.S. OFFICE OF PERSONNEL MANAGEMENT 

OFFICE OF THE INSPECTOR GENERAL 

OFFICE OF AUDITS 

Final Audit Report 

SUbject: 

AUDIT OF THE 2007 AND 2008 


INLAND NORTHWEST 


COMBINED FEDERAL CAMPAIGNS 


SPOKANE, WASHINGTON 


Report No. 3A-CF-OO-IO-035 

Date: March 17. 2011 

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Office of the 

Inspector Gene ral 

UNITED STATES OFFICE OF PERSONNEL MANAGEMENT 


Washington, DC 20415 


AUDIT REPORT 

AUDIT OF THE 2007 AND 2008 


INLAND NORTHWEST 


COMBINED FEDERAL CAMPAIGNS 


SPOKANE, WASHINGTON 


Report No. 3A-CF-OO-IO-035 Date: 3/17/2011 

Michael R. Esser 

Assistant Inspector General 

for Audits 

......

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UNITED STATES OFFICE OF PERSONNEL MANAGEMENT 


Washington, DC 2041 5 


Office of the 

lnspcclOr Geneml 

EXECUTIVE SUMMARY 


AUDIT OF THE 2007 AND 2008 


INLAND NORTHWEST 


COMBINED FEDERAL CAMPAIGNS 


SPOKANE, WASHINGTON 


REPORT NO. 3A-CF-OO-IO-035 DATE: 3/17/2011 

The Office of the Inspector General has completed an audit of the 2007 and 2008 Inland 

Northwest Combined Federal Campaigns (CFe). The Spokane County United Way, located in 

Spokane, Washington, served as the Princ ipal Combined Fund Organization (PCFO) during both 

campaigns. OUf main objective was to determine if the Inland Northwest CFe was in 

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

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

audit identified six instances of non·compliance with the regulations (5 CFR 950) governing the 

CFC. 

The following findings represent the results of our audit work as ofthe date ofthis report. 

AUDn GUIDE REVIEW 

• A2reed-Upon Procedures Not in Accordaoce with the CFC Audit Guide Procedural 

The Independent Public Accountant did not complete all ofthe agreed-upon procedures in 

accordance with the CFC Audit Guide. 

www.u Jo s, "" 
BUDGET AND CAMPAIGN EXPENSES 


• CFC Expenses Charged to the Wrong Campaign $5,834 

The PCFO incorrectly charged the 2008 CFC campaign for 10 expense transactions, totaling 

$5,834, which were charged to the wrong campaign year. 

• Expenses Not Identified as CFC-Related Charged to the Campaign $1,420 

The 2008 CFC campaign was charged $1,420 for expenses that could not be identified as 

belonging to the CFC. 

CAMPAIGN RECEIPTS AND DISBURSEMENTS 

• Pledge Card Errors Procedural 

The PCFO did not comply with the Federal regulations in regards to five pledge cards that 

were not properly completed by donors. 

• Excess Disbursement of CFC Funds $1,944 

The PCFO disbursed $1,944 in excess ofthe amounts received for the 2008 campaign. 

ELIGIBILITY 

• CFC Charity List Not in Compliance with Regulations Procedural 

The 2008 campaign brochure's Charity List order did not comply with OPM Memorandum 

2008-6. 

PCFO AS A FEDERATION 

Our review ofthe PCFO's activities as a federation showed that it complied with the applicable 

provisions of 5 CFR 950. 

11 
CONTENTS 


PAGE 

EXECUTIVE SUMMARY ............................................................................................... i 


1. INTRODUCTION AND BACKGROUND ...................................................................... 1 


II. OBJECTIVES, SCOPE AND METHODOLOGY............................................................2 


III. AUDIT FINDINGS AND RECOMMENDATIONS ........................................................6 


A. AUDIT GUIDE REVIEW ...........................................................................................6 


1. Agreed-Upon Procedures Not in Accordance with the CFC Audit Guide ............6 


B. BUDGET AND CAMPAIGN EXPENSES ................................................................ 8 


1. CFC Expenses Charged to the Wrong Campaign .................................................. 8 


2. Expenses Not Identified as CFC-Related Charged to the Campaign ................... 1 ° 


C. CAMPAIGN RECEIPTS AND DISBURSEMENTS ................................................ 11 


1. Pledge Card Errors ................................................................................................ 11 


2. Excess Disbursement of CFC Funds .................................................................... 13 


D. ELIGIBILITY ............................................................................................................. 14 


1. CFC Charity List Not in Compliance with Regulations ....................................... 14 


E. PCFO AS A FEDERATION ...................................................................................... 15 


IV. MAJOR CONTRIBUTORS TO THIS REPORT ............................................................. 16 


APPENDIX 	 (The PCFO and LFCC's response, dated November 10,2010, to the 

draft audit report.) 
I. INTRODUCTION AND BACKGROUND 


Introduction 

This report details the findings and conclusions resulting from our audit ofthe Inland Northwest 

Combined Federal Campaigns (CFC) for 2007 and 2008. The audit was performed by the Office 

ofPersonnel 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 in Federal installations throughout 

the world. In 2008, it consisted of 242 separate local campaign organizations located throughout 

the United States, including Puerto Rico, the Virgin Islands, and foreign assignments. The 

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

ofthe CFC. This includes publishing regulations, memoranda, and other forms of guidance to 

Federal offices and private organizations to ensure that all campaign objectives are achieved. 

