oversight

Audit of 2004 And 2005 Greater Los Angeles Area Los Angeles, California

Published by the Office of Personnel Management, Office of Inspector General on 2009-02-18.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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                                                          OFFICE OF THE INSPECTOR GENERAL
                                                                           OFEICEOFAUDITS




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                         tJNITED STATES OFFICE OF PERSONNEL MANAGEMENT
                                            Washington, DC 20415

 . Office of the
Inspector General




                                       AUDIT REPORT




                               AUDIT OF THE 2004 AND 2005

                             GREATER LOS ANGELES AREA

                            COMBINED FEDERAL CAMPAIGNS

                                LOS ANGELES, CALIFORNIA




               Report No. 3A-CF-OO-07-037               Date: 02/18/2009




                                                              ~e~

                                                              Michael R. Esser
                                                              Assistant Inspector General
                                                                for Audits


       www.opm.gov                                                                     www.usaJobs.gov
                           UNITED STATES OFFICE OF PERSONNEL MANAGEMENT

                                                 Washington. DC 20415



   Office of the
Inspector General




                                       EXECUTIVE SUMMARY





                                  AUDIT OF THE 2004 AND 2005

                                 GREATER LOS ANGELES AREA

                                COMBINED FEDERAL CAMPAIGNS

                                  LOS ANGELES, CALIFORNIA




                    Report No. 3A-CF-OO-07-037                    Date: 0211812009


      The Office of the Inspector General completed an audit of the Greater Los Angeles Area
      Combined Federal Campaigns (CFC) for 2004 and 2005. The United Way ofGreater Los
      Angeles, located in Los Angeles, California, served as the Principal Combined Fund Organization
      (PCFO) during both campaigns. The primary objective was to determine ifthe Greater Los
      Angeles Area 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 10 instances of non-compliance with the regulations governing the
      CFC.

                                          AUDIT GUIDE REVIEW

      •       Agreed-Upon Procedures Not in Compliance

              The Independent Public Accountant's audit of the 2004 campaign did not comply with all
              aspects ofthe 2006 Audit Guide.




          www.opm.goY                                                                       www.usajobs.goY
     Financial Statements Not Provided

     Financial Statements required to be distributed by the 2006 Audit Guide were not provided
     by the PCFO and LFCC.

                          BUDGET AND CAMPAIGN EXPENSES

•	   Improper Matching of Campaign Expenses

     The PCFO incorrectly charged the 2005 campaign for $36,504 in CFC expenses related to
     the 2004 campaign.

•	   Campaign Expense Reimbursement Not Authorized

     The PCFO reimbursed itself for 2005 campaign expenses without receiving authorization
     from the LFCC as required by the Federal regulations.

•	   Untimely PCFO Selection

     The LFCC did not select the PCFO by March IS, in accordance with 5 CFR 950.801 (a)(3),
     for the 2005 campaign year.


                         CASH RECEIPTS AND DISBURSEMENTS


•	   Uncashed CFC Distribution Checks

     The PCFO did not redistribute or reissue 16 CFC distribution-checks, totaling $910, to
     charities as required by the Office of Combined Federal Campaign Operations.

•	   Inaccurate Release of Donor Information

     The PCFO allowed personal donor information to be released to participating agencies
     against the wishes of the donor.

•	   Cutoff Procedures

     The PCFO incorrectly used January 31st as a cutoff date for incoming payroll receipts.


                                    LOCAL ELIGIBILITY


•	   Agency Application Evaluation Process

     The local agency and federation application screening procedures applied by the PCFO and
     LFCC do not account for all requirements outlined in the Federal regulations.




                                                11
                               PCFO AS A FEDERATION


•   Campaign Receipts Not Distributed

    The PCFO did not distribute $4,025 received from other participating CFCs to the member
    agencies for the 2005 campaign.




                                             111
                                        CONTENTS


                                                                                 PAGE

       EXECUTIVE SUMMARy                                                               .i


  1.   INRODUCTION AND BACKGROUND                                                       1


 II.   OBJECTIVES, SCOPE, AND METHODOLOGY                                              2


III.   AUDIT FINDINGS AND RECOMMENDATIONS                                               5


       A.   AUDIT GUIDE REVIEW                                                          5


            1. Agreed-Upon Procedures Not in Compliance                                 5

            2. Financial Statements Not Provided                                        6


       B.   BUDGET AND CAMPAIGN EXPENSES                                                7


            1. Improper Matching of Campaign Expenses                             ~     7

            2. Campaign Expense Reimbursement Not Authorized                            9

            3. Untimely PCFO Selection                                 ,               10


       C.   CASH RECEIPTS AND DISBURSEMENTS                                            11


            1. Uncashed CFC Distribution Checks                                        11

            2. Inaccurate Release of Donor Information                                 12

            3. Cutoff Procedures                                                       13


       D.   LOCAL ELIGlBILITY                                                          13


            1. Agency Application Evaluation Process                                  .13


       E.   PCFO AS A FEDERATION                                                       14


            1. Campaign Receipts Not Distributed                                       14


IV.    MAJOR CONTRIBUTORS TO THIS REPORT                                               16


       APPENDIX (The PCFO and LFCC joint response, dated August 1,2008, to the draft
       audit report)
                     I. INTRODUCTION AND BACKGROUND


Introduction

This report details the findings, conclusions, and recommendations resulting from our audit of the
Greater Los Angeles Area Combined Federal Campaigns (CFC) for 2004 and 2005. 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 at Federal installations throughout
the world. It consists of 299 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 aPM 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 eligibility of local voluntary organizations, selecting and supervising the
activities ofthe PCFO, and acting upon any problems relating to a voluntary agency's
noncompliance with the policies and procedures of the CPC. 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 DIG audit staff during audits and evaluations; responding in a
timely and appropriate manner to all inquiries from participating organizations, the LFCC, and the
Director ofOPM; and consulting with federated groups on the operation of the local campaign.

