Olms interpretative Manual

CONTENTS OF ANNUAL REPORT:LIABILITIES

214.301LMRDA,SECTION201(b)(1)

..assetsandliabilitiesatthebeginningandendofthefiscalyear;..

214.305
See Instructions for LM-2, Items 17, 30-34.SeeInstructions for LM-3, Items 32-36.

See Instructions for LM-4 Item15.

214.310CONTINGENTLIABILITIES(PENDINGDAMAGESUITS)

The United States District Court for the Northern District of Alabama has held that a unionmust include in its financial report any contingent liabilities in the form of pending damagesuits.The Court said:

Defendant (union) has filed with the U.S. Secretary of Labor two financial reports under(section 201(b) LMRDA). . . The Court finds there is reasonable cause to believe thesereports are inaccurate, incomplete, or inadequate explanations of the financial condition ofdefendant.Specifically,the Court finds . . . that defendant has contingent liabilities ofupwards of a quarter of a million dollars, in the form of certain damage suits pending inAlabama State courts, which were not reported on either financial report filed with the U.S.SecretaryofLabor;...

Allenv.Local92,InternationalAssociationofBridge,Structural,andOrnamentalIronWorkers,47LRRM 2214(N.D.Ala.1960).

(TechnicalRevisions:Dec. 2016)

214.320PERCAPITALIABILITIES

A local union which owes per capita taxes to a superior body at the end of its fiscal year shouldreport such obligations on its annual report as "Other Liabilities," Item 33 on Form LM-2, withdetailedinformation in Schedule10,oras "OtherLiabilities"inItem35onFormLM-3.

(Technical Revisions: Dec. 2016)CONTENTSOFANNUALREPORT:RECEIPTS

214.401LMRDASECTION201(b)(2)

...receiptsofanykindandthesourcesthereof;...

214.405

SeeInstructions forLM-2, 36-49. SeeInstructions forLM-3, 38-44.

214.410STRIKEFUND

The requirements for reporting the receipts and disbursements of a Strike Fund for which thereporting organization has the accountability are the same as for reporting all other receipts anddisbursements of the reporting organization. The Instructions for Form LM-2 state, in part, thatthe Statement of Receipts and Disbursements should include allcash receipts and disbursementsof the reporting organization during the reporting period. Receipts must be identified as to kindandsource and disbursements must be identified as to purpose.

Thefinancialreportshouldaccuratelydisclosetheconsolidatedfinancialconditionand

operations of the labor organization for the period for which it is filed; and include the generalfund, strike fund and any other receipts and/or disbursements for which the labor organizationhasfinancialaccountability.

214.420UNIONADVERTISINGINCOME

Labor organizations must include in their annual financial reports filed under section 201(b)of the Act, statements concerning income received from the sale of advertising space in theirnewspaper or journal.

NOTE: If the newspaper or journal is operated as a separate entity, see ruling on SubsidiaryOrganizations,ManualEntries215ff.

*214.430REPORTINGOFSHORT-TERMTRANSFERSOFUNIONFUNDS

On May 15, a union used $10,000 from its checking account to acquire a six-monthcertificate of a savings and loan association. On November 15 of the same year, the certificate ofdeposit was redeemed and the money returned to the union's checking account. A question wasraised as to the proper handling of this type of transaction for purposes of reporting under theLMRDA.

The acquisition and redemption of a certificate of deposit does not constitute the ordinarytype of cash flow activity required to be reported as a receipt and disbursement for purposes ofreporting under the LMRDA. The transferred funds were already part of the union's "cash"assets. The exchange of funds between cash accounts of the same labor organization, such as toand from savings accounts, subsidiary checking accounts, or credit union accounts, also do notconstitute reportable cash flow activities. If the transferred money were reported as part of theunion's cash flow activities for the fiscal year, the results would clearly distort the union'sfinancial status by inflating the amount of money reported as taken in and paid out for the fiscalyear involved.

The distinction, for reporting purposes, between cash transfers and actual receipts anddisbursements is explained in the Instructions for the LM-2 (page 34, column 1) under theheading (Statement B - Receipts and Disbursements).The explanation, which appears in thesecond paragraph, states that "the purpose of Statement B is to report the flow of cash in and outof the labor organization during the reporting period.Transfers between separate bank accountsor between special funds of the labor organization, such as vacation or strike funds, do notrepresent the flow of cash in and out of the labor organization.Therefore, these transfers shouldnotbe reported as receipts and disbursementsofthelabororganization.”

(Revised:Dec.2016)