During our review, we determined that the PCFO did not disburse CFC funds out of
the CFC dedicated account as required by the Federal regulations. Instead, the PCFO
distributed CFC funds to member agencies and federations from its corporate account
and then transferred funds from the CFC account to the corporate account to cover
those costs and campaign expenses. During the campaign, the PCFO withdrew
$38,000 from the CFC account, however, expenses and disbursements related to the
campaign only amounted to $31,690.

We requested that the PCFO provide a detailed accounting of each of the withdrawals
from the CFC account during the 2007 campaign period. The PCFO did not provide
this documentation. Discussions with the PCFO indicated that it could not provide
this documentation because it did not view the withdrawals as something that needed
to be tracked in detail.

Asa result of the PCFO not providing a reconciliation of the withdrawals from the
CFC account, we could not determine if the variance of $6,310 related to
disbursements to other campaigns or if the PCFO inappropriately withdrew and used
CFC funds.

Cc. ELIGIBILITY

1

Lecal Eligibility Review Process

The local agency and federation application screening procedures applied by the
PCFO and LFCC did not account for all requirements for applying agencies and
federations that are outlined in the Federal regulations.

Local agencies and federations must be reviewed and approved by the LFCC only if
they meet the requirements of 5 CFR 950.204 (b). Additionally, federations must
meet additional requirements outlined in 5 CFR 950.303.

We reviewed the screening materials used by the PCFO and LFCC to make eligibility
decisions for agencies and federations applying for inclusion in the 2007 CFC and
compared them to the requirements in the Federal regulations. We determined if the
screening checklist used by the PCFO and LFCC encompassed all of the requirements
in the regulations. Discussions with the OCFCO determined that the checklist used
by the PCFO and LFCC were merely “completeness” checklists that determined if the
required documentation that should be included with the application was provided.
The OCFCO stated that it has made a more complete “application review sheet” that
encompasses important areas that should be included in the application review
process and has made them available to PCFO’s during each campaign.

Our review of the screening materials used for the eligibility review found that the
materials did not account for nine areas for local agencies and eight areas for local
federations specifically required by the Federal regulations. When asked why the
“completeness checklist” was used and not the “application review sheet”, the CFC


Our review of the CFC disbursements and bank accounts determined that the PCFO
did not make CFC disbursements to agencies and federations out of a CFC dedicated
bank account. Rather, the PCFO made disbursements to agencies and federations
from its corporate account and reimbursed itself for those costs plus campaign
expenses via fund transfers from the CFC account. The PCFO stated that this
practice has been done for the ease of operations and that adding the additional step
of disbursing checks from the CFC account would be both time consuming and costly
to the campaign and that it did not intend to change its current procedures.

As a result of disbursing CFC funds from a PCFO account, the PCFO is running the
risk of misapplying CFC funds and not adhering to the wishes of the Federal
employees.

Approval of PCFO Expense Reimbursement

The PCFO did not submit a request for, nor did the LFCC approve, the
reimbursement of 2007 campaign expenses to the PCFO.

5 CFR 950.106 (a) states that the PCFO shall recover campaign expenses, approved
by the LFCC, which reflect the actual costs of administering the campaign.
Additionally, 5 CFR 950.901 (i)(2) states that the PCFO is responsible for the
accuracy of disbursements it transmits to recipients.

Our review of LFCC meeting minutes did not identify where the LFCC discussed,
reviewed, or approved the reimbursement of 2007 campaign expenses to the PCFO.
Additionally, discussion with the PCFO and LFCC determined that both parties were
unaware of their responsibilities regarding CFC expenses. We informed both the
LFCC and PCFO that prior to reimbursement of expenses the LFCC must give
authorization to the PCFO to do so.

As a result of not submitting its expenses for approval before their reimbursement, the
PCFO's reimbursement was not authorized as required by the regulations.
Additionally, by not reviewing and approving the reimbursement of 2007 campaign
expenses, the LFCC runs the risk of unrelated expenses being charged to the agencies
and federations of the campaign, thus reducing the monies due to them.

B. CAMPAIGN RECEIPTS AND DISBURSEMENTS

1.

Pledge Card Errors

Our review for pledge card accuracy identified four pledge cards for which either the
pledge information was input incorrectly or the donor’s intentions were improperly
interpreted by the PCFO. Additionally, our review of the PCFO's policies and
procedures related to pledge cards determined that it does not fully understand its
responsibilities related to contacting donors regarding their designations.


_ APPENDIX
>
3747 W. lilemational Speecway Blvd.
DayfXha Beach, FL 32124-1011
8, Phone: (386) 253-0563
@ Fax: (386) 253-9517

Q www.unitedway-vfc_org

September 11, 2009

United States Office of Personnel Management
Office of the Inspector General

Office of Audits

Washington, DC 20415

RE: Audit of Volusia-Flagler-Putnam
Combined Federal Campaigns
Report No. 3A-CF-00-09-039

dear

We have no comments regarding the above referenced Report.
We agree with, and support the merger of this campaign with a
neighboring CFC campaign.

