•.... ~--.··.·_·'··.·'·•• -r·~'_':""'·•• ~-,~-.

;f j 

il/ [

I

II

(f 

... 

US OFFICE OF PERSONNEL MANAGEMENT 

OFFICE OF THE INSPECTORGENERAL .' 

OFFICEOF AUDITS 

. ... . . . 

·'inal A,lltlit'1\epOrt ..
 

"Subj~ct:

. . 

Report Np.3A:~(~F'-OO~08-031 . 

Date: ··June1§« 20(}9 

( . 

.-~CAUTION- ThissUI:lit report has bun distributed to Fed~ralomdalswho ar~j-csl>oDsiblc for the administration ()Hbeaudilcdprogrllm~ This audit . 

rcpiJrt mliy .contain proprietirydata whiChis p~olede!I by F~deraIlaW (18 U.S~c. J905); therHore, wbile this audit report is avail able 

·undtdbe FreedomorJnformatioiJAct, ~antion needs.to be exercised before releasing thereporttothe general public. . 
I 

/


UNITED STATES OFFICE OF PERSONNEL MANAGEMENT 

Washington, DC 20415 

r 

Office of the 

Inspector General 

AUDIT REPORT 

AUDIT OF THE 2005 AND 2006
 

NORTH CENTRAL TEXAS
 

COMBINED FEDERAL CAMPAIGNS
 

DALLAS, TEXAS
 

Report No. 3A-CF-OO-08-031 Da~: June 18, 2009 

Michael 

~cL- R. Esser 

Assistant Inspector General 

for Audits 

www.opm.gov www.lIsaJobs.gQV 
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
 

Washington, DC 20415
 

Office of the 

Inspector General 

EXECUTIVE SUMMARY.
 

AUDIT OF THE 2005 AND 2006
 

NORTH CENTRAL TEXAS
 

COMBINED FEDERAL CAMPAIGNS
 

DALLAS, TEXAS
 

Report No. 3A-CF-OO-08-031 Date: June 18 , 2009 

The Office ofthe Inspector General has completed an audit ofthe 2005 and 2006 North Central 

Texas Combined Federal Campaigns (CFC). The United Way of Metropolitan Dallas, located in 

Dallas, Texas, served as the Principal Combined Fund Organization (PCFO) during both 

campaigns. Our main objective was to determine ifthe North Central Texas CFC was in 

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

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

audit identified six instances or non-compliance with the regulations (5 CFR 950) goveming the 

CFC. 

BUDGET AN]) CAMPAIGN EXPENSES 

• Unallowable Campaign Expenses 

The PCFO charged the 2006 Cf'C Campaign $85,328 in unallowable expenses. 

• PCFO Expense Reimbursement Not Properly Authorized 

The PCFO's 2006 campaign expenses were not properly authorized by the LFCC before 

reimbursement. 

www.opm.go\l www.usajobs.go\l 
• CFC Expenses Not Reconcilable to the Approved Budget 

The PCFO did not maintain its CFC expenses in a format that was reconcilable to the 

budget approved by the LFCC. , 

CAMPAIGN RECEIPTS AND DISBURSEMENTS 

•	 CFC Funds Maintained Incorrectly 

The PCFO did not maintain CFC funds separate from its corporate funds and did not keep 

the funds in an interest bearing account. 

•	 Incomplete Donor Lists 

The PCFO did not provide all federations with a donor list that indicated which member 

organizations were to receive the donor's information.
 

ELIGIBILITY
 

•	 Local Eligibility Solicitation Process Documentation Not Maintained 

The LFCC did notmaintain documentation to support that it accepted local charity 

applications for eligibility in the 2006 campaign for 30 calendar days. 

11 
CONTENTS 

PAGE 

EXECUTIVE SUMMARy i , 

I. INTRODUCTION AND BACKGROUND 1
 

II. OBJECTIVES, SCOPE, AND METHODOLOGy 3
 

III. AUDIT FINDINGS AND RECOMMENDATIONS 7
 

A. BUDGET AND CAMPAIGN EXPENSES , 7
 

1. Unallowable Campaign Expenses 7
 

2. PCFO Expense Reimbursement Not Properly Authorized 13
 

3. CFC Expenses Not Reconcilable to the Approved Budget 14
 

B. CAMPAIGN RECEIPTS AND DISBURSEMENTS 15
 

1. CFC Funds Maintained Incorrectly 15
 

2. Incomplete Donor Lists 16
 

C. ELIGIBILITY 17
 

1. Local Eligibility Solicitation Process Documentation Not Maintained 17
 

IV. MAJOR CONTRIBUTORS TO TI-IIS REPORT 19
 

APPENDIX A: (The PCFO and LFCC's response, dated January 6,2009, to the draft 

audit report.) 

APPENDIX B: (The PCFO and LFCC's response, dated February 10,2009, to the draft 

audit report.) 
I. INTRODUCTION AND BACKGROUND
 

Introduction 

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

the North Central Texas Combined Federal Campaigns (CFC) for 2005 and 2006. 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. It consists of278 separate local campaign organizations located throughout the 

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

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

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

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

are achieved. 