Executive Orders 12353 and 12404 established a system for administering an annual charitable
solicitation drive among federal civilian and military employees. Title 5, Code of Federal
Regulations (CFR) 950, the regulations governing CFC operations, set 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.

All recommendations from our previous audit of the Greater Los Angeles Area CFC (Report No.
3A-CF-00-OI-081, dated August 8, 2001) covering campaign years 1998 and 1999 have been
satisfactorily resolved.

The initial results of our audit were discussed with PCFO and LFCC officials during an exit
conference held on June 8,2007. A draft report was provided to the PCFO and LFCC on June 23,
2008 for review and comment. The PCFO and LFCC's response to the draft report was
considered in preparation of this final report and is included as an Appendix.




                                                 1

                II. OBJECTIVES, SCOPE, AND METHODOLOGY


Objectives

The primary purpose of the audit was to determine if the Greater Los Angeles Area CFC was in
compliance with 5 CFR 950, including the activities of both the PCFO and LFCC. The specific
objectives for the 2005 campaign were:

       Local 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 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 ofthe 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
          •	 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 2004 campaign was:

       Audit Guide Review
          •	 To determine if the Independent Public Accountant (lPA) completed the Agreed­
              Upon Procedures (AUP) as outlined in the 2006 CFC Audit Guide for Campaigns
              with pledges $1 Million and Greater (Audit Guide) for the 2004 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.

The audit covered campaign years 2004 and 2005. The United Way of Greater Los Angeles,
located in Los Angeles, California, served as the PCFO during both campaigns. The audit


                                                2

fieldwork was conducted at the United Way of Greater Los Angeles Area office in California from
June 4 through June 8, 2007. Additional audit work was completed at our Washington, D.C.
office.

The Greater Los Angeles Area CFC received campaign pledges, collected campaign receipts, and
incurred campaign administrative expenses for the 2004 and 2005 campaigns as shown below:

        Campaign              Campaign               Campaign             Administrative

          Year                 Pledges               Receipts               Expenses


           2004              $3,879,059              $3,735,676              $402,860

           2005              $3,957,451              $3,730,440              $411,190


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 came to out attention during our
review of the data to cause us to doubt its reliability.

We considered the campaign's internal control 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 ofthe 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, we reviewed the following:
    •	 The public notice to prospective charitable organizations to determine ifthe LFCC

       accepted applications from organizations for at least 30 days.

    •	 The process and procedures for the application evaluation process.
    •	 Sample eligibility letters to verify they were properly sent by the LFCC.
    •	 The LFCC's 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 of the public notice to prospective PCFO's, and LFCC meeting minutes
        related to the selection of the 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 actual expenses from 28
        expense accounts.




                                                3

   •	 Reviewed the LFCC meeting minutes and verified if the LFCC authorized the PCFO's
      reimbursement of campaign expenses.
   •	 Compared the budgeted expenses to actual expenses and determined if the actual expenses
      exceeded 110 percent of the approved budget.

To determine if the campaign receipts and disbursements were handled in accordance with CFC
regulations, we:

   •	    Selected and reviewed ajudgmental sample of25 out of 17,916 pledge cards (selected the
         top 10 pledge cards by high dollar, every 100 th pledge card [10 total], and the first 5 pledge
         cards identified with two or more charities designated) and compared them to the Pledge
         Card Report prepared by the PCFO
   •	    Reviewed cancelled distribution checks to verify that the appropriate amount was

         distributed in a timely manner.

   •	    Reviewed the PCFO's most recent listing of outstanding checks to verify that the PCFO
         was following its policy for such checks.
   •	    Reviewed Pledge Notification Letters to verify that the PCFO notified the CFC agencies of
         the designated and undesignated amounts due them before the March 15, 2006 deadline.
   •	    Reviewed and compared the Form 1417 provided by the PCFO to the Form 1417 obtained
         from the Office of Combined Federal Campaign Operations (OCFCO) to identify any
         material differences.
   •	    Verified the monthly disbursements on the Distribution of Funds Schedule to amounts
         reported on the PCFO's Campaign Receipts and Disbursements Schedule.
   •	    Reviewed all bank statements used by the PCFO for the 2005 campaign to verify that the
         PCFO was properly accounting for and distributing funds.
   •	    Reviewed the PCFO's Campaign Receipts and Disbursements Schedule to verify that the
         PCFO properly calculated allocation rates for undesignated funds.
   •	    Reviewed the PCFO's cutoff procedures and bank statements to verify that funds were
        'allocated to the appropriate campaign year.
   •	    Reviewed 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.

To determine if the PCFO acted appropriately as a federation, we reviewed federation receipts and
disbursements and the contract with its member agencies.

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 greater than $1 million) and determined the type of audit to be
completed by the IPA for the 2004 campaign. We also completed the AUP checklist to verify that
the IPA completed and documented the AUP steps.




                                                   4

              III. AUDIT FINDINGS AND RECOMMENDATIONS


The PCFO and LFCC administered the 2004 and 2005 Greater Los Angeles Area CFCs in
compliance with all applicable CFC regulations with the exception of the following areas.

A.   AUDIT GUIDE REVIEW

     1.	 Agreed-Upon Procedures Not in Compliance

         We found that the PCFO's IPA audit of the 2004 campaign did not comply with all
         aspects of the 2006 CFC Audit Guide AUPs.

         The Audit Guide states that the IPA performs "specified agreed-upon procedures (AUP)
         over the PCFO's compliance with CFC regulations and OPM guidance, and the
         effectiveness of the PCFO's internal controls over its compliance as of the end of the Fall
         2004 campaign period ...." Chapter III of the Audit Guide outlines the specific AUP
         steps for the IPA to perform.