The CFCs 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 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 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 (IP A) in accordance with generally 

accepted auditing standards; cooperating fully with the 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 ofOPM; 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 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 ofthe PCFO and LFCC. Management of 

the PCFO is also responsible for establishing and maintaining a system ofinternal controls. 

This represents our first audit ofthe Inland Northwest CFC. The initial results of our audit were 

discussed with PCFO and LFCC officials during an exit conference held on May 27,2010. A 

draft report was provided to the PCFO and the LFCC on September 15,2010, for review and 

comment. The PCFO and the LFCC's response to the draft report was considered in preparation 

ofthis final report and is included as an Appendix. 

1 

II. OBJECTIVES, SCOPE, AND METHODOLOGY 


OBJECTIVES 

The primary purpose of our audit was to determine ifthe Inland Northwest CFC was in 

compliance with 5 CFR 950, including the activities of both the PCFO and the LFCC. Our 

specific audit objective for the 2007 Campaign was: 

Audit Guide Review 

• 	 To determine ifthe IPA completed the Agreed-Upon Procedures (AUP) as outlined in the 

CFC Audit Guide (For Campaigns with Pledges of$150,000 to $999,999). 

Additionally, our specific audit objectives for the 2008 CFC campaign were as follows: 

Budget and Campaign Expenses 

• 	 To determine ifthe PCFO solicitation, application, campaign plan, and budget were in 

accordance with the regulations. 

• 	 To determine ifthe expenses charged to the campaign were actual, reasonable, allocated 

properly, approved by the LFCC, and did not exceed 110 percent of the approved budget. 

Campaign Receipts and Disbursements 

• 	 To determine if the pledge card format was correct and if the pledge card report agrees 

with the actual pledge cards. 

• 	 To determine if incoming pledge monies were allocated to the proper campaign year and 

that the net funds (less expenses) were properly distributed to member agencies and 

federations. 

• 	 To determine if the member agencies and federations were properly notified ofthe 

amounts pledged to them and that donor personal information was only released for those 

who requested the release ofinformation. 

Eligibility 

• 	 To determine ifthe charity list (CFC brochure) was properly formatted and contained the 

required information; ifthe charitable organization application process was open for the 

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

approved; ifthe applicants were notified ofthe eligibility decisions timely; and ifthe 

appeals process for denied applications was followed. 

PCFO as a Federation 

• 	 To determine ifthe amounts received by the PCFO as a federation reconciled to those 

disbursed by the CFC; if the PCFO properly distributed funds to its federation members; 

2 

if expenses charged by the PCFO (to its federation members) were documented properly; 

and ifthe disbursements made to the federation members were accurate. 

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. 

The audit covered campaign years 2007 and 2008. The Spokane County United Way, located in 

Spokane, Washington, served as the PCFO during both campaigns. The audit fieldwork was 

conducted at the offices ofthe PCFO from May 24 through May 27,2010. Additional audit 

work was completed at our Washington, D.C. and Cranberry, Pennsylvania offices. 

The Inland Northwest CFC received campaign pledges, collected campaign receipts, and 

incurred campaign administrative expenses for the 2007 and 2008 campaigns as shown below: 

! Campaign 

Year 

Total 

Pledges 

Total 

Receipts 

Administrative 

Expenses 

2007 $480,244 $469,251 $61,748 

2008 $493,426 $470,871 $71,312 

In conducting the audit we relied to varying degrees on computer-generated data. Our review of 

a sample of campaign expenses and supporting data, a sample of pledge card entries, and the 

distribution of campaign contributions and related bank statements verified that the computergenerated data used in conducting the audit was reliable. Nothing came to our attention during 

our review ofthe data to cause us to doubt its reliability. 

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

We gained an understanding of the management 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 tests of accounting records and such other auditing 

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

Memorandums. 

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

(For Campaigns with Pledges of$150,000 to $999,999) and completed the AUP checklist to 

verify that the IP A completed and documented the AUP steps. 

3 

In regard to our objectives concerning the 2008 campaign's budget and campaign expenses, we 

accomplished the following: 

• 	 Reviewed the PCFO's application to verify if it was complete. 

• 	 Reviewed a copy ofthe public notice to prospective PCFOs and the LFCC meeting 

minutes to verify that the PCFO was selected timely. 

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


PCFO's general ledger. 


• 	 Reviewed the PCFO's budgeted expenses, the LFCC's approval of the budget, and 

matched a sample of actual expenses to supporting documentation. Specifically, we 

judgmentally selected 27 expense transaction samples (the highest dollar transactions 

from the Supplies, Printing, Support, and Meetings budget categories occurring from 

March 2008 through December 2008; all 11 expenses incurred before March 2008; the 5 

highest dollar travel-related expenses; all 4 CFC Audit Expenses; and the top Salary, 

Office Space, and Computer Time expenses allocated to the 2008 CFC campaign) for 

review. The sampled expenses totaled $60,282, from a universe of 84 expense 

transactions totaling $71,312. 

• 	 Reviewed the LFCC meeting minutes and verified if 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 ifthe 2008 campaign's receipts and disbursements were handled in accordance 

with CFC regulations, we reviewed the following: 

• 	 Ajudgemental sample of pledge cards from the 2008 PCFO's Donor Pledge Campaign 

Report and compared the pledge information from the report to the actual pledge cards. 

Specifically, we judgmentally selected 45 pledge cards (selected the top 35 pledge cards 

by total amount pledged; 5 pledge cards that had more than 5 agency codes listed; and the 

top 5 undesignated pledge cards) amounting to a sample amount of$1 07,021 from a 

universe of 1,729 pledge cards with a total of $493,426 pledged. 

