oversight

Audit of 2007 And 2008 Combined Federal Campaigns Of Island County, Oak Harbor, Washington

Published by the Office of Personnel Management, Office of Inspector General on 2011-03-04.

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

                                                        U.S. OFFICE OF PERSONNEL MANAGEMENT
                                                              OFFIC E OF THE I	 'SPECTOR GENERAL
                                                                                  OFFICE OF AUDITS




Final Audit Report
Subject:



                      AUDIT OF THE 2007 AND 2008

                    COMBINED FEDERAL CAMPAIGNS

                         OF ISLAND COUNTY

                      OAK HARBOR, WASHINGTON





                                              Report No. 3A-CF-OO-IO-037


                                              Date: Marc h 4, 2011




                                                                --CA TTON-­
T his audit report has been dis tributed to Federal officials who a re r esponsible for the admini stration of t he audited program. This a udit
report may contain proprleta ry da ta whic h is prote cted by Fed er a l law (I S V.S.c. 1905). Therefore, while t his a udit report is ava ilab le
under the Freedom of Informatinn Act a nd mad e available to the public on the DI G webpage, caution needs to be exerci sed before
releasing the report to the general public as it ma y conta in pro prietary infor mation that was redacted fro m the publicly dist ributed cop y.
                           UNITED STATES OFFICE OF PERSONNEL MANAGEMENT

                                                 Washingto n. DC 20 415



   Office of the
Inspector General




                                             AUDIT REPORT



                                   AUDIT OF THE 2007 A..ND 2008

                                 COl\1BINED FEDERAL CAl\1PAIGNS

                                        OF ISLAND COUNTY

                                   OAK HARBOR, \VASHINGTON



                    Report No. 3A-CF-OO-IO-037                             Date:   March 4,   2011




                                                                            ~d
                                                                       ~~ ~ ~
                                                                            Michael R. Esser
                                                                            Assistant Inspector General
                                                                              for Audits




         www .o pm .g ov                                                                           www.usajo bs.gov
                             UNITED STATES OFFI CE OF PERSO NNEL MANAG EM ENT

                                                     Washi ngt on , DC 20415



   Office of the
Inspector General




                                            EXECUTIVE SUMMARY





                                       AUDIT OF T HE 2007 AND 2008

                                    COIVIBINED FE DE RAL CAMPAIGNS

                                           OF ISL AND COU NTY

                                      OAK HAR BOR, W ASHINGTON



                     Rep ort No. 3A-CF-00- l 0-037                              Date: Ma rch 4 r 2011

         The Office of the Inspector General has completed an audit of the 2007 and 2008 Combined
         f ederal Ca mpa igns (CFC) of Island County. The United Way of Island County, loca ted in Oak
         Harbor, Washington , served as the Princ ipal Combined Fund Organization (PCFO) during both
         camp aigns . Our main objective was to determ ine if the CFC of Island County was in comp liance
         with Title 5, Code of Federal Regulations, Part 950 (5 CFR 950), including the responsibi litie s of
         both the PCFO and Loca l Federal Coordinating Co mmittee (LFCC). The aud it identified eight
         instances of non-compl iance with the regulations (5 CFR 950) goveming the CFC.

         The following findings represent the res ults of our aud it work as of the dat e of this report.

                                              AUDIT GUIDE REVIE\V

         •     Agreed-U pon Proc edu res Not in Co mpliance with the Audit Guide                     Proc edural

              Th e Independent Public Accountant did not complete all of the agreed-upo n procedures in

              accordance with the Audit Gui de.


                                                                                                                          •




         w ww .o p m . gov                                                                          ww w.usaj obs .g ov
                          BUDGET AND CAl\t1PAIGN EXPENSES

•   LFCC Approv al of Campaign Expense Reimbursement                                  Procedural

    The PCFO did not submit its expenses related to the 2008 campaign to the LFCC for
    approval prior to reimbursement.

•   Unallowable Expense Charged to the 2008 Campaign

    The PCF O charged an unallowable expense , totaling 5955, to the 2008 campaign.

•   Insufficient and Undocumented Allocation Methods                                  Procedural

    The allocation methods used by the PCFO to allocate costs to the 2008 campaign were
    insufficient and were not supported by adequate documen tation . Additionally, we identifie d
    a number of transactions which used incorrect allocation percentages or which the PCFO
    could not reconcile to the amount recorded in the general ledger.

•   Campaign Expenses Charged to the Wrong Campaign Year                                  $13,420

    The PCFO did not properly match its expenses to campaign receipts and charged the 2008
    campaign 513,420 for expenses related to the 2006 and 2007 campaigns.

•   PCFO Applicat ion Missin g Required Langu age                                     Procedural

    The United Way ofIsland County's application to serve as PCFO did not include all of the
    specific language required by the regulations.

                     CAMPAIGN RECEIPTS AND DISBURSEMENTS

•   Pledge Car d Errors                                                               Procedural

    The PCFO incorrectly input 13 pledge cards causing it to not follow the CFC donor 's wishes.

•   LFCC Approval of One-Time Disbursements                                           Procedural

    The PCFO made one-time disbursements for the 2008 campaign before obtaining approval
    from the LFCC.