         We reviewed the IPA working papers related to the 2004 campaign's AUPs to determine
         if the IPA complied with the Audit Guide's requirements. We identified two AUP steps
         where the IPA did not fully comply with the requirements of the Audit Guide.
         Specifically we noted the following:

         a.	 We identified one instance where the AUP step was completed, however, the IPA did
             not report a finding identified in its working papers.
             •	 PCFO Budget and Administrative Expenses, step six, required the IPA to report
                 all instances where the PCFO was not properly matching campaign receipts and
                 expenses. Our review found that the IPA noted in its work papers that some
                 expenses were included in the incorrect campaign year. However, these instances
                 were not reported by the IPA. Discussions with the PCFO's Comptroller verified
                 that certain expenses (specifically the auditing fees) were not matched to the
                 correct campaign. For instance, the IPA expenses for the 2003 campaign would
                 not be known or billed until July 2005. The PCFO Comptroller did not
                 understand that this was not allowed, but stated that the expense would be
                 properly matched in the future.

         b.	 We also found one instance where the documentation maintained by the IPA was not
             sufficient for us to determine if the AUP step was completed correctly.
             •	 PCFO Budget and Administrative Expenses, step five, required the IPA 10 report
                 all instances where the PCFO's actual expenses did not agree to the general
                 ledger. Our review showed that the IPA performed adjusting entries to balance
                 the general ledger. However, there was no documentation included to SUpp011
                 these adjustments and, consequently, we could not verify the validity of these
                 entries.




                                                 5
   If the IPA does not complete the AUPs as stated in the Audit Guide or we are unable to
   verify the IPA's work, the OCFCO will not be able to rely on the IPA's work and,
   therefore, the ability to monitor the activities of the campaign is impaired.

   PCFO and LFCC's Comments:

   The PCFO and LFCC agree with the finding and state that they will work very closely
   with the IPA to ensure it is meeting all CFC audit guidelines when conducting audits for
   the campaign.

   Recommendation 1

   We recommend that the OCFCO ensure that the LFCC works with the PCFO and their
   IPA to implement procedures so that the AUPs, as outlined in the CFC Audit Guide, are
   properly completed.

2. Financial Statements Not Provided

   The PCFO was unable to provide support to show that it provided its organizational-wide
   statements to the LFCC as required by the Audit Guide. In addition, the LFCC did not
   submit the required audited financial statements to OPM as required by the Audit Guide.

   The Audit Guide requires that the PCFO provide its most recent organizational-wide
   financial statements, "as of and for the fiscal year ended, that are prepared in accordance
   with GAAP and audited by an IPA in accordance with GAAS. The PCFO must provide
   the financial statements and the related audit report to the LFCC no later than August 1,
   2006."

   Per our review and discussion with the PCFO, the PCFO did not provide and was unable
   "to locate documentation to support that the organizational-wide financial statements were
   provided to the LFCC.

   In addition, the Audit Guide states that the LFCC must provide the required financial
   statements and reports "to OPM no later than September 15,2006."

   Per the OCFCO, the LFCC did not provide any of the reports or financial statements
   required by the 2006 CFC Audit Guide to OPM.

   As a result ofthe PCFO and LFCe not complying with the requirements of the Audit
   Guide, the OCFeO can not provide reasonable assurance that the CFe Campaign is
   being operated in an effective and efficient manner.




                                           6

       PCFO .and LFCC's Comments:

       The PCFO and LFCC contend that the organizational-wide financial statements were
       submitted to the LFCC by the required deadline.

       The PCFO and LFCC do agree that the audit reports and financial statements were not
       provided to OPM and state that the PCFO will "work directly with the LFCC to provide
       OPM with the financial statements by the deadline."

       OIG Response:

       The PCFO and LFCC did not provide any documentation with their response to support
       its position that the organizational-wide financial statements were provided to the LFCC
       by the deadline requirements. Therefore, we can not remove this issue from our report.

        Recommendation 2

        We recommend that the OCFCO ensure that the PCFO and LFCC understand the
        reporting requirements of the CFC Audit Guide so that the audit reports and financial
        statements are provided to the appropriate patties by the CFC Audit Guide's deadlines.

B.   BUDGET AND CAMPAIGN EXPENSES

     1.	 Improper Matching of Campaign Expenses                                          $36,504

        The PCFO charged the 2005 CFC Campaign for expenses that were not related to that
        campaign year, resulting in $36,504 in inappropriate administrative charges.

        5 CFR 950.106 (a) states, "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."

        5 CFR 950.1 06 (b) states, "The PCFO may only recover campaign expenses from
        receipts collected for that campaign year. Expenses incurred preparing for and
        conducting the Cf'C cannot be recovered from receipts collected in the previous year's
        campaign. The PCFO may absorb the costs associated with conducting the campaign
        from its own funds and be reimbursed, or obtain a commercial loan to pay for costs
        associated with conducting the campaign."

        Based on our review of the 2005 campaign expenses, we identified campaign expenses
        totaling $36,504 that are related to a previous campaign. Specifically, we identified the
        following:

        •	 The PCFO charged the 2005 campaign for audit expenses related to the 2004 CFC
           Campaign. This resulted in an administrative expense overcharge to the 2005
           campaign of $32,888.



                                                7
•	 The PCFO charged the 2005 campaign for donor recognition awards related to the
   2004 campaign, resulting in a $3,616 overcharge.

By charging expenses to the incorrect campaign year, the PCFO is not matching
campaign expense with the receipts for that campaign year as required by 5 CFR
950.106(a). In addition, using current year campaign receipts to pay for prior year
campaign expenses is prohibited by 5 CFR 950.106 (b). As a result, $36,504 was not
properly distributed to member agencies of the 2005 campaign.

PCFO and LFCC's Comments:

The PCFO and LFCC do not agree with the finding. They stated that all expenses were
"posted to the appropriate year and reflected in the budgets provided to the LFCC and
OPM at the end of every campaign year." They also pointed out that "There have been
no instances of overcharging any campaign year for related expenses to that particular
campaign year." ­

OIG Response:

The PCFO and LFCC did not provide any additional documentation supporting their
disagreement with the finding. Their response also did not fully address the issue that
the expenses were charged to the incorrect campaign year. We have provided additional
information below on each expense questioned to further illustrate the problem:

Auditing Expenses

Any audits, either of financial statements or AUPs, completed during the 2005 campaign
had to be related to a prior campaign. Our review determined that the costs charged to
the 2005 campaign were incurred during the campaign; therefore, it is our opinion that
these costs could not be related to or chargeable to the 2005 campaign. Per discussion
with the OCFCO, this has been a topic of discussion with PCFOs during accounting
training sessions at CFC workshops in the past.