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

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

local CFC, determining the eligibility oflocal voluntary organizations, selecting and supervising 

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

noncompliance with the policies and procedures ofthe CFe. 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 ofthe 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. 

Our previous audit ofthe North Central Texas CFC was completed in 2001 and covered 

campaign years 1998 and 1999. The audit identified seven areas of non-compliance which were 

satisfactorily resolved through the OCFCO. 

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

conference held on May 1,2008. A draft report was provided to the PCFO and the LFCC on 
December 1,2008 for review and comment. The PCFO and LFCC's responses to the draft 

report were considered in preparation ofthis final report and are included as Appendices. 

2
 
II. OBJECTIVES, SCOPE, AND METHODOLOGY
 

OBJECTIVES 

The primary purpos~ of our audit was to determine if the North Central Texas CFC was in 

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

audit objectives for the 2006 campaign were as follows: 

Eligibility 

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

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

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

Budget and Campaign Expenses 

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

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

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

Campaign Receipts and Disbursements 

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

income and less expenses, was properly distributed to the designated 

organizations. 

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

and distributed to the various CFC participants, 

PCFO as a Federation 

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

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

reasonable manner. 

Additionally, our audit objective for the 2005 campaign was: 

Audit Guide Review 

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

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

Greater) for the 2005 campaign. 

SCOPE AND METHODOLOGY 

We conducted this performance audit in accordance with generally accepted govenunent 

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. 

., 

oJ 
The audit covered campaign years 2005 and 2006. The United Way of Metropolitan Dallas 

(UWMD), located in Dallas, Texas, served as the PCFO during both campaigns. The audit 

fieldwork was conducted at the offices ofthe PCFO from April 28 through May 2, 2008. 

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

The North Central Texas eFC received campaign pledges, collected campaign receipts, and 

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

Campaign Total Total Administrative 

Year Pledges Receipts Expenses 

2005 $2,954,491	 $2,749,540 $231,900 

2006 $4,552,796	 $4,258,626 $390,122 

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 else carne to our attention 

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

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

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

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

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

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

Memorandums. 

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

regards to eligibility, we reviewed the following: 

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

accepted applications from organizations for at least 30 days. 

•	 The process and procedures for the application evaluation process. 

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

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

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

following: 

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

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

related to the selection ofthe PCFO. 

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

PCFO's general ledger. 

•	 Reviewed supporting documentation for a judgmental sample of 100 actual expense 

transactions from 10 expense accounts (out of a total of 56 expense accounts). Accounts 

were judgrnentally selected based on a nomenclature review, as well as high dollar 

amounts paid. 

4
 
•	 Reviewed the LFCC meeting minutes and verified ifthe LFCC authorized the PCFO's 

reimbursement of campaign expenses. 

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

exceeded 110 percent ofthe approved budget. 

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

regulations, we reviewed the following: 

•	 A judgmental sample of 36 out of 13,368 pledge cards (selected the top 25 pledge cards 

by total amount pledged and judgmentally selected II pledge cards from 2 agencies that 

were not attributable to an individual) and compared them to the Pledge Card Report 

prepared by the PCFO. 

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

timely manner. 

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

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

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

following its policy for such checks. 

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

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

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

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

•	 FOID1S 1417 provided by the PCFO and the OCFCO to identify material differences. 

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

the PCFO's Campaign Receipts and Disbursements Schedule. 

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

was properly accounting for and distributing funds. 

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

the appropriate campaign year. 

•	 The General Designation Options and Undesignated Funds Spreadsheet and the 

Allocations and Disbursements Spreadsheet to verify disbursements were accurate and 

proportionate to the PCFO's allocation rates. 

To determine if the PCFO was in compliance with the CFC regulations as a federation (UWMD), 

we reviewed the following: 

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

whether receipts were properly recorded. 

•	 The CFC Distribution Schedule to ensure that the UWMD did not disburse any funds to 

member agencies not participating in the 2006 CFe. 

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

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

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

that the IPA completed and documented the AUP steps. • 

6
 
III. AUDIT FINDINGS AND RECOMMENDATIONS
 

The PCFO and LFCC administered the 2005 and 2006 North Central Texas CFCs in compliance 

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

A. BUDGET AND CAMPAIGNEXPENSES 

1. Unallowable Campaign Expenses	 $85,328 

Based upon our review ofthe expense samples provided by the PCFO, we identified 

$85,328 in unallowable expenses charged to the 2006 CFC. 

5 CFR 950.106 (a) states that the PCFO "shall recover from the gross receipts ofthe 

campaign its expenses, approved by the LFCC, reflecting the actual costs of 

administering the local campaign." Additionally, 5 CFR 950.106 (b) states that the 

PCFO "may only recover campaign expenses from receipts collected for that 

campaign year." 

Furthermore, 5 CFR 950.105 (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 expenses." 