                                         ELIGIBILITY

Our review of the campaign's eligibility processes showed that it complied with the applicable
provisions of 5 CFR 950.




                                                11
                                  PCFO AS A FEDERATION


Our review of the PCFO ' s activities as a federation showed that it complied with the applic able
provisions of 5 CFR 950.




                                                111

                                     CONTENTS

                                                                                       PAGE


       EXECUTIVE SUMM ARY	                                                                   i


  I.   INTRODUCTION AND BACKGROUND	                                                          1


 II.   OBJECT IVES, SCOP E, AND METHODOLOGY	                                                 2


III.   AUDIT FINDINGS AND RECOMMENDATIONS	                                                   6


       A.   AUDIT GUIDE REVIEW	                                                              6


            1. Agreed-Upon Proced ures Not in Compliance with the Audit Guide                6


       B.   BUDGET AND CAMPAI GN EXPENSES	                                                   9


            1.   LFCC Approval of Campaign Expense Reim bursement	                           9

            2.   Unallowable Expense Charged to the 2008 Campaign	                           10

            3.   Insufficient and Undocumented Allocation Methods	                           11

            4.   Campaign Expenses Charged to the Wrong Campaign Year	                       13

            5.   PCFO Application Missing Required Language	                                 14


       C.   CAMPAIGN RECEIPTS AND DISBURSEMENTS	                                             15


            1. Pledge Card Errors	                                                           15

            2. LFCC Approval of One-Time Disbursements	                                      18


       D.   ELIGIBILITY	                                                                     18


       E.   PCFO AS A FEDERATION	                                                            19


IV.    MAJOR CONTRIBUTORS TO THIS REPORT	                                                    20


       APPENDIX	      (The PCFO responses, dated October 6, 20 10, and January 6,20 11, to
                      the draft audit report.)
                    I. INTRODUCTION AND BACKGROUND


INTRODUCTION

This report details the findings and conclusions resulting from our audit of the Combined Federal
Campaig ns (CFC) of Island County for 2007 and 2008. 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. In 2008, it consisted of 242 separate local campaign organizations located throughout
the United States, including Puerto Rico, the Virgin Islands, and foreign assignments. The
Combined Federal Campaign Operations (CFCO) at OPM has the responsibility for management
of the CFC. This include s publishing regulations , memoranda, and other forms of guidance to
Federal offices and private organi zations to ensure that all campaign objecti ves are achieved .

The CFCs are conducted by a Local Federal Coordinating Committee (LFCC) and administered
by a Principal Combined Fund Organization (PCFO). The LFCC is respons ible for organizing
the local CFC, determin ing the eligibility of local voluntary organization s, 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 CFe. The PCFO is respons ible
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 the 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 Federa l employee donations.
Complianc e with these regulations is the responsib ility of the PCFO and the LFCe.
Management of the PCFO is also responsible for estab lishing and maintaining a system of
internal controls.

This represents our first audit of the CFC of Island County. The initial results of our audit were
discussed with PCFO and LFCC officials during an exit conference held on June 3, 2010. A
draft report was provided to the PCFO and the LFCC on September 7, 2010 , for review and
comment. The PCFO 's responses to the draft report were considered in preparation of this final
report and are included as an Appendix.
               II. OBJECTIVES, SCOPE, AND METHODOLOGY


OBJECTIVES

The primary purpose of our audit was to determine if the CFC of Island County was in
compliance with 5 CFR 950, including the activities of both the PCFO and the LFCC. Our audit
objective for the 2007 campaign was:

   Audit Guide Review
   •	 To determine if the IPA completed the Agreed-Upon Procedures (AUP) as outlined in the
      CFC Audit Guide (For Campaigns with Pledges between $150,000 and $999 ,999).

Additionall y, our specific audit objectives for the 2008 campaign were as follows:

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

   Campaign Receipt s and Disbursements
   •	 To determine if the pledge card format was correct and if the pledge card report agrees
      with the actual pledge cards.
   •	 To determine if incoming pledge monies were allocated to the proper campaign year and
      that the net funds (less expenses) were properly distributed to member agencies and
      federations.
   •	 To determine if the member agencies and federations were properl y notified of the
      amounts pledged to them and that donor personal information was only released for those
      who requested the release of information.

   Eligibilitv
   •	 To determine if the charity list (CFC brochure) was properly formatted and contained the
       required information; if the charitable organization application process was open for the
       required 30-day period ; if the applications were appropriately reviewed, evaluated , and
       approved; if the applicants were notified of the eligibility decisions timel y; and if the
       appea ls proces s for denied applications was followed.

   PCFO as a Federation
   •	 To determine if the amounts received by the PCFO as a federation reconciled to those
      disbursed by the CFC; if the PCFO properly distributed funds to its federation members ;
      if expenses charged by the PCFO (to its federation members ) were docum ented properly;
      and if the disbursements made to the federation members were accurate.




                                                2

SCOPE AND METHODOLOGY

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 2007 and 2008. The United Way of Island County, located in
Oak Harbor, Washington, served as the PCFO during both campaigns. The audit fieldwork was
conducted at the offices of the PCFO from May 28 through June 3, 2010. Additional audit work
was completed at our Washington, D.C. office.