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

timely manner. 

• 	 One-time disbursements 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 by the date required in the regulations. 

• 	 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. 

• 	 CFC receipts and distributions from the PCFO's campaign bank statements, campaign 

receipts, and agency disbursements and campaign expense support to verify whether the 

PCFO accurately recorded and disbursed all 2008 campaign receipts and disbursements. 

• 	 All bank statements used by the PCFO to verify that the PCFO was properly accounting 

for and distributing funds. 

4 

• 	 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 LFCC and PCFO were in compliance with CFC regulations in regards to 

eligibility for the 2008 campaign, we reviewed the following: 

• 	 The public notice to prospective charitable organizations to determine ifthe 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 process and procedures for responding to appeals from organizations. 

Finally, to determine ifthe PCFO was in compliance with the CFC regulations as a federation 

(Spokane County United Way) for the 2008 campaign, we reviewed the following: 

• 	 Data reported on the CFC Receipts Schedule and supporting documentation to determine 

if receipts were properly recorded. 

• 	 The CFC Distribution Schedule to ensure that the Spokane County United Way did not 

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

• 	 The Spokane County United Way's 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 ofthe universe taken as a whole. 

5 

III. AUDIT FINDINGS AND RECOMMENDATIONS 


A. AUDIT GUIDE REVIEW 


1. AUPs Not in Accordance with the CFC Audit Guide 	 Procedural 

The IP A utilized by the PCFO and the LFCC to complete the AUPs outlined in the 

CFC Audit Guide did not properly complete 9 ofthe 20 steps/procedures. 

Chapter III of the Audit Guide prepared by the CFCO "contains specific procedures 

for four requisite elements to be followed during the examination by the IP A." 

We reviewed the IPA's working papers to ensure that it properly completed and 

documented its review ofthe PCFO's operations for the 2007 campaign. During our 

review, we determined that rather than utilizing "Chapter III IPA Agreed-Upon 

Procedures" from the Audit Guide as its audit program, the IP A chose to re-write the 

audit steps and use its document as the audit program. Consequently, many of the 

details and instructions from the Audit Guide were not included in the IPA's review. 

Specifically, we identified the following problems: 

• 	 Pledge Form Tracking System Step 1: The step required the IPA to select a 

representative sample of25 pledge forms (cards) from the 2007 campaign. 

The pledge forms selected should represent all types of donations, including 

cash, designated, and undesignated funds. Fifteen should be selected from the 

pledge tracking system and traced to the pledge forms. Ten should be selected 

from the pledge forms and traced to the pledge tracking system. We found that 

the IPA only selected 24 pledge cards for review. Additionally, because the 

IP A rewrote the audit step from the Audit Guide, it did not include all ofthe 

review details required in the Audit Guide. Specifically, the IPA did not verify 

whether the pledge cards selected represented all types of donations (cash, 

designated, and undesignated funds). Additionally, the sample selected by the 

IP A did not meet the Audit Guide requirements regarding how many cards 

should be selected from the pledge tracking system and how many cards 

should be selected from the pledge forms. As a result, the IPA did not select 

the sample per the instructions ofthe Audit Guide. 

• 	 Pledge Form Tracking System Step 3: The step required the IPA to review the 

PCFO's spreadsheet used to track and analyze payroll office receipts to 

determine if it included the following: the amount of payroll deductions by 

payroll office, an estimated amount due from each payroll office by pay 

period, a comparison of the estimated amount due from each payroll office to 

the actual amount received, and any identified instances where actual amounts 

received from a payroll office exceeded the estimated amount. Our review 

found that the IPA did not include this step in its re-written audit procedures. 

As a result, the IP A did not review this area. 

6 
• 	 PCFO Budget and Administrative Expenses Step 1: The step required the IP A 

to obtain a copy ofthe PCFO's 2007 application and review it for signed 

statements required by the Federal regulations. However, because the IPA rewrote the audit step from the Audit Guide, it did not include all of the review 

details required in the Audit Guide. Specifically, the IPA's audit step did not 

include a review for the specific statements required by the regulations. As a 

result, we could not determine if this step was properly completed. 

• 	 PCFO Budget and Administrative Expenses Step 2: The step required the IPA 

to report all instances where the LFCC did not select the PCFO and approve 

the PCFO's campaign plan and budgeted expenses on or before March 15th 

(2007). However, because the IPA re-wrote the audit step from the Audit 

Guide, its revised audit step did not include a review to determine whether the 

LFCC made the approval by the required date. Additionally, the supporting 

documentation included in the work papers was related to the 2008 campaign 

and not the 2007 campaign. As a result, the IP A did not properly complete the 

audit step. 

• 	 PCFO Budget and Administrative Expenses Step 4: The step required the IPA 

to obtain a list of actual expenses incurred by and reimbursed to the PCFO for 

administering the 2007 campaign, and to trace the expenses to the PCFO's 

general ledger. Our review found that the expenses reviewed by the IP A were 

those charged to the 2008 campaign, not to the 2007 campaign. As a result, 

the IP A reviewed the wrong information. 

• 	 PCFO Budget and Administrative Expenses Step 5: The step required the IPA 

to compare the actual and budgeted expenses for the 2007 campaign to 

determine if the actual expenses exceeded 110 percent of the budget. Our 

review found that the IPA compared the actual expenses of the 2007 campaign 

to the actual expenses of the 2008 campaign. As a result, the IP A did not 

complete the step properly. 