Wejudgmentally selected 100 general ledger (OL) transactions charged to the CFC 

from 10 judgmentally selected accounts to determine if the costs were actual, related 

to the CFC, and charged ~o the correct campaign year. For allocated transactions, we 

also determined whether the allocation was reasonable and accurate. Our review 

identified $85,328 in charges that did not meet our review requirements. The errors 

identified resulted from the following: 

•	 $39,746 in charges that were not supported by actual invoices and/or receipts 

as required by the Federal regulations, Specifically, we identified the 

following: 

o	 $24,910 in Regular Salaries (account 7010) where the amount charged 

to the GL did not reconcile to the supporting documentation (payroll 

registers) provided to us for transactions occurring from March 2006 

through February 2007. 

PCFO Comments: 

The PCFO disagrees with this portion ofthe finding; however, no 

reasoning was provided for the disagreement. 

7 
c· ••' ••,;.',••'~ ,.,:....:~ ~.-:.... ". ". ".~-~.:_.....;-.._"--_, 

OIG Comments: 

We reviewed the payroll registers provided by the PCFO to support the 

charges to the CFC for regular salaries and compared the costs charged to 

the CFC departments (120 and" 320) and found that the costs charged to 

the CFC exceeded the actual salary costs allocated to the CFC departments 

in the payroll registers. As no additional explanation was provided by the 

PCFO, the finding remains in our report. 

o	 We identified $]4,836 charged to Temporary Salaries (account 

number 7020-320) where there was no supporting documentation 

provided for the charges to the CFC. 

PCFO Comments: 

The PCFO disagrees with this portion ofthe finding. It states that the 

costs related to these questioned costs do not entail an invoice and/or 

receipt since they are not services rendered by a temporary agency due to 

the sensitivity of the data handled by pledge card processors. To support 

that CFC work was being completed it enclosed copies ofpledge 

processing report envelopes which contain the signature and initials of the 

employee in question. 

OIG Comments: 

The PCFO did not provide documentation to support the charges in 

question. The charges to the CFC must be supported to be chargeable to 

the CFC. If the costs charged were not for temporary employees (as stated 

by the PCFO), then the documentation supporting the charges to the CFC 

(i.e., payroll register and any allocation documentation which the PCFO 

provided for "Regular Salaries") must be maintained for the costs to be 

chargeable to the CFC. 

•	 $22,163 in charges that were the result of incorrect, inaccurate, or unsupported 

allocation methodologies. Specifically, we identified the following: 

o	 $21,911 charged to Temporary Salaries (account 7020-120) where the 

allocation percentage used to charge costs to the CFC was not backed 

by verifiable documentation. Additionally, the invoices and time cards 

provided did not indicate that the temporary employee charges were 

related to the CFC. 

PCFO Comments: 

The PCFO disagrees with this portion ofthe finding and states that the 

CFC Director (a member ofthe PCFO) requested the use ofthe temporary 

8
 
employees, approved the invoices, and determined the allocation 

percentage used to charge the costs to the CFC. 

DIG Comments: 

The PCFO did not provide sufficient documentation to support the 

determination ofthe allocation percentage used to charge costs to the 

CFC. As stated above, the invoices do not indicate or support what work 

was done by the temporary employee (the invoices only indicate the 

temporary employee name, hours worked, and hourly rate charged). 

The PCFO provided a copy of an E-mail from the CFC Director 

(previously provided and reviewed) which states a 96 percent allocation to 

the CFC. This E-mail is not sufficient documentation because it does not 

show the determining factors for the allocation percentage. The E-mail 

simply states that the allocation was based on "this year's budget 

allocations." The Federal regulations require that the PCFO only recover 

expenses that are based on the "actual costs of administering the local 

campaign." Simply providing an E-mail which states it is basing the 

allocation of costs on a budget formula is not adhering to this regulation 

requirement. 

o	 We identified $2,157 in the Health Benefits (account 7130) and $310 

in Regular Salaries (account 7010) accounts where either inconsistent 

or inaccurate allocation methodologies were applied. Our review for 

the health benefits account focused on OL transactions for July 

through August 2006, while our review ofregular salaries focused on 

all GL transactions from March 2006 through February 2007. 

PCFD Comments: 

The PCFO agrees with this portion of the finding and recognizes that 

calculation errors were made. It goes on to further state that once the new 

Chief Financial Officer is on board (February 2009) a revised process will 

be implemented to alleviate repeated miscalculations. 

DIG Comments: 

We accept the PCFO's response; however, it is the responsibility ofthe 

PCFO to correct the errors identified in this audit, review the following 

year's calculations and make any necessary adjustments. 

o	 We identified $2,215 in Electrical Utilities (account 7510) that were 

undercharged to the CFC. During the audit, the PCFO informed us 

that charges to this account were allocated based on a headcount ratio. 

For the CFC during this period the ratio was 4.98 percent for 

9
 
department 120 and 0.35 percent for department 320. However, our 

review ofthe electrical utility invoices for June through December of 

2006 showed that the actual allocation percentages used were 2.43 

percent and 0.47 percent respectively. 

PCFO Comments: 

The PCFO agrees with this portion ofthe finding. 