The CFC of Island County received campaign pledges, collected campaign receipts, and incurred
campaign administrative expenses for the 2007 and 2008 campaigns as shown below:

    Campaign               Total                      Total               Administrative
      Year                Pledges                    Receipts               Expenses

      2007               $318,648                    $291,713                $59,038

      2008               $284,081                    $242,887                $61,387


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 our attention during
our review of the data to cause us to doubt its reliab ility.

We considered the campaign's internal control structure in planning the audit procedures. We
gained an understanding of the 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 tests of accounting records and such other auditing
procedures as we considered necessary to determine compliance with 5 CFR 950 and CFC
Memorandums.

To accomplish our objective for the Audit Guide Review, we reviewed the CFC Audit Guide (for
campaigns with pledges between $150,000 and $999,999) and completed the AUP checklist to
verify that the IPA completed and documented the AUP steps.

In regard to our objectives concerning the 2008 campaign's budget and campaign expenses, we
accomplished the following:

   •	 Reviewed the PCFO ' s application to verify if it was complete.
   •	 Reviewed a copy of the public notice to prospective PCFOs and the LFCC meeting
      minutes to verify that the PCFO was selected timely.


                                                3

    •	 Traced and reconci led amounts on the PCFO's Schedule of Actual Expenses to the
       PCFO's general ledger.
    •	 Reviewed the PCFO 's budgeted expenses, the LFCC's approv al of the budget, and
       matched a sample of actual expenses to supporting documentation. We judgmentally
       selected a sample of 44 expense transactions, totaling $18,475, for review from a
       universe 01'215 expense transactions, totaling $62, 136 1• Specifically, we judgmentally
       selected 20 allocated expenses (totaling $4,391), 2 IPA audit related expenses (totaling
       $5,775) and 22 direct expense transactions (totaling $8,309).
    •	 Reviewed the LFCC meeting minutes and verified if the LFCC authorized the PCFO 's
       reimbursement of campaign expense s.
    •	 Compared the budgeted expenses to actual expenses and determined if actual expenses
       exceeded 11 0 percent of the approved budget.

To determine if the 2008 campaign's receipts and disbursements were handled in accordance
with CFC regulations, we reviewe d the followi ng :

    •	 A judgmental sample of 45 pledge cards (totaling $38,387 , from a universe of 1,633
       pledge cards , totaling $284,081) from the 2008 PCFO 's Donor Pledge Campaign Report
       and compared the pledge information from the report to the actual pledge cards.
       Specifically, we judgmentally selected the top 10 pledge cards with the highes t amounts
       pledged (totaling $2 1,902); every 25 th pledge card, by card numbe r, for a total of 25
       pledge cards (totaling $6,871); the top 4 cash donation pledge cards (totaling $4,7 14);
       and 6 pledge cards of interest based on prior CFC audit experience (totaling $4,900).
    •	 Cancelled distribution checks to verify that the appropriate amount was distributed in a
       timely manner.
    •	 One-time disbursements to verify that the PCFO properly calculated pledge loss and
       disbursed the funds in accordance with the ceiling amount established by the LFCC.
    •	 The PCFO 's most recent listing of outstanding checks to verify that the PCFO was
       following its policy for such checks.
    •	 The Pledge Noti fication Letters to verify that the PCFO notified the CFC agencies of the
       designated and undesignated amounts due them by the date required in the regulations.
    •	 The donor list letters sent by the PCFO to organizations to verify the letters properly
       notify the organization of the donors who wish to be recognized.
    •	 CFC receipts and distributions from the PCFO's campaign bank statements, campaign
       receipts, and agency disbursements and campaign expens e support to verify whether the
       PCFO accurate ly recorded and disbursed all 2008 campaign receipts and disburse ments.
    •	 All bank statements used by the PCFO to verify that the PCFO was properly accounting
       for and distribu ting funds .
    •	 The PCFO 's cutoff procedure s and bank statements to verify that funds were allocated to
       the appropriate campaign year.
    •	 The General Des ignation Options and Undesignated Funds Spreadsheet and the
       Allocations and Disbursements Spreadsheet to verify disbursements were accurate and
       proportionate to the PCFO ' s allocation rates.

I The expense unive rse tota l is greater than the actua l expenses charged due to adjustment s made by the PCFO
following its reimbursement.


                                                          4

To determine if the LFCC and PCFO were in compliance with CFC regulations in regards to
eligibility for the 2008 campaign, we reviewed the following:

   •	 The public notice to prospective charitable organizations to determ ine if the 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.

Finally, to determine if the PCFO was in compliance with the CFC regu lations as a federation
(United Way of Island County) for the 2008 campaign, we reviewed the following:

   •	 Data reported on the CFC Receipts Schedule with supporting documentation to verify
      whether receipts were properly recorded.
   •	 The CFC Distribution Schedule to ensure that United Way ofIsland County did not
      disburse any funds to member agencies not participating in the CFC.
   •	 The United Way ofIsland County's agreements with its member agencies to determine if
      the fees were reasonable and supported.