We will await the final report. At that time we have 21 days to

object to parts of this report that should not be posted on the
OIG webpage.

Sincerely,

rector Of ministration

United Way of Volusia-Flagler Counties Inc.

oi


Designated and Undesignated Funds Notifications
The PCFO did not send designated and undesignated funds notification letters to all
agencies and federations for the 2007 campaign as required by the regulations.

Additionally, the notifications sent were not sent by the required date and did not include
al} of the information required,

Donor Lists
The PCFO did not send donor lists to all agencies and federations by the dates required by

the Federal regulations. Additionally, the PCFO incorrectly released donor information to
the agencies.

CFC Receipts Applied to the Wrong Campaign Year

The PCFO did not apply all incoming CFC receipts to the correct campaign year.

Accounting for CFC Funds

The PCFO did not provide a detailed reconciliation to support the transfer of funds from
the CFC account to cover campaign expenses and charity distributions.

ELIGIBILITY

Local Eligibility Review Process

The LFCC and PCFO did not account for all eligibility requirements in their review of
local organization applications.

Local Application Acceptance Period
The LFCC and PCFO did not maintain documentation to support that local organization
applications for the 2007 campaign were accepted for at least 30 calendar days.

Additionally, the PCFO limited the giving potential of the campaign by only extending
invitations to past participants of the campaign.

Local Application Denials Not Sent via the Proper Method

The LFCC and PCFO did not communicate local organization eligibility denials via the
correct method for the 2007 campaign.

Local Eligibility Appeals Process

The PCFO, not the LFCC as required by the Federal regulations, overturned two agency
eligibility appeals for the 2007 campaign. Additionally, these decisions were not
communicated to the appealing agencies using a proper method.

iii


Coordinator stated that they felt it was a money savings to the CFC and that they did
not realize the importance. As a result, the PCFO and LFCC are running the risk of
including agencies and federations in the CFC that do not meet the requirements of
the Federal regulations.

Local Application Acceptance Period

The PCFO and LFCC did not maintain documentation to support that the LFCC
accepted applications for 30 calendar days from organizations seeking eligibility in
the 2007 campaign. Additionally, the PCFO limited the giving potential of the
campaign by only extending invitations to past participants of the campaign.

5 CFR 950.801 (a)(5) states that the LFCC “must accept applications from
organizations seeking local eligibility for 30 calendar days as determined by the
LFCC, and must issue notice of its eligibility decisions within 15 business days of the
closing date for receipt of applications.”

Additionally, 5 CFR 950.105 (b) states that “the primary goal of the PCFO is to
conduct an effective and efficient campaign in a fair and even-handed manner aimed
at collecting the greatest amount of charitable contributions possible.”

Per the CFC Coordinator, the PCFO, on behalf of the LFCC, notified local agencies
and federations that participated in prior campaigns to apply for the 2007 campaign
via e-mail and the applications were accepted for 30 days. However, the PCFO did
not maintain hard copies of these notifications and it was unable to retrieve the
electronic versions of them as well. As a result, we can not determine if the
notification was actually made or if applications were accepted for at least 30 days as
required by the regulations. Additionally, by limiting the exposure of the invitations
to participate in the 2007 campaign, the PCFO limited the Federal employee's giving
options and therefore may have discouraged possible contributions to the campaign.

Local Application Denials Not Sent via the Proper Method

The PCFO and LFCC did not communicate local eligibility denials via the correct
method to those agencies or federations denied participation in the 2007 CFC.

5 CFR 950.204 (e) states that local organization application eligibility denials must be
sent by the LFCC “via U.S. Postal Service certified or registered mail with a return
receipt requested. Approvals may be sent via U.S. Postal Service regular first class
mail. Applicants denied eligibility may appeal in accordance with [5 CFR] 950.205.”

Discussions with the PCFO determined that the notifications sent to agencies or
federations denied participation in the 2007 CFC were sent via e-mail and U.S. Postal
Service. which did not comply with the regulations. The CFC Coordinator stated that
they did not understand that the denials had to be sent differently than acceptance
letters.

15


IV. MAJOR CONTRIBUTORS TO THIS REPORT

Special Audits Group
HR, Senior Team Leader
ee

W7


5 CFR 950.901 (i)(1) requires that the PCFO notify federations, national and
international organizations, and Jocal organizations of the amounts (if any) designated
to them and their members and of the undesignated amounts due them no later than a
date set by OPM.

Discussion with the PCFO determined that for the 2007 campaign it only provided
funds notification letters to those agencies and federations requesting them and that
the notifications were not sent by any particular date, but at the time of the request. A
review of the notifications sent to the agencies and federations of the 2007 campaign
also determined that the notifications were only related to the quarterly payment just
issued and did not report to the recipient the total designated and undesignated funds
due to them for the entire campaign. The PCFO stated that it was unaware of this
requirement in the regulations and would endeavor to send them by the appropriate
date in future campaigns.