• 	 PCFO Budget and Administrative Expenses Step 6: The step required the IP A 

to report as a finding all instances where the PCFO did not properly match 

campaign receipts and expenses. The actual expense listing included in the 

IPA's working papers clearly shows that the PCFO charged expenses on a 

calendar year instead of a campaign year basis. This is incorrect because the 

2007 campaign did not begin until the PCFO was officially selected by the 

LFCC. The deadline for this selection in 2007 was March 15, 2007. 

Therefore, any costs incurred before that date do not belong to the 2007 

campaign. As a result, the PCFO was not properly matching campaign 

receipts and expenses. The IP A did not report a finding in this area and, as a 

result, OPM and the PCFO were not made aware ofthis issue. 

• 	 PCFO Budget and Administrative Expenses Step 7: The step required the IPA 

to review a sample of expenses for the 2007 campaign. Our review found that 

7 

the IP A reviewed expenses related to the 2008 campaign. As a result, the IP A 

reviewed the wrong infonnation. 

• 	 Receipt and Disbursement of Funds Step 9: The step required the IPA to 

detennine ifthe PCFO's procedures regarding un-cashed checks were 

appropriate. Our review found that the IP A did not include this step in its rewritten audit procedures. As a result, the IP A did not review this area. 

As a result of not completing the Agreed-Upon Procedures properly, the IPA 

inadvertently misled both OPM and the LFCC to believe that the PCFO was in 

compliance with and had effective controls over compliance with 5 CFR Part 950 and 

OPM guidance. 

LFCC and PCFO's Comments: 

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

the IPA follows the OPM audit guidelines. In addition, the LFCC and the PCFO will 

advise the IPA to contact OPM to obtain clarification when necessary. 

Recommendation 1 

We recommend that the CFCO ensure that the LFCC fully implements its corrective 

actions and provides assistance to the IPA as necessary. 

B. BUDGET AND CAMPAIGN EXPENSES 

1. CFC Expenses Charged to the Wrong Campaign 	 $5,834 

The PCFO incorrectly charged the 2008 CFC campaign for 10 expense transactions, 

totaling $5,834, which were charged to the wrong campaign year. 

5 CFR 950.106 (b) states that the PCFO "may only recover campaign expenses from 

receipts collected for that campaign year." In addition, CFC Memorandum 2008-09 

states that because actual expenses are not known until the end ofthe campaign, 

which is two years from the beginning ofthe campaign, LFCC's are encouraged to 

authorize reimbursement of an estimated expense amount from the first distribution 

ofthe campaign. The PCFO then must track all expenses incurred for the campaign 

and make an expense adjustment to the last disbursement for the campaign, either up 

or down, based on the true amount of campaign expense incurred. 

During our review ofthe PCFO's 2008 CFC campaign expense transactions, we 

identified five expenses totaling $779 that were incurred prior to March 2008 (before 

the official 2008 CFC campaign began). We selected these transactions because we 

suspected that these expenses belonged to the prior campaign. After reviewing the 

supporting documentation, we found that the PCFO charged expenses on a calendar 

8 

year instead of campaign year basis. The PCFO indicated that this was the way 

things were always done and that it did not know that the process was incorrect. 

We also reviewed 27 expense transactions to detennine ifthe costs charged to the 

campaign were supported by source documentation, related to the CFC, allocated 

reasonably, and charged to the correct campaign year. We identified one transaction, 

totaling $555, from April 2008 for CFC awards which included personalization (name 

plates). These awards could not be related to the 2008 campaign because the 

campaign had not begun the solicitation process. 

Additionally, our review ofthe 2008 CFC campaign expense transactions identified 

four transactions, totaling $4,500, for services related to the IPA audit. We selected 

these transactions for review because the 2008 campaign, to which they were 

charged, was still active and could not be audited at that time. A review ofthe 

transactions confinned that the invoices were related to an audit of an earlier 

campaign and not related the 2008 campaign. 

CFC Memorandum 2008-9 states that the audit expenses incurred for the audit of a 

campaign must be paid from funds from the campaign being audited. Because this 

cost is paid after the close of the campaign, the amount should be accrued and 

withheld from the last distribution. The Memorandum encourages campaigns to 

negotiate a fixed cost agreement with the IP A so that the actual amount can be known 

prior to the close ofthe 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. 

As a result of charging expenses to the 2008 CFC campaign on a calendar year basis, 

and not to the campaign to which they truly belong, the PCFO is not following the 

CFC regulations and could adversely effect the distributions to member agencies and 

federations. 

LFCC and PCFO's Comments: 

The LFCC and PCFO agree with the finding that expense transactions were charged 

to the wrong campaign. The LFCC stated that it has implemented a policy for the 

annual budget to match the campaign year. Additionally, the LFCC stated that the 

PCFO will establish an annual budget for the period ofMarch I through February 28 

that will be submitted to the LFCC. This budget will contain the estimated cost to be 

accrued for the IP A audit for that campaign. 

Additionally, the LFCC and PCFO state that the use ofthe words "may" and "should" 

in the CFC regulations and Memorandums can be interpreted as not binding tenns 

and that the regulations and Memorandums should be revised. 

9 

OIG Response: 

We disagree with the LFCC and the PCFO's corrective action. The corrective action 

stated by the LFCC and the PCFO does not account for the entirety of the campaign 

cycle. CFC Memorandum 2008-9 clearly states that campaign expenses will be 

incurred over a two year period. However, the corrective action still states that the 

period for expenses is a 12 month cycle. 

Additionally, the LFCC's and PCFO's opinion that the language in the regulations 

and CFC Memorandums is not binding is incorrect. Per our discussions with the 

CFCO, this is discussed with all PCFO's at its yearly CFC workshops. 