Donor Recognition Awards

The 2005 campaign was charged for personalized awards in March 2005 (first month of
the 2005 campaign). These awards were purchased by the PCFO before the donation
solicitation period for the 2005 campaign; therefore, it is highly unlikely they were for
the 2005 campaign.

Recommendation 3

We recommend that the OeFCO direct the PCFO to reimburse the agencies of the 2005
campaign $36,504 for inappropriate administrative charges.




                                       8

  Recommendation 4

  We recommend that the OCFCO require the LFCC to ensure that the PCFO properly
  match expenses to the appropriate campaign year when reimbursing itself for the
  actual costs of administering the local campaign in future years, as required by
  5 CFR 950.106 (a).

2. Campaign Expense Reimbursement Not Authorized

   The PCFO reimbursed itself for 2005 campaign expenses without receiving the
   authorization of the LFCC as required by the Federal regulations. As a result, the PCFO
   could have been reimbursed for expenses not related to CFC activities and/or reimbursed
   itself more than the maximum allowed amount (110 percent or the approved budget
   amount).

   5 CFR 950.104 (b) (17) states that it is the responsibility of the LFCC to authorize the
   PCFO reimbursement of only campaign expenses that are related to the CFC and are
   adequately documented; and to ensure that the total reimbursed expenses do not exceed
   the approved campaign budget by more than 10 percent.

   5 CFR 950.1 06 (a) states that the PCFO may only recover campaign expenses approved
   by the LFCC which reflect actual costs of administering the campaign.

   To determine if the LFCC properly approved the PCFO reimbursement we reviewed the
   LFCC meeting minutes and did not identify anything in those minutes authorizing the
   reimbursement of CFC expenses to the PCFO.

   As a result of not reviewing and approving the PCFO's campaign expense
   reimbursement, the LFCC is at risk ofnon-CFC related expenses being charged to the
   campaign. Inclusion of non-CFC related expenses will reduce disbursements to member
   charities.

   PCFO and LFCC's Comments:

   The PCFO and LFCC state that the PCFO receives "a letter at the beginning of each
   campaign year where it states that expenses will be allocated as approved in the budget."
   The PCFO took this letter as written approval of the expenses.

   They also indicate that they will "add more documentation to the budget approval
   process" and "will incorporate the approval of the budget in the LFCC meeting agenda
   and record it in the minutes."

   DIG Response:

   Based on our review of the PCFO and LFCC's response to the finding, it is apparent that
   they do not understand the expense approval process and their related responsibilities.



                                          9

  In their response, they have associated the approval of campaign expenses with the
  approval of the campaign budget. This thinking is incorrect. Although the end of one
  campaign period and the beginning of the next occur almost simultaneously, the approval
  of campaign expenses and the approval ofthe campaign budget are not related.

   Campaign expenses that the PCFD wishes to have reimbursed should-be specifically
   requested by the PCFO and approved by the LFCC per the Federal regulations. The
   approval of expenses should also include a review by the LFCC to determine if the
   expenses were actual, necessary, reasonable, and related to the campaign year in
   question. The approval should occur prior to the actual expense reimbursement and be
   documented by the LFCC.

   Recommendation 5

   We recommend that the DCFCO direct the LFCC to review and document all PCFO
   reimbursement requests, verify that the requests are properly supported, and authorize
   only those expenses which are actual, necessary, reasonable, and related to the campaign
   year in question.

   Recommendation 6

   We recommend that the DCFCO ensure that the LFCC understands its responsibilities
   related to campaign expense reimbursement stipulated by 5 CFR 950.1 04 (b) (17).

3. Untimely PCFO Selection

   The LFCC did not select the PCFO by the date set forth in the Federal regulations for the
   2005 campaign year.

   5 CFR 950.801(a) (3) states that the "Local Federal Coordinating Committees must
   select a PCFO no later than March 15."

   Based on our review of the LFCC's PCFO selection notification letter, we determined
   that the LFCCs decision to select its PCFO for the 2005 campaign year was made
   March 31, 2005, 16 days after the date required by the Federal regulations.

   Although the regulation requiring the March 15th due date for PCFO selection changed
   in 2006 to state that the due date is now determined by DPM on a yearly basis, it is
   important that the LFCC adhere to due dates set by OPM. Not adhering to due dates,
   especially the selection of the PCFO, can set the entire campaign behind from the start
   and result in delays in other CFC-related activities.




                                          10

        PCFO and LFCC's Comments:

       The PCFO and LFCC agree with the finding and state that they will work together to
       ensure that the PCFO selection documentation is processed by the LFCC in a more
       timely manner to meet the deadline requirements.

        Recommendation 7

        We recommend that the OCFCO ensure that the LFCC understand its responsibilities and
        select the PCFO by the date required per 5 CFR 950.801(a) (3).

C.   CASH RECEIPTS AND DISBURSEMENTS

     1. Uncashed CFC Distribution Checks

        The PCFO did not redistribute 16 uncashed CFC distribution checks for the 2005 CFC
        Campaign, totaling $910, to charities as required by the OCFCO.

        CFC Memorandum 2006-5 requires the PCFO to develop and follow policies and
        procedures regarding uncashed checks. It also states that this policy should be
        documented and implemented after a check has gone uncashed for six months and that
        the procedures include at least three documented follow-up attempts to reach the payee
        by phone and e-mail. If it is determined that the payee is no longer active, the funds
        must be distributed among the remaining organizations for that campaign as
        undesignated funds.

        Our review identified 16 CFC distribution checks, totaling $910, that were outstanding
        six months or more and have not been redistributed to the remaining charities as
        undesignated funds.