As a result of not sending designated and undesignated funds notification letters to all
agencies and federations of the 2007 campaign and not reporting all funds pledged to
them, the agencies and federations could not have known the monies due to them for
that campaign. Not knowing the monies due to them could severely restrict the
planning and budgeting abilities of the agencies and federations depending upon the
monies donated by Federal employees.

Donor Lists

The PCFO did not send donor lists to all agencies and federations of the 2007
campaign by the dates required by the Federal regulations and OCFCO Calendar of
Events. Additionally, the PCFO incorrectly released donor information to the
agencies.

5 CFR 950.105 (d)(6) states.that it is the responsibility of the PCFO to honor the
request of employees who indicate on the pledge form that their names, contact
information and contribution amounts not be released to the organization(s) that they
designate. Conversely, it is the responsibility of the PCFO to release the information
employees wish to have released.

Discussion with the PCFO determined that for the 2007 campaign it only provided
donor lists to those agencies and federations requesting them and that they were not
sent by any particular date, but at the time of the request. A review of the 9 donor
lists sent to the agencies and federations of the 2007 campaign determined that donor
name and amount designated for 59 donors was released to agencies. Of those 59
donors, 39 chose to not release any information and 15 chose to release more
information (i.e., home address or E-mail address) than what was released (a 92
percent error rate).

As a result of releasing donor information to agencies and federations against the
wishes of the donor, the PCFO is not honoring the confidentiality guaranteed by the


The audit covered campaign years 2006 and 2007. The United Way of Volusia-Flagler Counties
(UWVFC), located in Daytona Beach, Florida, served as the PCFO during both campaigns. The
audit fieldwork was conducted at the offices of the PCFO from June 1, 2009 through June 5,
2009. Additional audit work was completed at our Washington, D.C. office.

The Volusia-Flagler-Putnam CFC received campaign pledges, collected campaign receipts, and
incurred campaign administrative expenses for the 2006 and 2007 campaigns as shown below:

Campaign Total Total Administrative
Year Pledges Receipts Expenses
2006 $33,375 $21,392 $7,645
2007 $43,271 $33,499 $4,276

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 computer-
generated data used in conducting the audit was reliable. Nothing else came to our attention
during our review of the data to cause us to doubt its reliability.

We considered the campaign’s internal contro] structure in planning the audit procedures. We
gained an understanding of 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 such tests of the accounting records and such other auditing
procedures as we considered necessary to determine compliance with 5 CFR 950 and CFC
Memorandums.

In order to determine that the LFCC and PCFO were in compliance with CFC regulations in
regards to eligibility for the 2007 campaign, 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 2007 campaign’s budget and campaign expenses, we
accomplished the following:
= Reviewed the PCFO application to verify if it was complete.
«Reviewed a copy of the public notice to prospective PCFOs and LFCC meeting minutes
to verify that the PCFO was selected timely.
= Traced and reconciled amounts on the PCFO’s Schedule of Actual Expenses to the
PCFO’s general ledger.
= Reviewed supporting documentation for all expense transactions for the campaign to
verify that the expenses were allowable.
= Reviewed the LFCC meeting minutes and verified if the LFCC authorized the PCFO’s
reimbursement of campaign expenses.


I. INTRODUCTION AND BACKGROUND

Introduction

This report details the findings and conclusions resulting from our audit of the Volusia-Flagler-
Putnam Combined Federal Campaigns (CFC) for 2006 and 2007. 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 260 separate focal 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 the eligibility of local voluntary organizations, selecting and supervising
the activities of the PCFO, and acting upon any problems relating to a voluntary agency's
noncompliance with the policies and procedures of the CFC. The PCFO is responsible for
training employee key-workers and volunteers; preparing pledge cards and brochures;
distributing campaign receipts; submitting to an extensive and thorough audit of its 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 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.

This report represents the results of the first audit of the Volusia-Flagler-Putnam CFC.

The initial results of our audit were discussed with PCFO and LFCC officials during an exit
conference held on June 5, 2009. A draft report was provided to the PCFO and the LFCC on
August 13, 2009, for review and comment. As a result of the numerous findings identified in the
draft report which confirmed previous concerns of the OCFCO, they merged the Volusia-
Flagler-Putnam CFC with the Central Florida CFC mid-way through the 2008 campaign year.