Recommendation 2 

We recommend that the CFCO and the LFCC ensure that the PCFO implements 

procedures to track and allocate expenses to the correct campaign year according to 

CFC Memorandum 2008-9. 

2. Expenses Not Identified as CFC-Related Charged to the Campaign $1,420 

The PCFO charged the 2008 CFC campaign for expenses, totaling $1,420, which 

could not be identified as belonging to the CFC. 

5 CFR 950.1 05 (d) (7) states that the PCFO is responsible for "Maintaining a detailed 

schedule of its actual CFC administrative expenses, with, to the extent possible, 

itemized receipts for the expenses." 

We reviewed 27 expense transactions to determine if the costs charged to the 

campaign were supported by source documentation, related to the CFC, allocated 

reasonably, and charged to the correct campaign year. We identified four expense 

transactions (travel reimbursements) where the documentation maintained did not 

indicate if the expense was related to the CFC campaign. Since the PCFO works with 

other campaigns, there is a risk of charging costs from other campaigns to the CFC. 

Therefore, the expense documentation maintained should explain in detail the nature 

of the expense and its relationship to the CFC campaign. 

By not indicating on the expense supporting documentation how the expense was 

CFC-related, the PCFO could charge non-CFC expenses to the campaign. 

LFCC and PCFO's Comments: 

The LFCC and the PCFO disagree with this finding. They stated that the expense 

transactions were clearly matched as CFC-related. The LFCC and the PCFO also 

stated that they have developed a new reimbursement form which has the CFC logo 

on it, which will be used for the PCFO to reimburse its employees for local travel 

with a detailed explanation of the charges. 

10 

OIG Response: 

We disagree with the LFCC's and the PCFO's comments. The supporting 

documentation provided by the PCFO for the travel reimbursements questioned did 

not indicate ifthe reimbursements were related to CFC travel (there were no 

itineraries or any statements regarding the purpose ofthe trips on the documentation 

provided to us for review). 

Additionally, the LFCC's and PCFO's corrective action regarding the development of 

a new travel form with the CFC logo on it and a detailed explanation ofthe charges 

should also be supported by an itinerary and all invoices related to the trip. 

Recommendation 3 

We recommend that the CFCO and the LFCC ensure that the PCFO implements 

procedures to properly identify, on the supporting documentation, all CFC-related 

costs charged to the campaign. 

C. CAMPAIGN RECEIPTS AND DISBURSEMENTS 

1. Pledge Card Errors Procedural 

Our review for pledge card accuracy identified five pledge cards for which either the 

pledge information was not properly completed by donors, or designations were made 

to more than five agencies per pledge card. Additionally, our review of the PCFO's 

policies and procedures related to pledge cards determined that the PCFO does not 

fully understand its responsibilities for not contacting donors in regard to their pledge 

cards' mathematical errors. 

5 CFR 950.105 (d) (4) states that the PCFO is responsible for ensuring that no 

employee is questioned in any way as to his or her designations or the amounts except 

by keyworkers, loaned executives, or other non-supervisory Federal personnel. 

5 CFR 950.105 (d) (3) states the PCFO should ensure that key workers are trained to 

check to ensure the pledge card is legible, verify the arithmetic, and ensure that the 

donor's release of personal information is properly completed. 

The 2008 Inland Northwest CFC campaign brochure section "Can I Specify Which 

Organization Will Receive My contribution?" states on page 17 that additional 

designations (Le., more than five) may be completed on a second pledge card. 

We reviewed a sample of 45 pledge cards to determine whether they were entered 

into the PCFO's pledge card database correctly. Specifically, we compared the actual 

pledge card to the database to determine ifthe following items were entered correctly: 

donor name, charity code(s) and amounts donated, total amount donated, and the 

11 

donor's choice to release personally identifiable information. Our review identified 

five pledge cards with errors. Specifically, we found: 

• 	 Two pledge cards with mathematical errors which were not identified or corrected 

by the keyworker prior to the cards being sent to the PCFO. Upon receipt of the 

cards, the PCFO identified the mathematical errors and rather than make the 

allowed corrections per the Federal regulations or send them back to the 

keyworker for clarification, it called the donor directly to correct the problem. 

Based on our discussions with the PCFO and its responses to related pledge card 

questionnaire items, it did not understand that it should not be contacting the 

donor directly. This is a conflict ofinterest issue as the PCFO should not be in 

charge of collecting and disbursing the funds, as well as clarifying questionable 

designations. 

• 	 Two pledge cards where the donor did not complete the personal information 

section. We found a series of four pledge cards, completed by the same donor, 

where two cards had the personal information section (i.e., name, agency, and 

work address) completed and two with that information blank. The PCFO was 

able to identify the two blank cards as belonging to the same donor because these 

were the only four cards in the envelope and because of handwriting similarities. 

However, the PCFO did not consider this a problem and, therefore, did not advise 

its keyworkers that they should ensure that all pledge cards are properly 

completed by the donors before they are forwarded to the PCFO for processing. 

• 	 One pledge card where the donor designated to more than five agencies. This 

error was not identified by either the keyworker or the PCFO. Upon discussion 

with the PCFO, it was determined that it did not understand that it could not be 

done. 

As a result of contacting a donor directly, the PCFO could be seen as trying to 

influence the Federal employee's donation. Additionally, by accepting incomplete or 

incorrectly completed pledge cards, without obtaining donor clarifications via the 

keyworker, the PCFO is running the risk of misinterpreting donor intentions. Finally, 

by allowing donors to designate to more than five agencies on pledge cards, the 

PCFO could misunderstand the donor's designations. 