        The PCFOs procedures related to outstanding checks did not encompass all of the
        procedures required by the OCFCO in CFC Memorandum 2006-5.

        PCFO and LFCC's Comments:

        The PCFO and LFCC agree with the finding and state that there is now a formal process
        of following up on uncashed checks. They also state that additional steps are being taken
        to further improve the uncashed checks process.

        Recommendation 8

        We recommend that the DCFCO ensure that the uncashed check procedures
        implemented by the PCFO fully meet the requirements outlined in Cf'C Memorandum
        2006-5.




                                              11

   Recommendation 9

   We recommend that the DCFCO direct the PCFO to redistribute $910 to the charities of
   the 2005 CFC campaign as undesignated funds.

2.	 Inaccurate Release of Donor Information

   The PCFO allowed personally identifiable information of individual donors to be

   released to participating agencies against their wishes.


   5 CFR 950.l05(d)(6) states that the PCFO is responsible for honoring the request of
   donors who indicate on the pledge card that their names not be released to the
   organization(s) that they designate.

   We selected and reviewed a judgmental sample of 25 out of 17,916 pledge cards for the
   2005 campaign. All pledge cards, with the exception ofthe following, were processed in
   accordance with the PCFO's pledge card procedures and 5 CFR 950.

   During our review of the pledge cards selected, we noted three errors where personally
   identifiable information was released to participating agencies against the wishes of the
   donor, indicating a weakness in the controls over pledge card processing:

      •	 In two instances, the donor only designated their name to be released; however,
         the PCFO released their home address and e-mail address as well.

      •	 In one instance, the donor did not want any information released; however, the
         PCFO released their name and e-mail address.

    Releasing names and addresses of donors against their wishes can subject those donors to
   'unwanted solicitation from member agencies and make their participation in a

    subsequent CFC campaign less likely.


   PCFO and LFCC's Comments:

   The PCFO and LFCC agree with the finding and stated that they will modify their

   training and verification procedures to ensure compliance with the donor intent.


   Recommendation 10

   We recommend that the DCFCO and LFCC ensure that the PCFO has implemented
   procedures safeguarding personally identifiable information of donors and to only
   release the information that the donors agree to.




                                          12

     3. Cutoff Procedures

        The PCFO incorrectly used January 31 st as a cut-off date for CFC receipts instead of
        tracking the receipts by payroll office, as recommended by the OCFCO.

        CFC Memorandum 2003-11 states, "Any checks received on or before January 31
        without supporting documentation should be applied to the prior campaign. Checks
        received after January 31 should be applied to the current campaign."

        Additionally, as a result of improvements made in the reporting of information by payroll
        offices, the OCFeO issued CFC Memorandum 2006-5 to update its recommendation.
        Memorandum 2006-5 states that "For the 2005 campaign, all campaigns should be
        tracking receipts by payroll office. Discrepancies should be brought to the attention of
        thepayroll office and/or OCFeo as soon as possible so that resolutions can be made in a
        timely manner."

        For the 2005 CFC campaign, the PCFO used January 31 st as a cutoff date regardless of
        the documentation provided with payroll disbursements. The PCFO stated that it used
        this date because the payroll offices do not provide the documentation needed to
        determine the appropriate campaign year to which the distributions belong.

        As a result of not tracking each receipt by payroll office as recommended by the
        OCFCO, the peFO runs the risk of misapplying incoming CFC payroll receipts to the
        wrong campaign year.

        PCFO and LFCC's Comments:

        The PCf'O and LFCC agree with the finding and state that they will work with the
        payroll offices and the OCFeO to specifically identify which campaign year
        contributions are intended for.

        Recommendation 11

        We recommend that the OCFCO ensure that the procedures implemented by the PCFO
        are adequate to properly allocate Cf'C receipts to the correct campaign year.

D.   LOCAL ELIGIBILITY

     1. Agency Application Evaluation Process

        The local agency and federation application screening procedures applied by the PCFO
        and LFCe do not account for all requirements outlined in the Federal regulations. As a
        result, there is a risk that local agencies andlor federations that do not meet requirements
        outlined in the regulations could be approved for inclusion in the Cf'C Campaign.




                                                13
        5 CFR 950.104(b) (3) states that the LFCC is responsible for "Determining the eligibility
        oflocal organizations that apply to participate in the local campaign." 5 CFR 950
        sections 202, 203, and 204 detail the approval requirements for federations and local
        agencies.

        We reviewed the LFCC evaluation process for approving 2005 local agency and
        federation applications. Using the Federal regulations, we compiled a checklist that
        encompasses all of the agency and federation requirements in 5 CFR 950. Our review
        consisted of comparing the LFCC application checklists used in the local
        agency/federation approval process to the DIG checklists.

        Our comparison of the local agency checklists showed that the LFCC's screening
        checklist did not account for 25 areas specified in 5 CFR 950. A similar comparison of
        the local federation checklists identified 36 areas of discrepancy.

        Consequently, the checklists used by the LFCC to review applications did not encompass
        all of the requirements necessary for an agency to be listed in the campaign brochure.
        For local agencies to be listed, the eligibility requirements set forth in 5 CFR 950.204
        must be met. For local federations to be included, the eligibility requirements set forth in
        5 CFR 950.303 must be met. We provided the PCFO with a copy of the OIG checklist
        and suggested that the LFCC use it, or a similar checklist, in the future to document the
        eligibility review process.

        As a result of the local agency and local federation eligibility checklists not including all
        of the information necessary for determining eligibility, there is a risk that ineligible
        agencies and/or federations could be included in the CFC campaign.

        PCFO and    LFCC~s Comments:


        The PCFO and LFCC agree with the finding and stated that steps are now being
        implemented to amend their eligibility checklist to include all criteria outlined in the OIG
        checklist.

        Recommendation 12

        We recommend that the OeFCO ensure that the procedures implemented by the LFCC
        in its local agency and federation approval process take all applicable Federal regulations
        (5 CFR sections 202, 203, 204, and 303) into account.

