oversight

Audit of the 2004-2006 Northern California Combined Federal Campaigns

Published by the Office of Personnel Management, Office of Inspector General on 2009-04-10.

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

                                                                 US OFFICE OF PERSONNEL MANAGEMENT
                                                                     OFFICE OF THE INSPECTOR GENERAL
                                                                                      OFFICE OFAUDITS




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                                                   ReportNo. 3A-CF'"()070R·035


                                                   Date:'          AprillQ;. 2009




                                                                     ~~CAUTION--
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                             UNITED STATES OFFICE OF PERSONNEL MANAGEMENT

                                              Washington, DC 20415



     Office of the
. Inspector General




                                            AUDIT REPORT


                                AUDIT OF THE 2004 THROUGH 2006

                                    NORTHERN CALIFORNIA

                                COMBINED FEDERAL CAMPAIGNS

                                     REDDING, CALIFORNIA



                      ReportNo, 3A-CF-OO-08-035                       Date:   Apr; 1   10,   2009




                                                                       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 THROUGH 2006

                                NORTHERN CALIFORNIA

                             COMBINED FEDERAL CAMPAIGNS

                                 REDDING, CALIFORNIA



                Report No. 3A-CF-OO-08-035                       Date: April 10, 2009

       The Office of the Inspector General has completed an audit of the Northern California Combined
       Federal Campaigns (CFC) for 2004 through 2006. The Unite.d Way of Northern California,
       located in Redding, California, served as the Principal Combined Fund Organization (PCFO)
       during each campaign year. Our main objective was to determine if the Northern California CFC
       was in compliance with Title 5, Code of Federal Regulations, Part 950 (5 CFR 950), including
       the responsibilities of both the PCFO and the Local Federal Coordinating Committee (LFCC).
       We are unable to express an opinion on whether the PCFO administered the 2004, 2005, and
       2006 CFCs in accordance with 5 CFR 950 due to difficulties encountered obtaining
       documentation during our audit.




        www.opm.goY                                                                       www.usajobs.goY
                             CONTENTS

                                            PAGE

       EXECUTIVE SUMMARY                       i


 I.    INTRODUCTION AND BACKGROUND             1


II.    OBJECTIVES, SCOPE) AND METHODOLOGY      2


III.   AUDIT RESULTS                           4


IV.    MAJOR CONTRIBUTORS TO THIS REPORT       5

                     I. INTRODUCTION AND BACKGROUND


INTRODUCTION

This report details the results from our audit of the Northern California Combined Federal
Campaigns (CFC) for 2004 through 2006. The audit was performed by the Office of Personnel
Management's (OPM) Office of the Inspector General (OIG), as authorized by the Inspector
General Act of 1978, as amended.

BACKGROUND

The CFC is the sole authorized fund-raising drive conducted in Federal installations throughout
the world. It consists of 278 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 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 of the PCFO, and acting upon any problems relating to a voluntary agency's
noncompliance with the policies and procedures of the CFC. The PCFO is responsible for
training employee key-workers and volunteers; preparing pledge cards and brochures;
distributing campaign receipts; submitting to an extensive and thorough audit of its CFC
operations by an Independent Certified Public Accountant (IPA) in accordance with generally
accepted auditing standards; cooperating fully with OIG audit staff during audits and
evaluations; responding in a timely and appropriate manner to all inquiries from participating
organizations, the LFCC, and the Director of OPM; and consulting with federated groups on the
operation of the local campaign.

Executive Orders No. 12353 and No. 12404 established a system for administering an annual
charitable solicitation drive among federal civilian and military employees. Title 5, Code of
Federal Regulations Part 950 (5 CFR 950), the regulations governing CFC operations, sets forth
ground rules under which charitable organizations receive federal employee donations.        ­
Compliance with these regulations is the responsibility of the PCFO and LFCC. Management of
the PCFO is also responsible for establishing and maintaining a system of internal controls.

The initial results of our audit were discussed with PCFO and LFCC officials during an exit
conference held on December 17, 2008. This was the first audit of the Northern California CFC.




                                                 1

               II. OBJECTIVES, SCOPE, AND METHODOLOGY


OBJECTIVES


The primary purpose of the audit of the Northern California CFC was to determine compliance
with 5 CFR 950. OUT specific audit objectives for the 2004 through 2006 campaigns were as
follows:

       Budget and Campaign Expenses
       •	    To determine if the PCFO's budget was in accordance with the regulations.
       •	    To determine if expenses charged to the campaign were actual, reasonable, did not
              exceed 110 percent of the approved budget, and were properly allocated.