•	 $15,229 in charges where we could not verify whether the costs charged were 

related to the CFC from the supporting documentation provided. Specifically, 

we identified the following: 

a	 $11,951 in Regular Salaries paid to United Way employees that were 

not listed as working on the CFC in the salary allocation spreadsheets 

provided to us. 

PCFO Comments: 

The PCFO did not have an opportunity to respond to this portion ofthe 

finding as it was identified as a result of additional documentation 

provided in response to the draft report. 

a	 We identified $] ,546 in Out-of Town Travel expenses (account 

number 7850) where documentation was provided by the PCFO, 

however, it did not tie back to the GL. Therefore, we could not 

determine ifthe costs were related to the CFC. Additionally, all ofthe 

documentation provided for this account did not indicate what the 

travel was for (i.e., there were no agendas or meeting invitations to 

show that the travel was related to the CFC). 

PCFO Comments: 

The PCFO disagrees with this portion ofthe finding; however, no 

reasoning was provided for the disagreement. Based on documentation 

provided by the PCFO, the finding was reduced from $3,025 to $1,546. 

OIG Comments: 

It is the responsibility of the PCFO to maintain documentation that not 

only supports the amount ofthe charge to the CFC, but also that the 

charges reflect the "actual costs of administering the local campaign." 

Maintaining documentation that merely shows travel occurred does not 

indicate if the travel was a cost necessary for administering the local 

campaign. 

10
 
o	 We identified $1,418 in cell phone charges (account 7415) where we 

could not tell if the charges were related to the crc. The cell phones 

were assigned to specific personnel, but were charged 100 percent to 

the CFC. The expenses should be charged using an allocation method 

similar to how salaries are allocated. 

PCFO Comments: 

The PCFO agrees with this portion of the finding and states that it will 

make necessary changes for the 2008 campaign and thereafter. 

OIG Comments: 

It is the responsibility ofthe PCFO to review all cell phone charges to the 

CFC, determine the actual overcharge to the CFC, and make corrections 

for the 2006 and later campaigns, not only the 2008 campaign and later. 

o	 We.identified $314 in Campaign Aids (account 8020) related to two 

transactions where the documentation provided did not indicate that 

the charges were related to the CFC. 

PCFO Comments: 

The PCFO disagrees with this portion of the finding; however, no 

reasoning was provided for the disagreement. 

DIG Comments: 

The PCFO provided supporting documentation for the two receipts 

questioned. However, the receipts provided as support for the transactions 

do not indicate that the purchases (gift cards) benefited the CFC. 

•	 $8,190 in Accounting Fees (account 7210) that were charged to the 2006 

campaign in elTor. The PCFO charged the CFC for Auditing Fees related to 

the Agreed-Upon Procedures Audit and Financial Statement Audit for a prior 

year's campaign. These costs, based on the timing of the invoice (dated 

June 19, 2006), could not be related to the 2006 campaign as it was still in 

operation. 

PCFO Comments: 

The PCFO disagrees with this portion of the finding and states that the CFC 

regulations in effect at the time the accounting fees were incurred did not 

allow audit expenses to be charged to the campaign year being audited. It also 

states that during the audit period the regulations required CFC accounts to be 

brought to a zero balance at the end of each disbursement cycle. 

11
 
Furthermore, the PCFO stated that there was no guidance issued by the 

OCFeO until November 14,2008, and that it would follow that guidance 

from this point forward. 

,

OIG Comments: 

The PCFO is incorrect in its interpretation of the Federal regulations as they 

apply to the matching of expenses to campaign receipts. The regulation 

clearly states that it is the responsibility of the PCFO to recover expenses from 

gross receipts of the campaign to which they belong. The regulations do not 

state to recover expenses from the campaign in which they are incurred. The 

PCFO's assertion that the "regulations required accounts be brought to zero" 

at the end of each disbursement period falls short as it could have accrued 

(recognized the expense prior to actual payment) the expense related to the 

audits and then offset the accrual when the expense was actually incurred. 

The PCFO is also incorrect in its assertion that the OCFCO has never (until 

November 2008) issued guidance on how auditing fees should be accounted 

for. CFC Memorandum 2004-01 (dated January 4,2004) issued guidance. 

related to concerns from PCFO's who recognized that no funds were left in 

their accounts for the 2001 campaign (first year audited). The OCFCO 

allowed a one time exception to 5 CFR 950.106(b) and suggested that the 

PCFOs plan for this expense in future campaigns. Additionally, the OCFCO 

in its yearly CFC regional workshops (' Accounting for the CFC' break out 

sessions) has specifically covered these audit expenses and provided 

suggestions to those PCFO's concerned with adhering to the regulations. This 

new CFC Memorandum does not represent new guidance or an official 

change in accounting for these types of costs, but a clarification to show 

proper accounting for them as this is a common issue to all PCFOs. 

As a result ofthese unallowable expenses, the PCFO overcharged the 2006 

participating campaign organizations $85,328. 

