MODULE VII - The Finances of the Local

OBJECTIVES:

• To examine a local’s obligations and responsibilities with respect to finances of the local.
• To provide information to assist locals in establishing budgets, completing Income and Expense Statements and Balance Sheet.

One of the greatest responsibilities and accountabilities of the local executive is with respect to the finances of the local.  Most Local By-Laws allow for local dues to be established at the annual general meeting of the local and the authority for establishing the local dues structure rests with the membership.  Members expect, however, the local executive to make a recommendation and/or to present resolutions outlining the amount of dues required to effectively administer the local and to represent the members as required.

As a result, it is imperative that locals turn their minds to the servicing requirements of the members, the day to day expenses in operating a local, the cost involved in meeting the local obligations under its own By-Laws and the By-Laws of UTE and the Constitution of the PSAC, and other such matters.  Additionally, locals must look at such things as historical spending, rents and operating expenses, projected campaigns and events, scheduled meetings, conferences and conventions and any other such financial obligations or undertakings which may affect the locals operating expenses.  Consequently, it is vital that local executives be able to predict as accurately as possible expenses so that revenues through local dues ensure the local’s financial viability.

While these responsibilities fall primarily under the responsibility of the Local Treasurer, it is actually a shared responsibility of all members of the local executive.  To provide to members the information that they will require to make an informed decision concerning local dues and proposed dues increases, it is important that local executives provide members with a sound economic forecast.  This responsibility is usually carried out through the development and distribution of a local budget, along with ongoing and periodic financial statements demonstrating the local’s financial position at any point in time. These latter financial statements keep members abreast of how their money is being spent and provides them with accountability for the monies held in trust.  They also allow for the Local Executive to determine its financial position at any given point in time.

To assist in this task, the UTE National Finance Committee delivered a presentation aimed at Local Treasurers in September 2006.  Following is this presentation.

Union of Taxation Employees
National Finance Committee

LOCAL TREASURER’S
Presentation

September 2006
National Presidents Conference

Presentation Objective:

The objective of this presentation is to present to local Treasurers a template of financial statements and reporting formats, as well as facilitating the preparation of financial statements by:

1. reviewing the duties of the Treasurer,
2. looking at record keeping, and
3. examining the statements that should be presented to the Local Annual General Meeting

Duties of the Treasurer:

Each Local has in its By-laws the duties of their Treasurer.

Here is an example:

The Treasurer is the custodian of all funds and revenue of the Local. He/she shall see that the dues, subscription and accounts due to the Local are paid. He/she shall sign the cheques together with the President. In the absence of either the Treasurer or the President, the other designated officer will sign the cheques together with the one appointed by the Local Executive. He/she will pay all authorized expenses; keep cash and other books necessary for the accounting of the funds of the Local.

The Treasurer shall keep the accounts of the Local and shall make a report of its financial condition to the Local Executive as required and at each Annual Meeting. Such reports shall include a statement of "Assets and Liabilities" and a statement of "Receipts and Disbursements".

While the duties outlined in each of your By-laws may be written differently, the committee suggests that you review your By-laws to ensure they include but not be limited to the following elements;

• Provide financial reports to the membership,
• Maintain basic record-keeping of all local financial transactions, including keeping all receipts and invoices
• Maintaining and reviewing bank statements on a regular basis
• Review the monthly membership statement to ensure the local is receiving the appropriate amount of monthly dues  
• Prepare an annual budget for the annual general meeting
• Recommend to the local executive amendments to the budget.
• Prepare all materials for audit purposes
• Assist the auditor, as requested, in the preparation of the audited statements.
• Present the audited statements at the Annual General Meeting.
• Forward the approved audited financial statements to the UTE National Office
• Recommend amendments to the Local Executive, changes to the By-Laws regarding finances

Record keeping

The most important aspect of a Treasurers’ job is to maintain the records of your local.  You are the person that is responsible to oversee the money for the members. You must ensure that all monies are accounted for when received or expensed. This must then be reported to the membership in a clear and concise manner.

Your responsibility is to keep a general ledger.  This format could be done using a manual journal, or through a computer program, (e.g. Money, Quicken, or Simply Accounting). All of the items that are recorded in your journal must be supported by documentation, to be presented as backup to the auditor at year end. To put it quite simply, the Treasurer must record the income from all sources that the local receives, i.e. membership dues, (the dues received from the national office should be verified against the locals’ membership list, this is one reason that the list should be kept up to date), travel advances to the local, or other miscellaneous items. All expenses of the local must be recorded. From this information, the financial statements will be prepared and reported back to the executive and members.  

For each fiscal year, a budget should be prepared; this should be done by the Treasurer and/or a finance committee. The budget should be vetted by the local executive and then presented to the members for approval at the AGM. (Please see attached sample budget.) We recommend that you use a couple of years for comparison.