The samples mentioned above , that were selected and reviewed in perform ing 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 .




                                                5

            III. AUDIT FINDINGS AND RECOMMENDATIONS


A.   AUDIT GUIDE RE VIEW


     1.   AUPs Not in Compliance with the Audit Guide	                                Procedural

          The IPA utilized by the PCFO and the LFCC to complete the AU P audit, required by
          the OPM CFCO, did not properly comp lete 8 of the 20 steps/procedures for the 2007
          campaign in accordance with the Audit Guide. Additionally, the IPA incorrectly used
          the Audi t Guide steps for the 2006 campaign (included in the 2008 Audit Guide )
          instead of those for the 2007 campaign (included in the 2009 Audit Guide) to perform
          and document its review.

          Chapter III of the Audi t Guide , prepared by the CFCO, "contain s specific pro cedures
          for four requi site elements to be followed during the examination by the IP A."

          We reviewed the IPA' s working papers to ensure that it properl y completed and
          documented its review of the PCFO ' s operations of the 2007 campai gn. Durin g our
          review we determined that the IPA copied the "Chapter III IPA Agreed-Upon
          Procedures" from the Audit Guide and used that as its audit program. Upon review of
          these procedures, however, it was determined that the IPA incorrectly used the
          previous year 's Audit Guide and steps as its audit program. Alth ough clos e
          inspection of the audit steps included in the 2008 and 2009 Audit Guides did not
          identify material differences, the correct Audit Guide shou ld have been used to
          conduct the audit.

          Additionally, we identified 8 out of the 20 audit steps/procedures where the IPA did
          not properl y complete the audit step . Spec ificall y, we found that the IPA did not
          complete:

             •	 Pl edge F orm Tracking System Ste p 1: The step required the IPA to select a
                repre sen tative samp le of 25 pledge forms (cards ) from the 2007 campaign.
                The pledge forms selected should have represented all types of donations ,
                including cash, designated funds and undesignated funds. Fifteen should have
                been selected from the pledg e tracking system and traced to the pledge forms .
                Ten should have been selected from the pledge forms and traced to the pledge
                tracking system . \Ve found that the IPA only included 10 samples from the
                pledge tracking system and no pledge card s as support. As a result we could
                not verify if the IPA performed this review appropriately. Furthermore, the l O
                sampl es included in the work papers did not include any that represented
                undesignated funds donations. As a result, the IPA did not select the sample
                per the instru ctions of the Audit Guide' s AUP .

             •	 Pledge Form Tracking System Step 2: The step required the IPA to "Trace
                and determi ne that the following information from each pledge form agrees to
                the PCFO' s automated system or pledge records." The specific information to


                                               6
   be traced included donor name , each charity code number and amount donated ,
   total amount donated, and the donor 's choice to release information. We found
   that for 9 of the 10 samples included in the IPA's working papers there was no
   indication that any of this information was traced as required . As a result, we
   could not determine if the IPA properly completed this step.

•	 Pledge Form Tracking System Step 3 : The step required the IPA to review
   the PCFO's spreadsheet used to track and analyze payroll office receipts to
   determ ine if it included the followin g:

      1.	 The amount of payroll deductions by payroll office;
      2.	 The estimated amount due from each payroll office by pay period;
      3.	 A comparison of the estimated amount due from each payroll office to
          the actua l amount received; and
      4.	 An identification of instances where actual amounts received from a
          payroll office exceed ed the estimated amount.

   The IPA determined that the PCFO's "campaign software does not track the
   estimated receipts by pay center, so the PCFO does not compare the actual
   amounts received to the estimated receipts." The Audit Guide directed the IPA
   to report as a finding all instance s where the PCFO 's spreadsheet did not
   calculate the estimated amounts from the payroll offices or compare the
   estimated amount s due to the actual amount received . However, no finding
   was reported by the IPA, although it clearly indicated that this was not done by
   the PCFO .

•	 PCFO Budget and Administrative Expenses Step 1: The step required the
   IPA to obtain a copy ofthe PCFO ' s 2007 application and review it for signed
   statements required by the Federal regulations. Our review found that the IPA
   obtained and reviewed the PCFO' s 2008 application, not the 2007 app lication.
   Additionally , the 2008 application reviewed included an incomplete statemen t.
   Specifically, regulation 5 CFR 950.105 (c)(2)(iii) requires the PCFO to state
   that it is subject to the "decisions and supervision of the LFCC and/or
   Director." The PCFO 's application reviewed by the IPA, and included in its
   working papers, did not include the language "and/or Director". Since the IPA
   did not report this as a finding in its report, the PCFO and OPM were not made
   aware of this error.

•	 PCFO Budget and Administrative Expenses Step 2: The step required the
   IPA to "report all instances where the LFCC did not select the PCFO and
   approve the PCFO 's campaign plan and budgeted expense s, on or before
   March 15" (2007). The IPA obtained and reviewed a copy of the LFCC
   meeting minutes from February 19, 2008, where the LFCC selected the PCFO
   for the 2008 campaign, not the 2007 campaign. Additionall y, the minut es only
   indicated that the LFCC selected the PCFO, but did not clearly indicate that it




                                 7

      had approved the PCFO's campaign plan or budgeted expenses. The IPA did
      not report the lack of this clear approval in its report.