CONTENTS

PAGE
L INTRODUCTION AND BACKGROUND ......cccccccscsesstecsicesseseseenseescscaeeanesnscastennenaennecsees 1

I. OBJECTIVES, SCOPE, AND METHODOLOGY

TH. = AUDIT FINDINGS 2.0... cc ceeseseseeeeseseesesreeeeceresnececnssseseseseesesesuesceneccentecsecaeeeeassnesseeacsceenae 6

A. BUDGET AND CAMPAIGN EXPENSES 0.0.00... csceceeseseteeseeseeateseesnessesseeeaessees 6

PCFO Application and Campaign Budget... .scsssesssssrsseeeersseseenesseencersnes 6
Solicitation and Selection of the PCFO
Disbursement of CFC Funds from PCFO Account
Approval of PCFO Expense Reimbursement

PONS

B. CAMPAIGN RECEIPTS AND DISBURSEMENTS ........-:cscscssesssetecseseeneeesceseeees 8

Pledge Card Errors.
One-Time Disbursement Approv:
Untimely CFC Disbursements...
Un-Cashed Check Procedures ...
Designated and Undesignated Funds Notifications
Donor Lists
CFC Receipts Applied to the Wrong 'g Campaign Year.
Accounting for CFC Funds... secseeveseeeneeseneeene

PNAMYEYND>

Local Eligibility Review Process ...
Local Application Acceptance Period
Local Application Denials Not Sent via the Proper Method
Local Eligibility Appeals Process

BYeNPT

IV. MAJOR CONTRIBUTORS TO THIS REPORT ...... ceetececaneaeeecatessoetesieaeenceeeererseesceecnecetane 17

APPENDIX (The PCFO and LFCC’s response, dated September 11, 2009, to the
draft audit report.)


CFC and risks that donors will not participate in future campaigns. As a result of not
releasing information requested to be released by donors, the PCFO is not allowing
those agencies and federations to make further contact with those donors who wish to
be contacted.

CFC Receipts Applied to the Wrong Campaign Year

The PCFO does not account for incoming CFC receipts in the proper manner. As a
result, we identified $2,088 in CFC funds that were not properly disbursed to member
agencies of the 2007 campaign.

CFC Memorandum 2006-5 indicates that most payroll offices are providing reports to
PCFO's in such a manner that the campaign to which a deposit pertains is
determinable. The memorandum goes on to direct the PCFO to bring discrepancies
up with the payroll office to determine a resolution to any questions as to which
campaign a deposit belongs to.

The PCFO's response to the OIG’s Policies and Procedures questionnaire stated that,

if provided, it uses the pay period ending date to determine which campaign a deposit
belongs to. In the case where detail was not provided, the PCFO applied the funds to
the next campaign.

To determine if the PCFO accounted for CFC receipts correctly, we reviewed the
bank statements from October 2007 through January 2009 and manually tracked each
deposit. We then accounted for all receipts that appeared to belong to the 2007
campaign and reconciled those receipts with the PCFO's reported 2007 campaign
receipts. Our review identified a variance of $2,088 that had not been recorded as a
receipt. We provided the PCFO with our review and it confirmed the accuracy of our
review.

As a result of not tracking CFC receipts correctly for the 2007 campaign, the amount
available for distribution to the member agencies and federations of that campaign
was $2,088 less than it should have been.

Accounting for CFC Funds

The PCFO could not provide detailed documentation to support withdrawals made
from the CFC account to cover campaign disbursements (both agency and federation
distributions and campaign expenses) for the 2007 campaign. As a result, we could
not determine if the CFC funds were properly disbursed.

5 CFR 950.901 (i)(2) states that the PCFO is responsible for the accuracy of the
disbursements it transmits. Additionally, 5 CFC 950.105 (d)(12) states that it is the
responsibility of the PCFO to produce any documents or information requested by the
LFCC and/or the Director within 10 calendar days of the receipt of that request.

13


Tl. OBJECTIVES, SCOPE, AND METHODOLOGY
OBJECTIVES

The primary purpose of our audit was to determine if the Volusia-Flagler-Putnam CFC was in
compliance with 5 CFR 950, including the activities of both the PCFO and LFCC. Our specific
audit objectives for the 2007 campaign were as follows:

« To determine if the charitable organization application process was open for the
required 30 day period; if applications were appropriately reviewed, evaluated,
and approved; and if the appeals process for rejected applicants was followed.

Budget and Campaign Expenses
* To determine if the PCFO’s budget was in accordance with the regulations.

« To determine if expenses charged to the campaign were actual, reasonable, did
not exceed 110 percent of the approved budget, and were properly allocated.

Campaign Receipts and Disbursements
© To determine if the total amount of funds received for the campaign, plus interest
income and less expenses, was properly distributed to the designated
organizations.
© To determine if the total amount of undesignated funds was properly allocated
and distributed to the various CFC participants.

PCFO as a Federation :
e To determine if the PCFO distributed funds only to member agencies.
© To determine if the PCFO charged its member agencies for expenses in a
reasonable manner.

Additionally, our audit objective for the 2006 campaign was:

Audit Guide Review
© To determine if the IPA completed the Agreed-Upon Procedures (AUP) as
outlined in the CFC Audit Guide (For Campaigns with Pledges Less than
$150,000) for the 2006 campaign.