E.   PCFO AS A FEDERATION

     1. Campaign Receipts Not Distributed                                                    $4,025

        The PCFO did not distribute $4,025 received from other participating CFCs to the
        member agencies for the 2005 campaign.




                                                 14
5 CFR 950.302 (e) states that "Each Federation, as fiscal agent for its member
organizations, must ensure that Federal employee designations are honored in that each
member organization receives its proportionate share of receipts based on the results of
each individual campaign."

During our review of the PCFO's operations as a federation, we identified funds received
from the Orange County and Ventura County CFC that were not disbursed to the PCFO's
member agencies. We informed the PCFO of this error and it verified that this was an
oversight on its part. The PCFO stated that "in complying with the CFC audit currently
taking place, we have learned the CFC funds received from another United Way and
applied to our General Fund were actually to have been partially distributed amongst
certain agencies in our area."

We have verified that the $4,025 was properly distributed to the member agencies as of
June 8, 2007. As a result of this error, the agencies in question did not receive funds in a
timely manner and Federal employee designations were not properly distributed.

PCFO and LFCC's Comments:

The PCFO and LFCC agree with the finding and state that procedures will be
implemented to prevent this situation from recurring in the future.

Recommendation 13

We recommend that the OCFCO ensure that the procedures implemented by the PCFO
properly account for and distribute all CFC funds received to its member agencies.




                                        15

                IV. MAJOR CONTIUBUTORS TO THIS REPORT

 Special Audits Group

                   Auditor-In-Charge


                     Group Chief

_ _ Senior Team Leader

 Office of Management

 Jill Henderson, Deputy Assistant Inspector General for Management

 Internal Audits Group

               Group Chief




                                              16

                                                                         APPENDIX



                             United Way, Inc.

                           Corrective Action Plan

                   (dated August 1,2008 and sent via e-mail)


A. AGREED UPON PROCEDURES

Finding 1: Agreed Upon Procedures not in Compliance

       The Principal Combined Fund Organization's PCFO's Independent
       Public Accountant (IPA) audit of the 2004 campaign did not comply with
       all aspects of the January 2006 Audit Guide for campaigns $1 Million
       and greater Agreed Upon Procedures (AUP).

       The Audit Guide states that the IPA performs "specified agreed-upon
       procedures (AUP) over the PCFO's compliance with CFC regulations
       and OPM guidance, and the effectiveness of the PCFO's internal
       controls over its compliance as of the end of the Fall 2004 campaign
       period ... " Chapter III of the Audit Gu ide outlines the specific AU P steps
       for the IPA to perform.

       We reviewed the IPA working papers related to the 2004 campaign
       AUPs to determine if the IPA complied with the Audit Guide
       requirements. We identified two AUP steps where the IPA did not fully
       comply with the requirements of the Audit Guide. Specifically we noted
       the following:

          a) We identified one instance where the AUP step was completed,
          however, the IPA did not report a finding identified in its working
          papers.

              •	   PCFO Budget and Administrative Expenses step six required
                   the IPA to report all instances where the PCFO is not properly
                   matching campaign receipts and expenses. Our review found
                   that the IPA noted in its work papers that some expenses were
                   included in the incorrect campaign year. However, these
                   instances were not reported by the IPA. Discussions with the
                   PCFO's Comptroller verified that certain expenses (specifically
                   the auditing fees) were not matched to the correct campaign.
                   For instance, the IPA expenses for the 2003 campaign would
                   not be known or billed until July 2005. The PCFO Comptroller
                   did not understand that this wasn't allowed, but stated that the
                   expense would be properly matched in the future.

          b) We also found that in one instance where the documentation
          maintained by the IPA was not sufficient for us to determine if the
          AUP step was completed correctly.
                                                                APPENDIX


         •	 PCFO Budget and Administrative Expenses step five required
            the IPA to report all instances where the PCFO's actual
            expenses did not agree to the general ledger. However, there
            was no documentation included to support these adjustments
            and, consequently; we could not verify the validity of these
            entries. If the IPA does not complete the AUP as stated in the
            Audit Guide or we are unable to verify the IPA's work and,
            therefore, the ability of the OCFC to monitor the activities of
            the campaign is impaired.

UWGLA Response: We will work very closely with our IPA to ensure
that we are meeting all CFC Audit guidelines when conducting our
audits.

Finding 2: Financial Statements Not Provided

 The PCFO also was unable to provide support to show that it provided its
 organizational-wide statements to the LFCC as required by the Audit
 guide. In addition, the LFCC did not submit the required audited financial
 statements to OPM as required by the Audit Guide.

 The Audit Guide requires that "the PCFO provide its most recent
 organizational-wide financial statements, as of and for the fiscal year
 ended, that are prepared in accordance with GAAP and audited by an IPA
 in accordance with GAAS. The PCFO must provide the financial
 statements and the related audit reports to the LFCC no later than August
 1,2006.

 Per our review and discussion with the PCFO, the PCFO did not provide
 and was unable to locate documentation to support that the
 organizational-wide financial statements were provided to the LFCC.

 The Audit Guide states that the LFCC provide the required financial
 statements and reports "to OPM no later than September 15, 2006."

 Per the OCFC, the LFCC did not provide any of the reports or financial
 statements required by the 2006 CFC Audit Guide to OPM.

 As a result of the PCFO and LFCG not complying with the requirements of
 the Audit Guide, the OCFC can not provide reasonable assurance that the
 CFC Campaign is being operated in an effective and efficient manner.

UWGLA Response: UWGLA submitted financial statements by the
deadline requirements. In the future, we will work directly with the
LFCC to provide OPM with the financial statements by the deadline.
                                                                      APPENDIX



B.   BUDGET AND CAMPAIGN EXPENSES

     Finding 1: Campaign Expense Reimbursement Not Authorized

       The PCFO reimbursed itself for 2005 campaign expenses
       without receiving the authorization of the LFCC as required by the
       Federal regulations. As a result, the PCFO could have been reimbursed
       for expenses not related to Combined Federal Campaign (CFC)
       activities and/or reimbursed itself more that the maximum allowed
       amount (110 percent of the approved budget amount).