  •	 PCFO Budget and Administrative Expenses Step 6: The step required the
     IPA to report as a finding all instances where the PCFO is not properly
     matching campaign receipts and expenses. The IPA, in completing this step,
     obtained a statement from the PCFO that said "The PCFO will cover all
     campaign costs at the start of the campaign and then recover their cost from the
     gross receipts of the same campaign." However, the actual expense listing
     included in the IPA's working papers clearly shows that the PCFO's charged
     expenses to the 2007 campaign were incurred from January 2007 through
     December 2007. This is incorrect because the 2007 campaign does not begin
     before the PCFO is officially selected by the LFCC. The deadline for this
     selection in 2007 was March 15, 2007. Therefore, any costs incurred before
     that date do not belong to the 2007 campaign. Consequently, the PCFO was
     not properly matching campaign receipts and expenses. The IPA did not report
     a finding in this area and, as a result, OPM and the PCFO were not made aware
     of this issue.

  •	 PCFO Budget and Administrative Expenses Step 7: The step required the
     IPA to report as a finding all instances where the PCFO's allocated expenses
     were not "allocated in a fair or reasonable method ... based on actual
     expenses ". The IPA relied upon an allocation spreadsheet provided by the
     PCFO as support for the allocation percentages applied to the expenses
     charged to the 2007 campaign. Based on our conversations with the PCFO ,
     these allocation percentages were not based on actual expenses as required by
     the step. Additionally, the allocation percentages were not adequately
     documented or supported. However, the IPA did not report this as a finding in
     its report As a result, OPM and the PCFO were not made aware of this error.

  •	 Receipt and Disbursement of Funds Step 3: The step required the IPA to
     report as a finding all instances where the PCFO did not disburse all receipts,
     less administrative expenses by the end of the campaign. The IPA noted in its
     review that the ending balance was "not zero, due to the distribution of prior
     year designations". The IPA should distinguish between campaign years and
     determine that all 2007 campaign year receipts were properly distributed. The
     audit step clearly states that the campaign's "ending balance should equal $0",
     and if this is not the case, it should be reported as a finding. As a result of not
     reporting this finding, the PCFO and OPM were not made aware of this error.

As a result of not completing the AUPs properly , the IPA inadvertently misled both
OPM and the PCFO to believe that the PCFO was in compliance with and had
effective controls over compliance with 5 CFR Part 950 and OPM guidance.




                                     8

          PCFO Comments:

          The PCFO agrees with the finding and stated that in the future it will ensure that the
          IPA follows the OPM Audit Guide and when clarification is necessary will advise the
          IPA to contact OPM.

          Recommendation 1

          We recommend that the CFCO work with the LFCC and PCFO to ensure that the IPA
          fully understands the reviews required of it by the AUP steps and that the IPA, if it
          has questions, contacts OPM to obtain clarification.

B.   BUDGET    A1~D   CAMPAIGN EXPENSES

     1.   LFCC Approval of Campaign Expense Reimbursement                              Procedural

          The PCFO did not submit to the LFCC , nor did the LFCC approve, the
          reimbursement of the 2008 campaign expenses to the PCFO.

          5 CFR 950.104 (b)(17) states that it is the responsibility of the LFCC to authorize "to
          the PCFO reimbursement of only those campaign expenses that are legitimate CFC
          costs and are adequately documented" . Additionally, 5 CFR 950 .106 (a) states that
          the PCFO shall recover campaign expenses, approved by the LFCC, which reflect the
          actual costs of administering the campaign.

          Our review of the LFCC meeting minutes did not identify where the LFCC discussed,
          reviewed, or appro ved the reimbursement of the 2008 campaign expenses to the
          PCFO. Additionally, discussion with the PCFO determined that both parties were
          unaware of their responsi bilities regarding reimbursement of CFC expenses. The
          PCFO stated that as a resu lt of our questions related to this subject, it became aware
          of this issue, and that it has instituted a policy to ensure that this request is made and
          approval obtained from the LFCC in the future (effective with the 2009 campaign
          year). We informed both the LFCC and the PCFO that prior to reimbursement of
          expenses, the LFCC must give authorization to the PCFO to do so.

          As a result of not reviewing and approving the reimbursement of the 2008 campaign
          expenses, the LFCC ran the risk of unrelated expenses being charged to the agencies
          and federations of the campaign, thus reducing the monies due to them. Additionally,
          by not submitting its expenses for approval before their reimbursement, the PCFO 's
          reimbursement was not authorized as required by the regulations.

          PCFO Comments:

          The PCFO agrees with the finding and stated that it confirmed that the campaign
          expense reimbursement approval is reflected in the LFCC minutes and has since been
          corrected.



                                                9
     OIG Comments:

     The PCFO's response did not clearly state its corrective action. During our on-site
     review , the PCFO stated that it would institute a policy to submit its expenses for
     approval to the LFCC prior to the actual reimbursement being made. We request that
     the CFCO ensure that the PCFO's corrective action is acceptable.