       Campaign Receipts and Disbursements
       •	    To determine ifthe total amount of funds received for the campaign, plus interest
             income and Jess 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.

SCOPE.

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

The audit covered campaign years 2004 through 2006. The United Way of Northern California
(UWNCA) served as PCFO during the campaign years reviewed. The audit fieldwork was
conducted at the PCFO's office in Redding, California from December 15 through 17,2008.
Additional audit work was completed at our Washington, D.C. office. At the request of the
OeFCO, our audit focused on the PCFO's budget and actual campaign expenses, and the receipt
and distribution of campaign funds to the participating organizations to determine whether the
PCFO accurately disbursed all campaign receipts (including interest and less allocated campaign
expenses) to the appropriate recipients.

METHODOLOGY

In conducting the audit we typically rely to varying degrees on computer-generated data.
However, the PCFO was unable to provide adequate documentation to base any reliance upon.

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. Our audit plan relied primarily on substantive testing rather than
tests of internal controls. The plan included such tests of the accounting records and such other




                                                2

auditing procedures as we considered necessary to determine compliance with 5 CFR 950 and
CFC Memorandums.

In regard to our objectives concerning the budget and campaign expenses, we requested the
following:
    •	 The PCFO application to complete the PCFO application checklist;
    •	 A copy of the public notice to prospective PCFO's, and LFCC meeting minutes related to
        the selection of the PCFO;
    •	 The PCFO's Schedule of Actual Expenses to trace and reconcile amounts to the PCFO's
        general ledger;
    •	 The LFCC meeting minutes to verify if the LFCC authorized the PCFO's reimbursement
        of campaign expenses; and
    •	 The budgeted and actual expenses per campaign to determine if 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 requested the following:
    •	 The Pledge Card Detail Schedule and PCFO's Pledge Card Report to determine if the
        report and schedule reconcile and to select a sample of pledge cards for review;
    •	 The PCFO's distribution schedule for each campaign to select a sample of disbursement
        checks for review;
    •	 The PCFO's most recent listing of outstanding checks to verify that the PCFO was

        following its policy for such checks;

    •	 The Pledge Notification Letters to verify that the PCFO notified the CFC agencies of the
        designated and undesignated amounts due them before the March 15,2006 deadline;
    •	 The Form 1417 prepared by the PCFO and the OCFCO to identify material differences;
    •	 The PCFO Distribution Schedule to verify whether monthly disbursements reconciled
        with the PCFO's Campaign Receipts and Disbursements Schedule;
    •	 All bank statements used by the PCFO for the 2004, 2005, and 2006 campaigns to verify
        that the PCFO was properly accounting for and distributing funds; and
    •	 The PCFO's cutoff procedures and bank statements to verify that funds were allocated to
        the appropriate campaign year.

The PCFO was unable to provide documentation supporting a majority of the above requests. As a
result, we were unable to complete the audit and, therefore, could not render an opinion as to the
PCFO's compliance"with 5 CFR Part 950.
                                 III. AUDIT RESULTS


Due to the difficulties encountered in obtaining adequate documentation during our audit, we
cannot express an opinion on whether the PCFO administered the 2004, 2005, and 2006 CFCs in
accordance with 5 CFR 950.

The PCFO had significant turnover in personnel from the end of the 2006 campaign to the start
of our audit. This turnover included the Chief Executive Officer (CEO) and financial staff
involved in the administration of the campaigns under review. The new CEO and staff had
limited knowledge of how the campaign funds were handled and were unsuccessful in providing
adequate receipt, distribution and campaign expense information requested by the OIG auditors.
Therefore, due to inadequate documentation we were not able to complete our audit of the 2004,
2005, and 2006 CFCs.

The UWNCA is no longer the PCFO for the Northern California CFC. For the 2008 Campaign
year, OPM's OCFCO merged the Northern California CFC with the Sacramento CFC to form
the Sacramento/Northern California CFC.

Recommendation

The OIG recommends that should the UWNCA apply for a PCFO position for any future CFCs,
that the UWNCA be required to submit to a full independent audit of its operations. The LFCC,
in concert with the OCFCO, should review the results of this audit to determine whether the
UWNCA can effectively and efficiently function as a PCFO to administer a CFC in accordance
with 5 CFR 950 and CFC guidance and directives from OPM.




                                              4

             IV. MAJOR CONTRIBUTORS TO THIS REPORT

Special Audits Group

                  Auditor- In-Charge


                  Group Chief

                  Senior Team Leader




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