        5 CFR 950.104 (b)(17) states that it is the responsibility of the LFCC to
        authorize the PCFO reimbursement of only campaign expenses related
        to the CFC and are adequately documented; and to ensure that the total
        reimbursed expenses do not exceed the approved campaign budget by
        more than 10 percent.

        5 CFR 950.106 (a) states that the PCFO may only recover campaign
        expenses approved by the LFCC which reflect actual costs of
        administering the campaign.

        To determine if the LFCC properly approved the PCFO reimbursement
        we reviews the LFCC meeting minutes and did not identify anything in
        those minutes authorizing the reimbursements.

        Reimbursements that are not reviewed and authorized by the LFCC
        could result in non-CFC related charges reducing the disbursement
        amounts to member agencies.

     UWGLA Response: We receive a letter at the beginning of each
     campaign year where it states that expenses will be allocated as
     approved in the budget. This letter was taken as written approval. To
     add more documentation to the budget approval process, we will
     incorporate the approval of the budget in the LFCC meeting agenda
     and record it in the minutes.

     Finding 2: Untimely PCFO Selection

        The LFCC did not select the PCFO by the date set forth in the Federal
        regulations for the 2005 Campaign year.

        5 CFR 950.801 (a)(3) states that the "Local Federal Coordinating
        Committee must select a PCFO no later than March 15."

        Based on our review of the LFCC's PCFO selection notification letter we
        determined that the LFCC's decision to select its PCFO for the 2005
                                                                APPENDIX


  campaign year was made March 31,20'05, 16 days after the date
  required by the Federal regulations.

  Although the regulation requiring the March 15th due date for selection
  changed in 2006 to state that the due date is now determined by OPM
  on a yearly basis, it is important that the LFCC adhere to due dates set
  by OPM. Not adhering to due dates, especially selection of the PCFO,
  can set the entire campaign behind from the start and result in delays in
  other CFC related activities.

UWGLA Response: We will continue to work with the LFCC to ensure
that the documentation provided is processed by them in a timely
manner to meet the deadline.

Finding 3: Improper Matching of Campaign Expense Reimbursement

  The PCFO charged the 2005 CFC Campaign for expenses that were not
  related to that campaign year resulting in $36,504 in inappropriate
  administrative charges.

  5 CFR 950.104 (b)(17) states, "The PCFO shall recover from the gross
  receipts of the campaign its expenses, approved by the LFCC, reflecting
  the actual costs of administering the campaign" from receipts collected
  for that campaign year.

  5 CFR 950.106 (a) states, "The PCFO may only recover campaign
  expenses from receipts collected for that campaign year. Expenses
  incurred preparing for and conducting the CFC cannot be recovered
  from receipts collected in the previous year's campaign. The PCFO may
  absorb the costs associated with conducting the campaign from its own
  funds and be reimbursed, or obtain a commercial loan to pay for costs
  associated with conducting the campaign>"

  Based on our review of the 2005 campaign expenses, we identified
  campaign expenses totaling $36,504 that are related to a previous
  campaign. Specifically, we identified the following:

         •	 THE PCFO charged the 2005 campaign for audit expenses
            related to the 2004 CFC Campaign. This resulted in an
            administrative expense overcharge to the 2005 campaign of
            32,888.
         •	 The PFCO charged the 2005 campaign for donor recognition
            awards related to the 2004 campaign, resulting in an $3,616
            overcharge to the 2005 campaign.
                                                                 APPENDIX

 By charging expenses to the incorrect campaign year, the PCFO is not
 matching campaign expense with the receipts for that campaign year as
 required by 5 CFR 950.1 06(a). In addition, using prior year campaign
 receipts to pay for current year campaign expenses is prohibited by 5 CFR
 950.106(b). As a result, $36,504 was not properly distributed to member
 agencies of the 2005 campaign.

UWGLA Response: All expenses are posted to the appropriate year
and reflected in the budgets provided to the LFCC & OPM at the end of
every campaign year. There have been no instances of overcharging
any campaign year for related expenses to that particular campaign
year.

C. CASH RECEIPTS AND DISBURSEMENTS

Finding 1: Uncashed CFC Distribution of Checks

   The PCFO failed to redistribute or reissue 16 CFC distribution checks,
   totaling $910, to charities as required by the OCFC.

   CFC Memorandum 2006-5 requires the PCFO to develop and follow
   policies and procedures regarding un-cashed checks. It also states that
   this policy should be documented and implemented after a check has
   gone uri-cashed for six-months and that the procedures include at least
   three documented follow-up attempts to reach the payee by phone and
   e-mail. If it is determined that the payee is no longer active, the funds
   must be distributed among the remaining organizations for that
   campaign as undesignated funds.

   Our review identified 16 FC distribution checks, totaling $910,
   outstanding six months or more that have not been redistributed to the
   remaining charities as undesignated funds.

   The PCFOs procedures related to outstanding checks did not

   encompass all of the procedures required by the OCFC in CFC

   Memorandum 2006-5.


   Adherence to the procedures outlined in the CFC Memorandum is
   imperative to ensure that CFC disbursement checks outstanding six
   months or more are not inadvertently escheated to the state and not
   redistributed to other charities as undesignated funds.

UWGLA Response: Staff has a formal process of following up on un­
cashed checks. To better document the process, staff will document
in writing all communication with agencies regarding un-cashed
                                                                APPENDIX

checks. Any voided check goes back to the CFC Campaign as
undesignatedfunds to be redistributed to agencies.

Finding 2: Inaccurate Release of Donor Information

    The PCFO allowed personally identifiable information of individual
    donors to be released to participating agencies against their wishes.
    5 CFR 950.1 05(d)(6) states that the PCFO is responsible for honoring
    the request of donors who indicate on the pledge card that their names
    not be released to the organization(s) that they designate.