     Recommendation 2

     We recommend that the CFCO ensure that the LFCC knows and understands its
     responsibilities under the Federal regulations, especially in regards to the PCFO 's
     reimbursement of campaign expenses under 5 CFR 950.104 (b) (17).

     Recommendation 3

     We recommend that the CFCO ensure that the PCFO has instituted polices to submit
     its expense reimbursement requests to the LFCC for review and approval prior to
     making reimbursement of those expenses.

2.   Unallowable Expense Charged to the 2008 Campaign

     The PCFO charged the 2008 campaign for an expense that was not related to the
     CFC. As a result, the 2008 campaign was overcharged and the amounts disbursed to
     member agencies and federations were reduced by $955.

     5 CFR 950.106 (a) states that the "PCFO shall recover from the gross receipts ofthe
     campaign its expenses, approved by the LFCC, reflecting the actual costs of
     administering the local campaign. "

     Our review of the expense s charged to the 2008 campa ign identified one charge to the
     campaign that was not related to the CFC. Specifically, we found one expense
     transaction, totaling $955, where the PCFO incorrectly charged the 2008 campaign
     for its membership dues to the United Way. This expense is not required by or
     related to the CFC. After discussion with the PCFO, it did not understand why the
     expense was charged to the campaign and agreed with our determination that the cost
     was unallowable to the CFC.

     As a result of charg ing unallowable expenses to the 2008 campaign, the member
     agencies and federation's disbursements were reduced by $955.

     PCFO Comments:

     The PCFO agrees with the finding and stated that the $955 has been properly
     distributed. Additionally, the PCFO stated that its policies and procedures have been
     amended to ensure that United Way dues are not charged to the CFC in the future.




                                          10

     Recommendation 4

     We recommend that the CFCO verify that the PCFO redi stributed the proportionate
     share of the $955 overcharged to the member agencies of the 2008 campaign.

     Rec ommendation 5

     We recommend that the CFCO ensure that the PCFO has implemented polic es and
     procedures to ensure that unallowable expenses are not charged to the CFe.

     Recommendation 6

     We recommend that the CFCO ensure that the LFCC understands its role in the
     review and approval of all costs charged to the CFC so that unallowable expenses are
     not charged to future campaigns.

3.   Insufficient and Undocumented Allocation Methods                             Procedural

     The allocation methods used by the PCFO were insufficient and undocumented and,
     therefore, not a reliable basis for allocating costs to the CFe. Additionall y, we
     identified seven allocated expense transactions where the allocation percentage
     applied was incorrect and six allocated transactions that we and the PCFO could not
     reconcile to the amounts char ged to the CFe.

     5 CFR 950. 106 (a) state s that the "PCF O shall recover from the gros s receipts of the
     campaign its expenses, app roved by the LFCC , reflecting the actual costs of
     administering the local campaign. "

     The CFCO 's Aud it Guide states that the allocation methodology should be reasonable
     so that "th e CFC incurs a fair share of the costs. In addition, the allocations mus t be
     based on actual amounts that can be traced and agreed to the general ledger."

     Our revie w of the PCFO 's expense transactions found that all 23 allocated exp ense s
     reviewed did not have documentation which supported the reasoning for the
     allocation meth od used. The PCFO pro vided spreadsheets that it uses to determine
     which allocation method to appl y to a CFC expense transaction. Howe ver, there was
     no addi tional documentation to support the figures going into the allocation
     calculations. After discussion with the PCFO , it was determined that the methods in
     place had been used for a number of years and had not been updated recently. The
     Audit Guide requires the PCFO to use an allocat ion methodology that is reasonable
     so that the CFC incurs a fair share 0 f its related costs. It also requires that the
     allocations mu st be based on actual amo unts that can be traced to the general ledge r.




                                           11

Additionally, we identified the following problems among the allocated expenses
reviewed :

•	 Seven allocated expense transactions where the percentage charged to the CFC
   did not match the allocation documentation provided by the PCFO; and
•	 Six allocated expense transactions (salary related transactions totaling $2,454)
   where the OIG and the PCFO could not reconcile 10 the amount charged to the
   2008 campaign.

As a result of these errors, the PCFO is running the risk of charging the CFC for
expenses not actually incurred, which could negatively impact the amounts received
by its member agencies and federations.

PCFD Comments:

The PCFO agreed with the finding and stated that allocation methods will be
supported by adequate documentation in the future. Additionally, it provided specific
percentages that expense categories would charge to the CFC for indirect expenses.

DIG Comments:

We accept the PCFO's response. Howe ver we would like to stress that the allocation
methods used by the PCFO for the CFC should have a reasonable basis that is
supported by verifiable documentation and regularly checked and updated.

Additionally, in its response to the draft report the PCFO did not address
recommendation number eight relating to a review of the allocation methods applied
to its 2008 campaign expenses to ensure the accuracy of the percentages applied to
indirect costs charged to the campaign.

Recommendation 7

We recommend that the CFCO ensure that the PCFO supports all allocations used to
allocate CFC-related expenses with verifiable documentation, and that the allocations
are reasonable and fairly share the expense cost with the CFC.