SCOPE AND METHODOLOGY

We conducted this performance audit in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the audit to obtain
sufficient and appropriate evidence to provide a reasonable basis for our findings and
conclusions based on the audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on the audit objectives.

we


U.S. OFFICE OF PERSONNEL MANAGEMENT
OFFICE OF THE INSPECTOR GENERAL
OFFICE OF AUDITS

Final Audit Report

Subject:

AUDIT OF THE 2006 AND 2007
VOLUSIA-FLAGLER-PUTNAM
COMBINED FEDERAL CAMPAIGNS
DAYTONA BEACH, FLORIDA

Report No. 3A-CF-00-09-039

Date: December 17, 2009

--CAUTION--

Act and made ay:
ublic as it nay c

Dic to the public om the OLG webpage, caution needs ta be ex
ain proprictary information that was redacted from the publicly dis



Iii. AUDIT FINDINGS

Due to the numerous audit findings identified, which confirmed previous concems of the
OCFCO, they merged the Volusia-Flagler-Putnam CFC with the Central Florida CFC mid-way
through the 2008 campaign year. As a result of the OCFCO’s action, the UWVFC is no longer
the PCFO. In its response to the draft report, the PCFO and LFCC did not provide any
comments. However, they indicated support for the merger of the campaign with the
neighboring CFC. Therefore, we do not include individual recommendations for the
following findings as the PCFO and LFCC related to the 2006 and 2007 campaign years no
ionger conduct and administer the campaign. However, if the UWVFC wishes to be
considered as a PCFO for any campaigns in the future, we recommend that it undergo a thorough
audit and acknowledge its responsibilities as a PCFO.

The PCFO and LFCC administered the 2006 and 2007 Volusia-Flagler-Putnam CFCs in
compliance with all applicable CFC regulations, with the exception of the following areas:

A. BUDGET AND CAMPAIGN EXPENSES

1. PCFO Application and Campaign Budget

The UWVEFC did not submit an application and budget to serve as the PCFO for the
2007 campaign year.

Title 5, Code of Federal Regulations (CFR) 950.105(c), states that any federation,
charitable organization, or combinations thereof wishing to be selected for the PCFO
must submit a timely application that includes a campaign plan; CFC budget; and
signed statements pledging to administer the CFC fairly and equitably, conduct
campaign operations separate from non-CFC operations, abide by the directions,
decisions, and supervision of the LFCC and/or Director of the OPM, and
acknowledge being subject to 5 CFR 950.603.

The PCFO confirmed that it did not submit an application and budget for the 2007
campaign and stated that “in 2007 there was a change to the LFCC Chair as well as
the PCFO's CFC Coordinator. Neither the new Chair nor the new CFC Coordinator
were aware of all the CFC requirements. It was not until the IPA AUP was
completed in late 2008 that the PCFO and LFCC were made aware of several
procedural mistakes.”

As part of our review, we requested the PCFO to provide a copy of is most recent
application to determine if it was properly completed. The 2009 application provided
by the PCFO was lacking statements by the PCFO regarding the administration of the
CFC. Specifically, the application lacked a statement signed by the applicant's local
director or equivalent acknowledging the applicant is subject to the provision of

5 CFR 950.603.


Compared the budgeted expenses to actual expenses and determined if actual expenses
exceeded 110 percent of the approved budget.

To determine if the 2007 campaign’s receipts and disbursements were handled in accordance
with CFC regulations, we reviewed the following:

A judgmental sample of 33 out of 177 pledge cards (selected the top 25 pledge cards by
total amount pledged and judgmentally selected 8 pledge cards that raised questions to
the auditors) and compared them to the Pledge Card Report prepared by the PCFO.
Cancelled distribution checks to verify that the appropriate amount was distributed in a
timely manner.

One-time payments to verify that the PCFO properly calculated pledge loss and disbursed
the funds in accordance with the ceiling amount established by the LFCC.

The PCFO’s most recent listing of outstanding checks to verify that the PCFO was
following its policy for such checks.

The Pledge Notification Letters to verify that the PCFO notified the CFC agencies of the
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.

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

The PCFO Distribution Schedule to verify whether monthly disbursements reconcile with
the PCFO’s Campaign Receipts and Disbursements Schedule.

All bank statements used by the PCFO to verify that the PCFO was properly accounting
for and distributing funds.

The PCFO’s cutoff procedures and bank statements to verify that funds were allocated to
the appropriate campaign year.

The General Designation Options and Undesignated Funds Spreadsheet and the
Allocations and Disbursements Spreadsheet to verify disbursements were accurate and
proportionate to the PCFO’s allocation rates.

To determine if the PCFO was in compliance with the CFC regulations as a federation
(UWVFC) for the 2007 campaign, we reviewed the following:

Data reported on the CFC Receipts Schedule with supporting documentation to verify
whether receipts were properly recorded.

The CFC Distribution Schedule to ensure that the UWVFC did not disburse any funds to
member agencies not participating in the CFC.

The UWVFC contract with its member agencies to determine if the fees were reasonable
and supported.

The samples, mentioned above, that were selected and reviewed in performing the audit were not
statistically based. Consequently, the results could not be projected to the universe since it is
unlikely that the results are representative of the universe taken as a whole.