    We reviewed a sample of 25 out of 17,934 pledge cards for the 2005
    campaign. All pledge cards, with the exception of the following, were
    processed in accordance with the PCFO's pledge card procedures and
    5 CFR 950.

   . During our review of the pledge cards selected, we noted three errors
     where personally identifiable information was released to participating
     agencies against the wishes of the donor, indicating a weakness in the
     controls over pledge card processing:

      •	 In two instances, the donor only designated their name to be
         released; however, the PCFO released their home address and
         E-mail address as well.

      •	 In two instances, the donor did not want any information released;
         however, the PCFO released their name and E-mail address.

   Releasing names and addresses of donors against their wishes can
   subject those donors to unwanted solicitation from member agencies
   and make their participation in a subsequent CFC campaign unlikely.

 UWGLA Response: We concur with findings and will modify training
 and verification procedures to ensure compliance with donor intent.

Finding 3: Cutoff Procedures

   The PCFO incorrectly uses January 31st as a cut-off date for CFC

   receipts instead of tracking the receipts by payroll office as

   recommended by the OCFC.


   CFC Memorandum 2004-11 states,        Any checks received on or before
                                       lJ • • •


   January 31 without supporting documentation should be applied to the
   prior campaign. Checks received after January 31 should be applied to
   the current campaign."
                                                                       APPENDIX



      Additionally, a result of improvements made in the reporting of
      information by payroll offices, the OCFC issued CFC Memorandum
      2006-5 to update its recommendation. Memorandum 2006-5 states that,
      "For the 2005 campaign, all campaigns should be tracking receipts by
      payroll office. Discrepancies should be brought to the attention of the
      payroll office and/or OCFC as soon as possible so that resolutions can
      be made in a timely manner."

      For the 2005 CFC campaign, the PCFO used January 31 et as a cutoff
      date regardless of the documentation provided with payroll
      disbursements. The PCFO stated that it used this date because the
      payroll offices do not provide the documentation needed to determine
      the appropriate campaign year to which the distribution belong.

      As a result of not tracking each receipt by payroll office as
      recommendation by the OCFC, the PCFq runs the risk of misapplying
      incoming CFC payroll receipts to the wrong campaign year.

     UWGLA Response: As previously stated, UWGLA did not receive
     complete information with payroll disbursements and was unable to
     confirm periods for certain disbursements. On a go-forward basis,
     UWGLA will obtain a list of the payroll offices for CFC and create a
     master list of contact data to enable a quick resolution of any
     campaign attribution issues. Further, UWGLA will escalate any
     unresolved issues to OCFO in a timely matter to alert them to any
     resulting issues and to ensure proper allocation of funds received.

D. LOCAL ELIGIBILITY

    Finding 1: Agency Application Evaluation Process

      The local agency and federation application screening procedures
      applied by the PCFO and LFCC do not account for all requirements
      outlined in the Federal Regulations. As a result, there is a risk that local
      agencies and/or federations that do not meet requirements outlined in
      the regulations could be approved for inclusion in the CFC Campaign.

      5 CFR 950.1 04(b)(3) states that the LFCC is responsible for
      "Determining the eligibility of local organizations that apply to participate
      in the local campaign." 5 CFR 950 sections 202, 203, and 204 detail the
      approval requirements for federations and local agencies.

      We reviewed the LFCC evaluation process for approving 2005 local
      agency applications. Using the Federal regulations, we compiled a
      checklist that encompasses all of the agency and Federation
      requirements in 5 CFR 950. Our review consisted of comparing the
                                                                       APPENDIX


      LFCC application checklists used in the agency/federation approval
      process to the DIG checklist.

      Our comparison of the local agency checklists showed that the LFCC's
      screening checklist did not account for 25 areas specified in 5 CFR 950.
      A similar comparison of the local federation checklists identified 36 areas
      of discrepancy.

      Consequently, the checklists used by the LFCC to review the
      applications did not encompass all of the requirements necessary for an
      agency to be listed in the campaign brochure. For local agencies to be
      listed, the eligibility requirements se forth in 5 CFR 950.204 must be met.
      For local federations to be included, the eligibility requirements set forth
      in 5 CFR 950.303 must be met. We provided the PCFO (via e-mail on
      7/13/07) with a copy of the DIG checklist and suggested that the LFCC
      use it, or a similar checklist, in the future to document the eligible review
      process.

      As a result of the local agency and local federation eligibility checklists
      not including alt of the information necessary for determining eligibility,
      there is a risk that ineligible agencies and/or federations could be
      included in the CFC campaign.

    UWGLA Response: We will amend our eligibility checklist to include
    all criteria as identified in the OIG checklist.

D. PCFO AS A FEDERAliON

   Finding 1: Campaign Receipts not Distributed                                       $4,025

      The PCFO did not distribute $4,025 received from other participating
      CFC's to the member agencies for the 2005 campaign.

      5 CFR 950.302 (e) states that "each Federation, as fiscal agent for its
      member organizations, must ensure that Federal employee designations
      are honored in that each member organization receives its proportionate
      share of receipts based on the results of each individual campaign."

      During our review of PCFO's operations as a Federation, we identified
      funds received from the Orange County Combined Federal Campaigns
      that were not disbursed to the PCFO's member agencies. We informed
      the PCFO of this error and it verified that this was an oversight on it's
      part. The PCFO stated that "in complying with the CFC audit currently
      taking place, we have learned the CFC funds received from another
      United Way and applied to our General Fund was actually to have been
      partially distributed amongst certain agencies in our area." We have
                                                                   APPENDIX

   verified that the $4,025 was properly distributed to the member agencies
   as of June 8, 2007.

   As a result of this error, the agencies in question did not receive funds in
   a timely manner and Federal employee designations were not properly
   distributed.

UWGLA Response: We will implement a new procedure to prevent
this situation from recurring. Staff will verify the checks received
without supporting documentation and will document the process to
ensure that the check received is coded to the correct account.