Recommendation 8

We recommend that the CFCO require the PCFO 10 review all allocated CFC
expenses for the 2008 campaign to ensure that the correct allocation method was
applied and that the charge to the 2008 campaign was correct.

Recommendation 9

We recommend that the CFCO ensures that the LFCC understands it responsibilities
related to the review and approval of CFC campaign expenses.



                                    12

4.   Campaign Expenses Charged to the Wrong Campaign Year                             $13,420

     The PCFO is not properly matching expenses with receipts of the same campaign
     year. As a result, $13,420 was incorrectly charged to the 2008 campaign year.

     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 950.106 (b) states, "The PCFO may only
     recover campaign expenses from receipts collected for that campaign year."

     Additionally, the CFC Calendar of Events, published by the CFCO , for the 2007/2008
     campaign years states that the deadline for LFCC's to select a PCFO was March 17,
     2008.

     Furthermore, CFC Memorandum 2008-09 states that actua l campaign expenses are
     not known at the time of the first disbursement to agencies (for the 2008 campaign
     year, by April 1, 2009). Therefore, the CFCO encourages LFCCs to authorize
     estimated expenses with that first disbursement. The estimated expense should be
     made up of the actual expenses up to that point, plus any estimated future expenses.
     Then the expenses charged should be reconciled to actual expenses, making any
     necessary adjustments, prior to the last campaign disbursement (for the 2008
     campaign year, by March 31, 2010).

     Our review of the expenses charged to the 2008 campaign found that the PCFO's
     standard practice is to charge each campaign for expenses on a calendar year basis.
     This is not in adherence with the regu lations and CFC Memorandum 2008-09. Our
     review found that the PCFO charged the 2008 CFC campaign for 33 expense
     transactions, totaling $7,645, incurred before the start of the 2008 campa ign (for our
     purposes, we are using March 1, 2008 as the start date of the 2008 campaign).

     Additionally, we identified two IPA audit expense transactions, totali ng $5,775, that
     although incurred in April and July 01'2008, were related to the AUP audit of the
     2006 campaign. The PCFO stated that it did not fully understand the regulations and
     other guidance for properly matching expenses with campaign receipts.

     As a result of not properly matching expenses with campaign receipts, the PCFO
     inadvertently charged the 2008 campaign $13,420 for expenses related to the 2006
     and 2007 campaigns. Continuation of this practice will impair future campaigns as
     well.

     PCFO Comments:

     The PCFO agrees with this finding and stated that the issue was due to the budget
     being set on a calendar year instead of a campaign year basis. To correct for this
     error in the future, the PCFO stated that it will establish its annual budget based on a




                                          13

     campaign year (March through February) basis, and that the budget will include an
     accrual for cost s estimated for the IPA audit of the campaign.

     OIG Comments:

     The PCFO 's corrective action will not completely correct the problem identified by
     our finding. CFC Memorandum 2008-09 clearly describes the campaign period to be
     a two year period (approximately) and not 12 calendar months, which the PCFO 's
     corrective action will entail. We request that the CFCO ensure that the PCFO's
     revised corrective action contain procedures which will allow it to account for all
     expenses related to a campaign (from inception to last agency disbursement).

     Recom mendation 10

     We recommend that the CFCO ensure that the PCFO understands its responsibilities
     related to campaign expenses and properly matching them to the proper campaign
     year.

     Recommendation 11

     We recommend that the CFCO direct the PCFO to properly account for the CFCs
     expenses so that they are recovered from the rece ipts of the campaign year to which
     they are relat ed .

5.   PCFO Application Missing Required Language                                  Procedural

     The PCFO application accepted by the LFCC did not include all of the statements
     required in the Federal regulations.

     5 CFR 950.105 (c) states that any "federation, charitable organ ization or
     combinations thereof wishing to be selected for the PCFO mus t submit a timel y
     application in acco rdance with the deadline set by the LFCC." 5 CFR 950.105 (c) (2)
     requires the application to include statements pledging to:
         "(i) administer the CFC fairly and equitably,
         (ii) conduct cam paign operations, such as training, kick-off and other events, and
         fiscal operations, such as banki ng, audi ting , reporting and distribution separate
         from the applicant' s non-CFC operations, and;
         (iii) abide by the direction s, decisions. and supervision of the LFCC and/or
         Director."

     Specifically, we reviewed the PCFO appl ication to determine if each of the
     statements requ ired by the Federal regulations was included. Our review found that
     the PCFO did not include the words "and/or Director" in the statement that the PCFO
     would "be subject to the deci sion s and supervision of the LFC C and/or Director."
     The PCFO stated that it did not understand or know that this statement should have
     been includ ed in the app lication.



                                          14

          By accepting an application that did not include all of the required state ments in the
          application letter , the LFCC approved a PCFO which did not state that it will abide by
          all of those things required of it by the Federal regulations.

          PCFD Comments:

          The PCFO agrees with the finding and stated that the missing language will be
          included in future PCFO app lications.

          DIG Comments:

          We acce pt the PCFO's response. However, it did not provid e a response to
          recom mendation number 13. We recommend that the CFCO follow-up with the
          PCFO to ensure that the application covering the 2008 campaign (and future
          campaigns) is properly revised.