Recommendation 1 

We recommend that the OCFCO ensure that the PCFO distributes $85,328 in 

unallowable expenses charged to the CFC to the participating organizations of the 

2006 campaign. 

Recommendation 2 

We recommend that the OCFCO and LFCC ensure that the PCFO understands its 

responsibilities to maintain sufficient documentation to support the charges to the 

cre and that the charges are related to the CFC. 

12 
Recommendation 3 

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

appropriate allocation support (including how allocations are determined) for all costs 

allocated. to the CFC. 

Recommendation 4 

We recommend that the OCFCO and LFCC ensure that the PCFO makes necessary 

changes to properly adhere to the clarified guidance (CFC Memorandum 2008-09) 

related to the charging ofAUP expenses related to the CFC Audit Guide. 

2. PCFO Expense Reimbursement Not Properly Authorized 

The LFCC did not properly authorize the PCFO's reimbursement of campaign 

expenses for the 2006 campaign. 

5 CFR 950.104(b)(17) states that the LFCC is responsible for "Authorizing to the 

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

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

approved campaign budget by more than 10 percent." 

We reviewed all LFCC meeting minutes provided to determine ifthe LFCC 

authorized the PCFO's reimbursement of 2006 campaign expenses. Our review of 

those meeting minutes did not identify where the LFCC approved the PCFO's 

reimbursement of expenses for the 2006 campaign year. We also did not receive any 

other proof of approval from the PCFO or LFCC. 

As a result of not properly authorizing reimbursement of campaign expenses, the 

LFCC is running the risk that expenses that are not legitimate CFC costs, 

inadequately documented costs, and/or expenses that exceed the approved budget by 

more than 10 percent may be improperly reimbursed to the PCFO, thereby reducing 

the amounts paid to participating CFC organizations. 

PCFO's Comments: 

The PCFO disagrees with this finding and stated that beginning in September 2007 

the LFCC began reviewing year-to-date CFC expense reports at its meetings, 

approves expenses as they are incurred, and is aware ofits responsibilities. 

OIG Comments: 

The PCFO did not provide documentation to show the approval ofits actual expenses 

reimbursed in March 2007. The steps taken by the LFCC, beginning in September 

2007, are a good first step; but they do not ensure that the costs are accurate or that 

they are legitimate CFC expenses. It would be worthwhile for the LFCC to 

13 
,~ .~. ," .... -.;~,.. -:.~.:.-':.. ..:..:;_.;;. 

physically review a detailed CFC transaction report (by category); and not just a 

summary report, to ensure that no non-CFC expenses are included and that the reports 

are accurate prior to authorizing the PCFO to reimburse itself for campaign expenses. 

Recommendation 5 

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

responsibilities as related to 5 CFR 950.1 04 (b) (17) and ensure that it properly 

authorizes the PCFO's reimbursement of campaign expenses for future campaigns. 

3. CFC Expenses Not Reconcilable to the Approved Budget 

The PCFO was reimbursed for 2006 CFC expenses from six accounts not included or 

reconcilable to its budget submitted and approved by the LFCC. 

48 CFR 950.105 (d) (7) states that it is the responsibility ofthe PCFO to maintain its 

expenses in a format that is reconcilable to the budget submitted to and approved by 

the LFCC. 

We reviewed the actual expense charges ofthe PCFO and compared the expenses and 

accounts charged to those proposed to the LFCC in the budget included in the PCFO 

application. Our review identified six GL accounts charged to the CFC by the PCFO 

that were not included in the budget. Costs charged to the CFC by the PCFO for 

these accounts amounted to $3,908. 

Specifically, the accounts in question are: 

7330 - Computer Software 

7340 - Other Computer Supplies 

7415 - Mobile Phones - Public Sector 

7860 - Out of Town Meal Reimbursement 

7915 - Local Meal Reimbursement 

8212 - Workers Comp Insurance 

Although these accounts, and the transactions contained within them, may be 

allowable, ifthe PCFO does not maintain its expense records in a format that is easily 

reconcilable to its approved budget there is a risk that unallowable charges and/or 

non-Cf'C expenses could be charged to the CFC, which would reduce the amounts 

paid to participating organizations. 

PCFO's Comments: 

The PCFO disagrees with the finding and states that according to 5 CFR 950.105 (c) 

(1) the budget submitted to the LFCC was an estimate ofthe costs required to operate 

the CFC and that it is "impossible" to reconcile actual expenses to an estimate. It 

goes on to further state that it has provided support to show that the costs charged 

14
 
from the accounts in question reflect the actual costs of administering the local 

campaign. The PCFO requests that this finding be removed from the final audit 

report. 

ole Comments: 

The allowability ofthe costs charged from these accounts is not in question, as we 

recognize that these types of costs are often necessary for administering a local 

campaign. However, the regulations require that the budget submitted at the time the 

PCFO is selected reflect and be reconcilable to the costs ultimately charged to the 

campaign. The budget provided by the PCFO was in the format of general ledger 

accounts and the actual costs charged for six accounts were not included in its budget. 