Finally, to accomplish our objective for the Audit Guide Review, we reviewed the CFC Audit
Guide (for campaigns with pledges less than $150,000) and determined the type of audit to be
completed by the IPA for the 2006 campaign. We also completed the AUP checklist to verify
that the IPA completed and documented the AUP steps.


Therefore, the PCFO and LFCC did not provide comments to the draft report. However, they
did indicate support for the merger of the campaign.


By not sending the denial letters via the proper method, the PCFO and LFCC would
not know if the agency or federation received the denial. Additionally, they would
not know when the denial was received to determine if an appeal was sent within the
proper timeframe.

Local Eligibility Appeals Process

For the 2007 CFC, it was the PCFO and not the LFCC that made appeals decisions.
Additionally, those decisions were riot communicated to the appealing organizations
via the proper method.

5 CFR 950.205 (b) states that “The LFCC must consider all timely appeals and notify
the appealing organization within a reasonable time period. Denial of the appeal by
the LFCC must be sent via U.S. Postal Service certified or registered mail with a
return receipt. Approval of local appeals may be sent via U.S. Postal Service regular
first class mail or facsimile.”

We reviewed the PCFO's responses to appeals-related questions in our policies and
procedures questionnaire. Initial PCFO responses to the questionnaire indicated that
the LFCC made decisions regarding agency and federation appeals to eligibility
denials. However, further review could not identify where these decisions were
discussed during the regular meetings of the LFCC. Discussion with the CFC
Coordinator determined that there was no additional involvement by the LFCC past
the initial eligibility review phase.

We identified two appeals during the 2007 CFC which were overturned, thereby
admitting the agency or federation into the CFC. In both of these situations, the
denials were due to the lack of appropriate documentation in the initial application.
The CFC Coordinator stated that in both of these situations the missing
documentation was provided and they didn't think LFCC involvement was necessary.
Additionally, the PCFO stated that they didn't involve the LFCC because of time
constraints and the difficulty it has getting the LFCC to meet regularly. The PCFO
then incorrectly communicated the appeal resolution via e-mail.

As a result of the PCFO making appeals decisions in the place of the LFCC, the
PCFO is making decisions that the LFCC is not aware of and may not be in
agreement with. Additionally, by not notifying the appealing agency or federation via
the proper method, there is no guarantee that they received the notification.

16


Solicitation and Selection of the PCFO

The LFCC did not publicly solicit for the position of PCFO for the 2007 CFC nor did it
formally select the UWVFC as the PCFO or approve the budgeted expenses for the 2007
campaign.

Disbursement of CFC Funds from PCFO Account

The PCFO inappropriately disbursed CFC funds from the PCFO's corporate checking
account in violation of the Federal regulations.

Approval of PCFO Expense Reimbursement

The PCFO did not submit a request for, nor did the LFCC approve, the reimbursement of
2007 campaign expenses.

CAMPAIGN RECEIPTS AND DISBURSEMENTS

Pledge Card Errors

The PCFO incorrectly input pledge information or misinterpreted the donor’s intentions on
four pledge cards. Additionally, our review of the PCFO's policies and procedures related
to pledge cards determined that it does not fully understand its responsibilities related to
contacting donors regarding their designations.

One-Time Disbursement Approval

The PCFO did not obtain approval from the LFCC to make one-time disbursements for the
-2007 campaign.

Untimely CFC Disbursements

The PCFO did not make initial or final disbursements for the 2007 campaign by the dates
required by the OCFCO guidance and the Federal regulations.

Un-Cashed Check Procedures

The PCFO’s policies and procedures related to un-cashed checks do not include all of the
steps required by CFC Memorandum 2006-5.

ii


The 2007 CFC Brochure states that the donor may designate to the agency of their
choice in the spaces provided. However, additional designations must be made on a
second pledge card.

5 CFR 950.402 (d) states that “In the event that a PCFO receives a pledge form that
has a total amount pledged that is less than the sum of the individual designations, the
PCFO must honor the designations by assigning a proportionate share of the total gift
to each organization designated.”

Additionally 5 CFR 950.105 (d)(4) states that the PCFO is responsible for ensuring
that no employee is questioned in any way as to their designation except by
keyworkers, loaned executives, or other non-supervisory Federal personnel.

We reviewed a questionnaire completed by the PCFO regarding its pledge card
policies and procedures and determined that two responses by the PCFO indicated a
lack of understanding of its responsibilities required in the Federal regulations.
Specifically, in regards to questions related to a donor designating to a charity not
listed in the CFC brochure and a pledge card with a mathematical error, the PCFO's
first step was to contact the employee to clarify the situation. According to 5 CFR
950.105(d)(4), the PCFO can not make this contact directly.