After the year end and prior to the locals AGM, from the information kept in the General Ledger, you will prepare your financial statements, (the Income and Expense statement and the Balance sheet). These statements must be audited prior to presenting them at your AGM.  The type and scope of audits vary from local to local. It is up to your membership and the executive to choose what type of audit meets your needs.  Providing sound and accurate financial statements demonstrates good financial accountability on the part of the local executive.  Members have a right to be informed about their Local’s finances.  As per the UTE Bylaws your local is required to yearly prepare and file financial statements with the National Office.  We have supplied examples of an Income and Expense Statement and a Balance Sheet. These are a basic acceptable format, that can be presented to your local and give the members the information they are entitled. 

This is a very basic and general overview of what is expected of a Treasurer and as stated, some local bylaws or resolutions of record are very specific on how the recording and reporting of the finances are to be done. So please check your bylaws and regulations.

As per By Law 7 section 8, Each Local shall submit annually, a copy of their local annual financial statement/reports to the Vice-President responsible for Finance.  They shall be submitted no later than 90 days from when they were presented to the Locals Annual General Meeting.

UNION OF TAXATION EMPLOYEES
FORT SMITH LOCAL 000027
2006 BUDGET

Signed by

President ________________________Date____________
Local 000027

Treasurer________________________Date_____________
Local 000027

UNION OF TAXATION EMPLOYEES
FORT SMITH LOCAL 000027
STATEMENT OF INCOME AND EXPENSES
FOR THE YEAR ENDING DECEMBER 31, 2005

Signed by

President ____________________Date____________
Local 000027

Treasurer____________________Date_____________
Local 000027

UNION OF TAXATION EMPLOYEES
FORT SMITH LOCAL 000027
BALANCE SHEET
FOR THE YEAR ENDING DECEMBER 31, 2005

Signed by

President____________________________Date_____________________
Local 000027

Treasurer____________________________Date_____________________
Local 000027

When planning your local’s annual budget, there are many activities, events, obligations and expenses that may significantly affect your budget.  These include, but are not limited to:

• Conventions (observers)
• Conferences
• Training for local representatives
• Training for members
• Annual General Membership Meetings
• Meetings of the Local Executive
• Other general membership meetings
• Dues to other organizations (e.g. District Labour Council, etc.)
• Campaigns and rallies
• Strike fund
• Local communications (e.g. newsletters, posters, etc.)
• Hardship fund
• Telephone and cell phones
• Donations
• Computer
• Printer
• Other equipment
• Stationery
• Postage
• Office expenses (e.g. rent, furniture, etc.)
• Bank charges
• Social events
• Orientation for new members
• Meeting with members (LWOP and travel)
• Grievance representation

Are there others?

One need not have a line item in the budget for each specific expense.  In fact, the line items should be carefully identified so as to group similar anticipated expenditures, but each individual item needs to be examined to determine its expected cost in terms of the overall line item and the budget.

In preparing a budget, we also need to identify all anticipated revenues that we should consider, such as:

Local dues

• Subsidies and allowances for conferences
• Subsidies and allowances for conventions
• Interest from banks and other financial institutions
• Miscellaneous income

Are there others?

Often, expenses in any given year fall short of our expectations contained in our budget, resulting in a surplus situation. Most Local By-Laws specify the conditions under which the surplus may be used. Consequently, Local Officers should consult their By-Laws when this situation arises or when a Local intends to use a surplus or any portion of it.

From time to time as well, the anticipated expenses identified in preparing the budget exceed projected revenues. When this occurs, there are only four possible options. Firstly, the Local Executive may present a deficit budget to the general membership, but this is not preferable. Secondly, the deficit budget may be presented, with a resolution to fund the deficit out of surplus. Again, this is not a preferred option. Thirdly, the budget may be revisited with a view to reducing expenses, but this may not always be possible. Finally, the Local Executive may present a resolution to the annual general membership meeting calling for a dues increase.

While most members do not embrace this option and while some Locals shy away from this option due to the membership opposition, it is perhaps the most responsible measure.  A Local cannot operate efficiently and properly represent its members unless it is financially viable.  And while a dues increase often places the Local Executive in a difficult position, it is a large piece of an executive’s accountability to the members in achieving the delicate balance between the servicing and administration requirements and the responsible financing of these obligations.  In any event, deficit budgeting should be the very last alternative, if indeed an alternative, at all.  Always remember, local dues are monies held in trust and should be carefully and responsibly maintained and expanded.  Many efficient locals and many otherwise strong union activists over the years have lost the support and respect of the members over what the members perceived to be mismanagement of local funds.  To nurture our members support, Local Officers should be transparent and accountable in all matters of finance.  Rest assured that most often, when thorough and accurate budget forecasts are presented to the membership and expenses and disbursements from local funds are expended transparently and responsibly, members are apt to approve reasonable proposals for dues increase.