We are requesting that the PCFO ensure that all accounts that could reasonably be 

chargeable to the CFC be included in the budget (even if the PCFO does not always 

anticipate costs to come from those accounts). 

Recommendation 6 

We recommend that the PCFO include all accounts that could reasonably charge costs 

to the CFC in the budget submitted to the LFCC to ensure that it is reconcilable to the 

format that is contained in its general ledger. 

B. CAMPAIGN RECEIPTS AND DISBURSEMENTS 

1. CFC Funds Maintained Incorrectly 

Om review determined that the PCFO did not maintain CFC accounts separate from 

the PCFOts corporate accounts and that CFC funds were not maintained in an interest 

bearing account. 

5 CFR 950.1 05(d)(8) states that the PCFO is responsible for "Keeping and 

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

the PCFO's internal organizations financial records and bank accounts." 

We reviewed the bank statements provided by the PCFO to determine ifthe PCFO 

maintained CFC accounts and PCFO accounts separately and in an interest bearing 

account. We determined that the the PCFO did not maintain a CFC only checking 

account. Instead the PCFO transferred the distributable funds to its corporate 

checking account and cut the checks from that account. Although we found no errors 

in the disbursement of CFC funds, this does not adhere to the regulations governing 

the CFC. Our review also found that the CFC funds were not maintained in an 

interest bearing account. 

As a result ofthe above errors, the PCFO ran the risk ofincorrectly disbursing CFC 

funds and reduced the distributions to participating organizations by not earning 

interest income. 

15 
PCFO's Comments: 

The PCFO agrees with the finding and stated that, effective February 2009, it has 

segregated all CFC funds from other corporate funds and is maintaining them in 

analyzedinterest bearing accounts. 

Recommendation 7 

We recommend that the OCFCO and LFCC ensure that the PCFO has ceased the 

practice ofdisbursing CFC funds from its corporate account and set up a CFC only 

checking account to disburse monies to participating organizations. 

Recommendation 8 

We recommend that the OCFCO and LFCC ensure that the PCFO has moved CFC 

funds to an interest-bearing bank account for CFC funds, as required by 5 CFR 

950.105(d)(8). 

2. Incomplete Donor Lists 

The PCFO did not provide all federations with donor lists that indicated which 

member organization was to receive the donor information. 

5 CFR 950.601 (c) states that "It is the responsibility of the PCFO to forward the 

contributor information for those who have indicated that they wish this information 

released to the recipient organization directly, if the organization is independent, and 

to the organization's federation if the organization is a member ofa federation." 

During our review, we requested and reviewed 10 donor lists sent to participating 

agencies and federations to determine if they were sent by the required date, ifthe 

PCFO did not release donor social security numbers and pledge amounts, and ifthe 

notifications to federations indicated which member organization was to receive the 

donor information. 

Our review determined that the donor list sent to Community Health Charities of 

Texas did not identify which member organization was to receive the donor 

information. 

As a result of not indicating which member organization was to receive the donor's 

information, the federation had no way of telling which member organization to 

release the donor information to. 

16
 
PCFO's Comments: 

The PCFO agrees with the finding and stated that the reports have been modified to 

identify t~e federation and member agency where the donor's information should be 

sent. . 

Recommendation 9 

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

member organization designated by the donor to receive their personal information be 

included in the donor list sent to the federation. 

C. ELIGIBILITY 

1. Local Eligibility Solicitation Process Documentation Not Maintained 

The LFCC did not maintain documentation to support that it accepted applications 

from local charities for eligibility in the 2006 campaign for 30 calendar days as is 

required by the Federal regulations. 

5 CFR 950.801(5) states that the LFCC "must accept applications from organizations 

seeking local eligibility for 30 calendar days as determined by the LFCC ."." 

5 CFR 950.604 states that the PCFO "shall retain documents pertinent to the 

campaign for at least three completed campaign periods." 

As part of our review, we requested that the LFCC provide a copy ofthe public 

solicitation of local charities to participate in the 2006 campaign to determine if the 

application period was open for at least 30 calendar days. 

According to the PCFO, local applications for eligibility to participate in the 2006 

Campaign were solicited through a public notice placed on the CFC of North Central 

Texas website. We also reviewed the LFCC meeting minutes (March and April of 

2006) to determine the time frame of when local charity applications were accepted. 

Our review determined that the period opened March 10, 2006, but we were unable to 

identify a date where applications would no longer be "accepted. Therefore, we could 

not determine if applications were accepted for 30 calendar days because the LFCC 

could not provide any other supporting documentation. 

As a result of not maintaining documentation of the local charity application 

acceptance period, we could not determine if the application period was open for the 

required amount of time or if eligibility decisions were rendered within the time 

frames required by the Federal regulations. 

17
 
PCFO's Comments: 

The PCFO agrees with the finding and stated that it will retain electronic copies of 

public notices listed on its website. 

Recommendation 10 

We recommend thatthe OCFeO ensure that the LFCC maintains all documentation 

pertinent to the campaign, such as information related to the period applications are 

accepted from local charities wishing to participate in theCFC. 