LFCC and PCFO's Comments: 

The LFCC and the PCFO agree with this finding. The LFCC and the PCFO stated 

that they will ensure that 5 CFR 950.105 (d) (3) and (4) and all regulations pertaining 

to Campaign pledge cards shall be adhered to. The LFCC also stated that it has 

implemented a policy to correct pledge card mathematical errors and the PCFO, on 

behalf of the LFCC, will contact the donors to inform them of the action taken to 

correct the errors. 

12 
OIG Response: 

We accept the LFCC's and the PCFO's corrective action regarding the correction of 

pledge card errors identified. However, the PCFO's statement that it will contact the 

donor on behalf ofthe LFCC and inform the donor of the action taken to correct 

mathematical errors is in violation of the regulations and is unnecessary. According 

to the regulations only "non supervising Federal personnel" may contact donors 

directly. Correction of mathematical errors on a donor's pledge card does not effect 

the "total" pledged. The only changes made as a result of correcting mathematical 

errors are to the amounts designated to individual charities. Therefore, it is not 

necessary to contact the donor in these cases. 

Additionally, we also noted that the LFCC's and the PCFO's corrective action did not 

address the recommendation oftraining keyworkers to ensure that donors complete 

the pledge forms correctly, legibly, and precisely before they are turned into the 

PCFO. 

Recommendation 4 

We recommend that the CFCO and the LFCC work with the PCFO to ensure that it 

understands its responsibilities regarding direct contact with Federal employees 

concerning their donations. 

Recommendation 5 

We recommend that the CFCO and the LFCC ensure that the PCFO properly trains its 

CFC keyworkers to ensure that donors complete pledge forms correctly, legibly, and 

precisely before sending them to the PCFO. 

2. Excess Disbursement of eFe Funds $1,944 

The PCFO disbursed $1,944 in excess ofthe amounts received for the 2008 

campaIgn. 

5 CFR 950.901 (i) (2) states that at the close ofthe disbursement period (i.e., 

campaign) the PCFO's CFC account shall have a zero balance. 

Using the PCFO's bank statements and disbursement schedule, we traced all 

campaign receipts from the bank statements to the PCFO's records ofreceipts and 

disbursements to determine the following: ifthe PCFO was properly accounting for 

2008 campaign receipts, ifthe receipts were allocated to the correct campaign year, 

and if all receipts received were disbursed to members of the 2008 campaign. Our 

review found that the PCFO inadvertently disbursed $1,944 more to the members of 

the 2008 campaign than was received. As ofthe time of our audit, the PCFO did not 

understand why this over-disbursement occurred, however, it was looking into it. 

13 

As a result ofthis over-disbursement of funds to the 2008 campaign, other campaigns 

will receive less funds to distribute to the participating agencies and federations, 

causing donor wishes to not be followed. 

LFCC and PCFO's Comments: 

The LFCC and the PCFO agree with this finding and state that the LFCC Chair or 

Vice-Chair will review the financial statements each month with the PCFO during the 

disbursement of campaign donations to ensure that all CFC funds are disbursed 

completely and appropriately. 

Recommendation 6 

We recommend that the CFCO and the LFCC ensure that the PCFO implements 

procedures to properly track incoming receipts and outgoing disbursements to ensure 

that all CFC funds are disbursed completely and properly. 

D. ELIGIBILITY 

1. CFC Charity List Not in Compliance with Regulations Procedural 

The 2008 campaign brochure's charity list order did not comply with OPM 

Memorandwn 2008-6. 

5 CFR 950.401 (g) (2) states that the order ofthe charity list will be annually rotated 

in accordance with OPM instructions. 

Memorandum 2008-6, dated June 25, 2008, dictates the order ofthis list. For 2008, 

the CFC charity list order is: 1) Local Organizations, 2) National/International 

Organizations, and 3) International Organizations. The order ofthese parts and the 

order of federations in each part cannot be altered by the campaigns. 

We reviewed the 2008 campaign brochure'S charity list to determine ifit contained 

the information required per CFC Memorandwn 2008-6 and ifthe charities were in 

the correct order. We found that the charity list produced by the PCFO for the 2008 

campaign was in the wrong order. 

The CFCO designates the order ofthe campaign brochure each year to ensure that 

certain types of organizations are not treated favorably. By not producing the 

brochure in the order prescribed by the CFCO, the PCFO inadvertently showed 

favoritism to those organizations listed first and may have influenced the Federal 

donors. 

LFCC and PCFO's Comments: 

The LFCC and the PCFO agree with this finding and state that the LFCC Chair and 

Vice-Chair will review the charity list order prior to authorizing it to be printed to 

14 

ensure that it is in compliance with the OPM charity list issued for that campaign 

year. 

Recommendation 7 

We recommend that the CFCO and the LFCC ensure that the PCFO complies with 

the CFC regulations and applicable CFC Memorandums regarding the charity list 

order for the campaign brochure. 

E. PCFO AS A FEDERATION 

Our review ofthe PCFO's activities as a federation showed that it complied with the 

applicable provisions of 5 CFR 950. 