We also reviewed 33 pledge cards to determine if the following areas were correctly
input into the pledge system by the PCFO: a) donor name, b) amount donated,

c) agency codes donated to, and d) total amount donated. Our review identified four
pledge card problems. Specifically:

o We identified one pledge card where the donor incorrectly designated to more
than five agencies on one card, rather than use an additional pledge card as the
CFC brochure states. The PCFO did not contact the Keyworker to have the donor
fill out an additional pledge card nor did the PCFO treat the.additional agency
designation as undesignated (to no particular agency or federation). Instead the
PCFO recognized all designations. Additionally, on this same pledge card the
PCFO misapplied a designation as undesignated when a correct designation code
was listed.

co We identified one pledge card where the donor listed a designation to an incorrect
code number. Discussion with the PCFO determined that it attempted to contact
the employee directly to clarify the designation code, which as stated above is
against the Federal regulations. Contact was not made with the employee and the
amount was correctly accounted for as undesignated funds.

o We identified one pledge card where the donor marked through the designation
code area of the pledge card making it questionable as to whether the donor
wished to designate to that code or not. Discussion with the PCFO determined
that it recognized the designation without contacting the Keyworker to clarify the
designation.


Our review of the PCFO's disbursements found that no initial disbursements were
made by the date required by the regulations. We also noted that 39 of the 82 final
disbursements for the 2007 campaign were made after the March 31, 2009 deadline
set by the OCFCO. The PCFO stated that due to turnover in the PCFO office they
were unaware of the requirements. However, this error was brought to their attention
by their IPA in late 2008. As such, the PCFO stated that all requirements have been
met for the current (2009) campaign.

As aresult of the PCFO not making disbursements (both initial and final
disbursements) to agencies and federations of the 2007 campaign by the deadlines set
by the regulations and the OCFCO, those charities did not receive monies pledged
and donated to them by Federal employees in a timely manner.

Un-Cashed Check Procedures

The PCFO's policies and procedures regarding un-cashed CFC checks do not include
all of the required steps outlined by the OCFCO in CFC Memorandum 2006-5.

CFC Memorandum 2006-5 recommends that the PCFO develop and follow policies
and procedures regarding un-cashed checks. After a check has gone un-cashed for a
period of six months, the OCFCO recommends that the PCFO set up procedures that
require at least three documented follow-up attempts to reach the payee by phone and
e-mail. If it is determined that the agency or federation has gone out of business, the
funds must be distributed among the remaining CFC organizations for that campaign
year as undesignated funds.

The PCFO's current un-cashed check procedures are limited to reviewing any un-
cashed checks six months and older, contacting the payee to determine if they
received the check, stopping payment on the old check (depending on amount) if it
was not received, and reissuing a new check. Further discussion with the PCFO
determined that the state of Florida requires escheating of un-cashed checks to the
state that are over one year old. Therefore, implementation of the complete OCFCO
procedures for un-cashed CFC checks would alleviate any threat that CFC monies
would be escheated to the state in the future.

As a result of not fully implementing procedures that adhered to the recommendations
of the OCFCO, the PCFO is risking that un-cashed CFC checks may be escheated to
the state rather than distributed to other member agencies of the appropriate
campaign.

Designated and Undesignated Funds Notifications
The PCFO did not send designated and undesignated funds notification letters to all
agencies and federations of the 2007 campaign by the dates required by the Federal

regulations and OCFCO Calendar of Events. Additionally, the notifications sent did
not include all of the required information.

1}


UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
Washington, DC 20415

Office of the
Inspector General

EXECUTIVE SUMMARY

AUDIT OF THE 2006 AND 2007
VOLUSIA-FLAGLER-PUTNAM
COMBINED FEDERAL CAMPAIGNS
DAYTONA BEACH, FLORIDA

Report No. 3A-CF-00-09-039 Date: December 17, 2009

The Office of the Inspector General has completed an audit of the 2006 and 2007 Volusia-
Flagler-Putnam Combined Federal Campaigns (CFC). The United Way of Volusia-Flagler
Counties (UWVFC), located in Daytona Beach, Florida, served as the Principal Combined Fund
Organization (PCFO) during both campaigns. Our main objective was to determine if the
Volusia-Flagler-Putnam CFC was in compliance with Title 5, Code of Federal Regulations, Part
950 (5 CFR 950), including the responsibilities of both the PCFO and Local Federal
Coordinating Committee (LFCC). The audit identified 16 instances of non-compliance with the
regulations (5 CFR 950) governing the CFC. As a result of our draft audit report which
confirmed previous concerns of the Office of Combined Federal Campaign Operations
(OCFCO), they merged the Volusia-Flagler-Putnam CFC with the Central Florida CFC mid-way
through the 2008 campaign year.