18
 
IV. MAJOR CONTRIBUTORS TO THIS REPORT 

Special Audits Group 

~uditor-In-Charge

/ 

Group Chief 

Senior Team Leader 

Senior Team Leader 

19
 
Appendix A 

1/2$ldq)~

Combined Federal Campaign of North Central Texas 

January 6, 2009 

Office of Personnel Management 

Office ofthe Inspector General 

Attention: •••••• 

1900 E Street NW, Room 6400 

Washington, DC 20415-1100 

Dear:_ 

In response to the OIG Draft Audit Report Findings for the 2005 and 2006 campaigns for Combined 

Federal Campaign of North Central Texas (CFCNCTX) CFC Code 0839, we are submitting the following 

responses and attached supporting documentation. 

I.	 Unallowable Campaign Expenses ($60,398) 

o	 No supporting documentation for $21,911 charged to Temporary Salaries (account 7020­

120). 

1.	 A sample review of invoices ~andan email authorizing expenses 

from the formerCFC Directo_(attachment I-B), is provided. 

_was the authorizing agent acting on behalf of the LFCC. Her request to 

to which the 

contract with 

~aid.

Dunhill Staffing Systems, 

According 

Inc. resulted in the hiring 

to guidance contained 

0_in _ 

email 96% o_salarywas charged to CFe. 

Request: It is requested this finding be removed from the final audit report. 

o	 Inaccurate or inconsistent allocation methods were applied to $2157 in Health Benefits 

(account 7130) and $356 in Regular Salaries (account 7010). 

i.	 UWMD recognize the calculation errors made in the spreadsheet used. Once the 

new Chief Financial Officer is onboard in February 2009 a revised process will 

be implemented to alleviate repeated miscalculations. UWMD will also 

communicate the method of future calculation to the LFCC. 

o	 CFC was undercharged $2215 in electrical utilities (account 7510). 

i.	 The PCFO wishes not to recoup these charges, but Laoffset previously mentioned 

unallowable expenses totaling $'25.13 leaving a net unallowable expense of $298. 

The method of calculation resulting in the error will be revised as stated. 

o	 No invoice and/or receipt for $20,752 in charges. 

i.	 Honoring employee designations and insuring anonymity of employees is the 

responsibility of the Principal Combined Fund Organization (PCFO) as outlined 

in 5 CFR 950.105 c3d I and 5 CFR 950.105 c3d6. In fulfilling this regulatory 

obligation, the PCFO is responsible for hiring and providing pledge processing 

staff (see 5 CFR 950.104 bi4) much like it does for employing the CFC Director 

and other staff who assist with campaign operations. These positions do not 

entail an invoice and/or receipt since they are not services rendered by a 

temporary agency. Due to the sensitivity ofdata handled a background check is 

conducted and a temp service not used for hiring pledge processing staff. 
In addition, according to state and federal employment laws, the hiring 

organization must maintain a W-4 and provide employees with an annualized 

W-2. Because CFC is not a recognized organization by the Internal Revenue 

Service (IRS) it could not engage in this hiring contract to which a receipt or 

invoice would have been possible. As such, the contract agree.'of 

application, had to be between UWMD and the employee hired . 

To support CFC work was being completed by we are enc osmg 

sample pledge processing report envelopes (attachment l-C) which contain 

signature and initials for auditing, keying, and releasing data. 

Request: It is requested $14,836 in Temporary Salaries (account 7020-320) be 

allowed as justifiable expenses in accordance with 5 CFR 950 and in adherence 

to state and federal employment laws. It is also requested this finding be 

removed from the final audit report. 

o	 Supporting documentation for $1987 in salaries did not reconcile to account 7010. 

i.	 Additional clarification from the OIG is needed before a response can be 

provided. We are however enclosing March 2006 (attachment I-D) and July 

2006 - February 2007 (attachment I-E) general ledger detail as requested. 

Request: OIG to clarify what additional supporting documentation is needed 

with a 7-10 business day response period from the PCFO. 

o	 Unsupported expenses of $904. 

i.	 Actual supporting documentation and source documents for the three invoices 

totaling $904.22 are enclosed for your review (attachment I-F). The actual total 

is $906.14 since $1.92 was overpaid on a previous invoice to Purple Giraffe. 

Request: It is requested this finding be removed from the final audit report. 

o	 Could not verify if $9247 was CFC related. 

1.	 Supporting documentation and source documents for the three undocumented 

invoices totaling $7829 (account 8020) are enclosed for your review (attaclunent 

I-G). 

Request: It is requested this finding be removed from the final audit report. 

n.	 Cell phone charges in the amount of$1418 were being charged at 100 percent 

instead of staff allocated percentages. This was an internal oversight that will be 

corrected for 2008 and thereafter beginning 2009. 

o	 The PCFO charged $8190 in accounting fees for the completion of the Agreed-Upon 

Procedures (AUP) Audit and Financial Statements for a prior year's campaign. 

i.	 CFC regulations in effect at the time the AUP and financial statements were 

conducted did not allow audit expenses to be charged to the campaign year being 

audited. Guidance was not issued from the Office of Combined Federal 

Campaign Operations (OeFCO) until November 14,2008 (attachment I-H). 