15 

IV. MAJOR CONTRIBUTORS TO THIS REPORT 

Special Audits Group 

Auditor 

Auditor-In-Charge 

Group Chief, 

Senior Team Leader 

Senior Team Leader 

16 

9

APPENDIX 

m Inland Northwest 


Combined Federal Campaign 
 • FA.X (509) 624·084 0 

20 N washington #100 """'"E'-"1O,"' 9"'... ""'....""""",,..· ' ..9,,0"',""".0..""...".66-· fOlON0\(T~9)P~3~;625f 1 

,AlA. 99201 spokane. V' 

10 Novembe r, 2010 

Special Audits Group 

The LFCC and PCFO would like to for their help 

and guidance during the audit process. The . I I th.e 

audit helped ensure the aud it went smoothly and had a minimal impaci on the PCFO preparing 

for the 201 0 campaign. Part of the feedback received indicated our procedures are fine however 

we could improve our procedures by adopting the procedures of other programs which are 

simpler and/or more cost effective. 

O\'erall Note 

The acronym CFCO is used in all recommendations but is. no t de fined in the document. The 

LFCC and PCFO are unable to find the definition of the ac ronym CFCo. If this acronym shou ld 

reflect Combined Federal Campaign Operations, identified as OeFO on page I , it is unclear how 

the OCFO is able to verify or ensure the recommendations arc implemented by the PCf O, 

A. 	Agreed Upon Procedures Not in Compliance With the Audit Guide: Auachcd is 

LeMasters Daniels, Certified Public Accountants and Advisors. The LfCC and PCfO will 

ensure that the IPA will follow QPM Audit Guideli nes. We wi ll also advise rPA to contact 

arM to obtai n clarification, when necessary. 

B. 	Budget and Campaign Expenses 

1. a Improper Matching of CFC Expenses and Receipts: Expenscs charged to thc 

wrong campaign year. 

The LFCC and pcro agree with the find that ex pense transactions were charged to 

the wrong campaign ycar. This issue was due to setting the budget based on a ca lendar 

~ear ( nu y to December) instead of a campaign year (March to February) resulting 

In expenses III January and February being charged to the wrong campaign. 

The LFCC agree with Recommendation 2 and have imp!emented a policy for the 

annual hudget to match the campaign year. The PCFO shaH establish an annu a! budget 

for the period of March I through February 28. The arulUal budget submitted by the ~ 

PCFO shaH contain Ihe estimated cost to be accrued fo r the [ndependent Public 

Accountant (LPA) audit for that campaign. 

The LFCC and pcro do not agree with the finding of expcnse transactions for the 

mon ths of January and February being chargcd 10 the wrong campaign year as slat..:d 

Page I of 4 
as a finding in five (5) different paragraphs in I~is section. ~s it is stated in this 


section, it can be interpreted as being five (5) different findtngs. 


While the LFCC and PCFO agree to set the budget calendar to. match the campaign 

both the LFCC and PCFO recommend the language 10 the Memorandum and eaIendar, . . CFR be modified to binding terms under meeting federal contracting reqUIrements. 

CFe Memorandum 2008-9, page 2, Accounting for Audit Expenses, and ~ CFR 

950.1 06(b) stales "The PCFO may only reeo.ver ca~1Pa ~n expense from receIpts . 

collected for that campaign year. Because this cost IS paid after the close of campaIgn, 

the amount shou ld be accrued. The LFCC should include a note in their LFCC 

compliance assessment report. " The lenns 'may' and 'shou ld.' are not normally 

interpreted as contractually binding terms by federal contractmg an~ards . The LFCC 

shall change their policy to require the PCFO 'shall meet' these reqUIrements and not 

simply reference the Memorandum and CFR. 

I.b Improper Matching oreFe Expenses and Receipts: Expenses identified as not 

belonging to the CFe. 

The LFCC and PCFO do not agree with this finding. Based on our review of the 14 

expense transactions (totaling 57,254) all expense transactions were clearly matched as 

CFC related. The transactions were directly matched to CFe budgeted expenses (i.e., 

postage, annual scheduled travel). Review of additional expense transactions before 

and after that period also resulted in finding all expenses were clearly matched to CFe 

work. 

The LFCC and PCFO were unable to identi fy the six (6) expense transactions that 

were not confinned as CFC related. Sce page 4, I l bullet point. totaling S I ,3 34. The 

LFCC and PCFO do agree with expense transactions during this period were charged 

to the wrong campaign year. 

The LFCe and peFO do not agree with the four (4) ex pense Attached is the answer 

provided by IPA. transactions whicb did not indicate ifthe tra vel was related to CFe. 

See page 4, 3'd bullet point, totalingSl,420. While the expense was reported on the 

reimbu rsement forms with the PCFO logo (United \Vay). the detailed information 

clearly stated CFC and the location traveled. The only information not included on the 

reimbursement forms was the specific person or group visited during the travel. 

The LFCC and PCFO believe Recommendation 3 and Recommendation 4 are the 

same recommendation stated twice. The LFCC and PCFO request the 

recommendations be modified to reflect the single recommendation identified . 

The LfCe and PCFO have developed a new reimbursement fonn which has CFC logo 

on it. We will ensure eac h reimbursement has detail explanation what the charges 

were for. 

Page20f4 
C. Campaign Receipts and Disbursements 

1. 	 Pledge Cards Errors 

The LFCC and peFO concur with findings and Recommendation 5 and 

Recommendation 6. The PCFO and LFCC shall ensure that 5 CFR 950.1 50 (d) 

(3&4) and all regulations pertaining to Campaign Pledge Cards shall be adhered to. 

The LFCC has implemented the following policy: 

If PCFO finds any mathematical or agency code errors, the PCFO shall notify onc of 

the following individuals requesting they contact the person making the pledge to 

request they correct the error. If the error is not corrected, the PCFO shaH contin ue 

contacting others on the list until the error is corrected. 