BUDGET AND CAMPAIGN EXPENSES

¢  PCFO Application and Campaign Budget

The PCFO did not submit an application or campaign budget for the 2007 campaign as
required by the Federal regulations.

www.opm.gov www.usajobs.gov


UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
Washington, DC 20415

Office of the
Inspector General

AUDIT REPORT

AUDIT OF THE 2006 AND 2007
VOLUSIA-FLAGLER-PUTNAM
COMBINED FEDERAL CAMPAIGNS
DAYTONA BEACH, FLORIDA

Report No. 3A-CF-00-09-039 Date: December 17, 2009

VAs
Michael R. Esser

Assistant Inspector General
for Audits

www.upm.gov www.usajobs.go¥



By not submitting an application, the UWVEFC, while operating as the PCFO, did not
acknowledge nor accept the responsibilities of the PCFO. Additionally, by not
requiring the UWVEFC to provide an application, the LFCC disregarded its
responsibilities as required by the Federal regulations and as such jeopardized the
ability of the Volusia-Flagler-Putnam CFC to operate properly from the start.

Solicitation and Selection of the PCFO

The LFCC did not publicly solicit for local organizations to apply for the position of
PCFO for the 2007 CFC nor did it formally select the UWVFC as PCFO or approve
budgeted expenses for the 2007 campaign.

5 CFR 950.104(c) states that “The LFCC must select a PCFO to act as its fiscal agent
and campaign coordinator on the basis of presentations made to the LFCC as
described in [5 CFR] 950.105(c). ... The LFCC must consider the capacity of the
organization to manage an efficient and effective campaign, its history of public
accountability, use of funds, truthfulness and accuracy in solicitations, and sound
governance and fiscal management practices as the primary factors in selecting a
PCFO. The LFCC must solicit applications on a competitive basis for the PCFO no
later than a date to be determined by OPM ... .”

The PCFO confirmed that the LFCC did not formally solicit for a PCFO nor select it
to serve as PCFO. Additionally, the LFCC did not approve budgeted campaign
expenses for the 2007 CFC. The PCFO stated that “In 2007 there was a change to the
LFCC Chair as well as the PCFO's CFC Coordinator. Neither the new Chair nor the
new CFC Coordinator were aware of all the CFC requirements. It was not until the
IPA's AUP was completed in late 2008 that the PCFO and LFCC were made aware of
several procedural mistakes.”

By not soliciting for and selecting a PCFO for the 2007 CFC, the LFCC is not
adhering to its responsibilities as outlined in the Federal regulations. As a result, the
organization operating as PCFO was not reviewed and determined to have the
capacity to manage the campaign effectively, efficiently, and according to the Federal
regulations.

Disbursement of CFC Funds from PCFO Account

The PCFO inappropriately disbursed CFC funds from the PCFO's corporate checking
account in violation of the Federal regulations.

5 CFR 950.105 (c)(2)(ii) states that it is the PCFO’s responsibility to conduct
campaign operations such as banking, auditing, reporting, and distributions separate
from its non-CFC operations. Additionally, CFC Memorandum 2006-5 (dated
February 7, 2006) states that the use of the PCFO corporate account for distributions
to agencies and federations is not m compliance with CFC regulation 5 CFR section
950.105(c)(2)(ii).


2.

o We identified one pledge card where the donor listed two designations for $26
each, however, in the total gift area chose to give $1 per pay period ($26 total).
The PCFO incorrectly chose to recognize both designations in full which resulted
in the donor giving $2 per pay period and not the $1 listed on the pledge card. Per
discussion with the PCFO, we determined that it did not contact the Keyworker to
have the donor correct the total gift nor did it adjust the designations to the two
charities chosen to $13 each.

By having procedures that call for it to contact Federal employees directly, the PCFO
could inadvertently cause individuals to reconsider donating to the CFC in the future.
Additionally, by not following its procedures to contact Keyworkers regarding pledge
cards that are either incorrectly prepared by the donor or where the donor's intent is
questionable, the PCFO is making its own determinations regarding the intent of the
donor.

One-Time Disbursement Approval

The PCFO did not obtain approval from the LFCC to make one-time disbursements
to agencies and federations participating in the 2007 campaign.

5 CFR 950.901(i)(3) requires the PCFO to obtain approval from the LFCC prior to
making any one-time disbursements.

Our review identified one agency to whom the PCFO made a one-time disbursement.
According to the PCFO, it makes one-time payments to those agencies/federations
that receive designations of $10 or less. Our review of the LFCC meeting minutes for
the 2007 campaign did not identify where the LFCC discussed or approved the
payment of one-time disbursements to any agencies or federations. Further inquiry of
the PCFO determined that “no formal approval” was obtained from the LFCC.
Although this was a one-time occurrence for the 2007 campaign, the PCFO is still
required to obtain approval each year to make one-time disbursements.

As a result of not obtaining the approval of the LFCC, the PCFO made unauthorized
one-time disbursements.

Untimely CFC Disbursements

The PCFO did not make initial or final disbursements to the agencies and federations
of the 2007 campaign according to the dates set by the Federal regulations and

-OCFCO calendar of events.

5 CFR 950.901(i)(2) requires the PCFO to make initial payments beginning April 1
(2008). Additionally, the OCFCO CFC Calendar of Events directed the PCFOs to
make the initial payments by that same date. Regarding the final disbursement of
2007 campaign funds, the OCFCO Calendar of Events directed the PCFOs to make
that payment by March 31, 2009.