Therefore, the PCFO acted in compliance with regulations and OPM guidance in 

effect at the time the audit was conducted. During this time, regulations required 

accounts be brought to a zero balance at the end of each month. With the new 

guidance now in effect, the PCFO will comply with the application of these 
expenses by requesting LFCC approval prior to the close of final campaign 

collections. 

Request: It is requested this finding be removed from the final audit report. 

Deleted by OPM-OIG 

Not Relevant to Final Audit Report 

3.	 PCFO Expense Reimbursement Not Properly Authorized 

o	 Effective September 2007, the LFCC has begun reviewing year-to-date expense reports 

(attachment 3-A) at its LFCC meetings and approving expenses as they are incurred. The 

LFCC is very aware of its role as outlined in 5 CFR 950.104. 

Request: It is requested this finding be removed from the final audit report. 

4.	 Expenses not Reconcilable to the Approved Budget 

o	 According to 5 CFR 950.105cl the budgetsubmitted to the LFCC for approval was an 

"estimate" of costs required La operate the CFC. Therefore, it is impossible to reconcile 

"actual" expenses to an estimate. CFC regulations which provide guidance on how much 

can be reimbursed to the PCFO states in 5 CFR 950.106a "The PCFO shall recover from 

the 'gross' receipts of the campaign its expenses, approved by the LFCC, reflecting the 

'actual' costs of administering the local campaign:' We have provided supporting 

documentation to the DIG that the $3908 in question were actual CFC expenses and are 

thereby reimbursable. As previously noted in section 3 of this response, beginning 

September 2007, the PCFO has provided the LFCC with year-to-date expense reports 

which is measured against the proposed budget (attachment 3-A). 

Request: It is requested this finding be removed from the final audit report. 

Deleted by OPM-OIG 

Not Relevant to Final Audit Report 
Deleted by OPM-OIG 

Not Relevant to Final Audit Report 

6.	 CFC Funds Maintained with United Way Accounts 

o	 Effective February 1,2009 the PCFO has segregated all CFC funds from its United Way 

portfolio of accounts. Enclosed is authorization for the OCFCO granting these funds be 

maintained in analyzed interest bearing accounts (attachment 6-A) as a result of new 

FDIC regulations. Additionally, we are including confirmation from the holding bank 

that a separate CFC account was established (attachment 6-B). 

7.	 Incomplete Donor Lists 

o	 The PCFO recognized the inaccuracy of the donor list provided to recipient charities 

during the 2006 campaign. Beginning with the 2008 campaign, this report has been 

modified to identify the federation and member agency where the donor information 

should be sent. 

8.	 Local Eligibility Solicitation Process 

o	 Beginning March 2008, the LFCC will retain electronic copies of public notices listed on 

its website. 

Please let me know if there is any additional information needed to complete the final audit report. Once 

the new Chief Financial Officer comes onboard in February 2009, Senior Director of 

Public Sector Campaigns, will insure all compliances made in this response are carried forward. 

Z~IY'!/nf/ . Kim Hall 

Interim ChiefFinancial Officer 
Appendix B 

Combined Federal Campaign of North Central Texas 

February 10,2009 

Office of Personnel Management 

Office of the Inspector General 

Attention: ••iII•••• 

1900 E Street NW, Room 6400 

Washington, DC 20415-1100 

Dear Mr._: 

In response to your email dated February 51h titled "OPM-OlG Audit Response" for the 2005 and 2006 

campaigns for Combined Federal Campaign of North Central Texas (CFCNCTX) CFC Code 0839, we 

are submitting the following responses and attachments. 

I.	 Unallowable Campaign Expenses ($1,987) 

a	 Documentation tested during audit review resulted in a calculation inconsistent with 

method applied. OIG requests payroll registers for March 2006 and July 2006 through 

February 2007. 

I.	 We have attached the requested payroll registers for further review by OIG. 

Request: Pending OIG review, it is requested this finding be removed from the 

final audit report as immaterial. 

2.	 Unsupported Out-or-town E:xpenses ($3,025) 

o	 Out-of-town expenses totaling $3025 could not be verified as CFC related expenses. 

i.	 Attached is supporting documentation and general ledger entries which identifies 

these expenses as CFC specific.. 

Request: It is requested this finding be removed from the final audit report. 

If there are any further questions ~Gaudit findings for CFCNCTX please contact Karra 

Guess, ChiefFinancial Officer, a__Final audit reports should be sent to: 

Combined FederaJ Campaign ofNorth Central Texas 

c/o:••••••••• 

1800 Nmth Lamar Street
 

Dallas, TX 75202
 

Sincerel 

,'r----­

Kim Hall 

Interim Chief Financial Officer 

CC: _LFCCChairman 

___iJIG 

1800 North Lamar Street· Dallas, TX 75202· Ph (214) 978-0024 • FAX (214) 978-9056· www.cfcnctx.org