• 	 Key campaign contacts for that agency 

• 	 The campaign coordinator for the person's office or agency 

• 	 LFCC members that may have contact ~ith the individual 

• 	 Loan Executives 

• 	 Other non-superv isory federal, military, or U.S. postal personnel. 

• 	 LFCC Chair and Vice-Chair 

[f PCFO receives is unable to reso lve the error on the pledge foml , th e LFCC Chaif 

shall authorize the PCFO to take one of the follow ing actions: 

• 	 If the error is a mathematical error resulting in the entire pledge amount NOT 

being assigned to a charity, the remaining amount will be assigned as 

Undesignated Funds. 

• 	 Irthe error is a mathematical error resulting in the sum of the pledgc(s) exceeding 

the total amount pledged, the amount pledge to each charity will be reduced 

proportionally so the sum is equa l to the total amollnt pledged. 

• 	 lfthe error is an incorrect agency code, the funds will be assigned as 

Undesignated Funds. 

If the PCFO is required to take one of the actions listed above, the PCFO, on behalf 

of the LFCC Chair, will send a letter to the individual pledging inform ing them of the 

action taken and referencing this procedure. 

2. 	 Over-disbursement of CFe Funds 

The LFCC and CFO concur with the findings and Recomme ndation 7. The PCFO shal l 

follow LFCC polices and procedures for Monthly Financial Statement Rccom;i liati on. 

The LFCC has reviewed the established policies and procedures for Monthly Financial 

Statement Reconc ili ation with the PCFO. In addition to ensu ring the PCFO is following 

the established policies and procedures, the LFCC Chair or Vice-Chair shall review the 

financial statements each month with the PCFO during the disbursement of the 2010 

campaign donations to ensure that all CFC fu nds are disbursed completel y and properly. 

Page 3 of 4 
I). Eligibility 

I. crc Charity List Not in Compliance With the Regulations 

The LFCC and PCFO agree with the find ings and Recommendation 8. The LFCC Chair 

and Vice-Chair shilll review the Charity List order prior to authorizing the Chanty List to 

be printed to ensu re it is in compliance with the aPM Charily List order issued for thaI 

campaIgn year. 

Page 4 of 4 
LeMasrerDclr1iels ." 


October 6, 2010 

920 N. Washington, Suite 100 

Spokane. WA 99201 

Re: Offiet: of Per$Onn~·1 Management Audit Report 

You have ask"d us to romm~n t on th.. ;n ~I"nrPf; (>1 no:>rH;I>mp liana.> 0011''(\ by II", Office of Personnel Man":;t'ment 

(OI'M) in their report dated ScptcmbEor 15, 2010. rcMive to the audit that agenC)! performed on thc 2007 and 2008 

Inland Northwl 1 Combinl'<.l Federal Cam pigm. vore have T':!vicwed thc tiraft rc?Or! and offer thc commcnt~ that 

follow. 

Under section A, "Audit Guide R<.'ticw," lhl' i"~Fm lists se\l('ral i:1st<lnCl'S of nof'.~ompl ian~'(' that pertain to Ii'lL' 

Agreed-Upon ProcOOuT('!; (AUf') S'?:vicc we perform(d for the 2007 campaign. Spc<:ifiOllly, tht;> report points out 

Ih..! we w;oo a customized program i(,T perfO~'1\il'g Ire Ff()cC<i :' rcs rath.!r th.:l n Ihc audit guide prepan.>d by the 

Combined FooNal Campaign Operatior'! :OFCO). The dral, re-port note3that our cuslomb~d program did nol 

(Ontolin allll'll' sleps lisled in Ihe opeo auc.!1 guide and, as J result, some procedures that should have bi.>en 

pt.'rformed were inadvert('fltly or.litk-d by us. 

It was our underst,mding that a~! the rroced u[e~ ~.';, d!J(l for an a~ccptable AUP servire were induded in our 

customized program whkh was tailou.-C: for your organiza.ion a1,d developed to perform an efficient and (Ost 

eflee!ive engagement. In Q)':r' p"rinr, 0i.J~ prc",r"m to II.e OFCO audit g'~ ide, we do not disagree with thl! 

~mments made by theOPM.!f we 2.re ~ml';agcd to l,erfo!'Tll tl lisservice for theCFC in the future, we will usc the 

J'Jdil guide preparoo by the orco and wiU con~1.! 1 1 with th<.1TI, '-IS thej ncte in "RC(:()mmcndation 1," if ,,":c have 

any questions or n':.'('d clarification on the proo."Clu rc:.: that n~j to be perfo.med . 

A~ yuu know, you had asked us to be availilble \0 come to the crc offi(l;' ouring th~ week that the OPM 

po:rforrnL"Cl their .ludit field work last Yay to ar.sIVer qlJC!iti n~ !he auditor::; may have h<ld. We, indeed, had 

severa l fX'Opk' "on call" to respond to their in<1uirics, if askOO. I'm d isappointed that no onc contacted us at t hat 

time as we would have appreciated the opportunity to diSOJss the procedures th?t were omitted and whJI the 

appropriate Jction is 10 take in Ihe future. 

We regret that these instanCES of noncompliance were noled in our work and apologb:e for any incorwenicn((' 

Ih ~ has (aused you or thl! CFe rkase rontact me if you need anything furthcf. 

inrere~y. 

601 w.:-<t Rivenidt ~ut ' Suitt 700 • Spobne. WI< 99101-0622 

109.614.015 • (I,~) 5G . 624.U7~ • W'oYW. h!~'lo:n1,,";"' . tom