          Rec ommendation 12

          We recommend that the CFCO ensure that the LFCC understands the language
          requirements of the PCFO app lication and that it makes sure that the required
          language is included by all applicants considered for the position of PCFO in the
          future.

          Recommen da tion 13

          We recommend that the LFCC require the PCFO to submit a revised application for
          the agreement covering the 2008 cam paign.

C.   CAMPAIGN RECE IPTS AND DISBUR SEMENT S

     1.   Pledge Card E rrors                                                        Procedural

          Our pledge card review identified 13 pledge cards that were not entered into the
          pledge system correctly, which resulted in the se donor's wishes not being adhered to.

          5 CFR 950.105 (d) states that the "specific responsibilities of the PCFO include but
          are not limited to:
              (1) Honoring employee designations... .
              (3) Training agency loaned executives, coordinators, and keyworkers in the
              methods of non-coercive solicitation. This training mus t be completely separate
              from training given for other types of charitable campaign drives. Additionally,
              keyworkers should be trained to check to ensure the pledge form is legible on
              each copy, verify arithmetical calculations, and ensure the block on the ple dge
              form concerning the release of the employee's name and contact information is
              completed fully ."




                                              15

We reviewed a sample of 45 pledge cards to determine whether they were entered
into the PCFO ' s pledge card database correctly. Specifically, we compared the actua l
pledge card to the database to determine if the following items were entered correctl y:
donor name , charity code(s) and amounts donated, total amount donated, and the
donor 's choice to release personally identifiable information. Our review identified
13 pledge cards with errors. Specifically, we found :

   •	 Nine pledge cards where the dono r chose to release their name and E-mail
      address. However, the PCFO incorrectly entered this information into the
      database. For each of these pledge cards, the PCFa correctly entered the
      E-mail address but incorrectly indicated that the donor chose to release their
      home address rather than their E-mai l address. As a result, these donors did
      not have their desired information released. Upon further review with the
      PCFO, it appears as if this erro r was universal for the 2008 campaign.
      However, we determined that the error was corrected for the 2009 campaign
      based on our review of several pledge cards .
   •	 Three pledge cards where the donor incorrectly entered the amount per pay
      period into the annual amount area for the designated charity. For example, a
      civi lian donor (26 pay periods ) chooses to donate $10 per pay period with a
      total donation amount of $260, but enters $10 in the annual amount area of the
      one charity code designated to. This error is twofold . First, the Key Worker
      did not identify and have the donor correct the pledge card prior to it being
      sent to the PCFO. Second , rather than contact the Key Worker to correct the
      obvious ly incorrec t pledge card , the PCFO chose to treat the differ ence
      between the total amount donated and individual annual amounts as
      undesignated pledges. This, although adhering to the regulation , does not
      follow the overall spirit of the regulation 's guidance to honor the donor's
      wishes .
    •	 One pledge card which had two distinct errors . First, the PCFO altered the
       amounts donated for no apparent reason. The per pay period amoun t times the
       numb er of pay periods equaled the total amount donated, and the total of the
       annual amounts reconci led to the total amount donated . Therefore, there was
       no reason to adjust the pledge card . Additionally, the donor indicated that he
       wished to release his E-mail address, however, the PCFa failed to
       acknowledge this request by not entering this information into its pledge card
       database.

As a result of these errors, the donor' s wishes on these 13 pledge cards were not
honored according to the Federal regulations.

PCFO Comments:

The PCFO agrees with the finding and stated that if it identifi es a mathematical or
agenc y code error on a pledge card, that it will first contact the Unit Coordinator or
Key Worker so they might make the correction through the donor. In all other cases



                                     16

where the PCFO is unable to resolve the error the PCFO will follow the procedures
outlined in its response. Additionally, the PCFO stated that its Key Workers
understand the importance of the accuracy of the pledge cards as a result of the
training that they receive.

D IG Co mments:

We accept the PCFO ' s response in regards to the correction of mathematical or
agency code errors. How ever, the PCFO did not provide an explan ation of the
procedures put in place to ensure that all donor pledge card information is properly
entered into the pledge card database (recomme ndation number 14). Additionally,
the PCFO 's statement that the Key Workers understand their responsibilities as a
result of training received lacks support. It is our understanding that the Key Workers
utilized durin g the 2008 campaign were trained . However, the errors identified in our
review occurred in spite of the training provided. We suggest that the training
provided be modi fied or enhanced to ensure that these types of errors are identified
and corrected by the Key Workers before the pledge cards are sent to the PCFO .
Finally, the PCFO ' s response did not touch on recommendation number 17 which
recommended procedures for supervisory approval of pledge card changes made by
the PCFO.

Recommendation 14

We recommend that the CFCO ensure that the PCFO has procedures in place to
ensure that all information requeste d for release by the donor is prop erly entered into
its pledge card database and that the information is released as requested.

Recommendation 15

We recommend that the PCFO ensure that all Key Workers unders tand that they are
to verify the accuracy of all pledge cards before they are returned to the PCFO , and
that errors identifi ed are to be corrected by the donor before the pledge card is
forwarded.

Recommendation 16

We recommend that the CFCO direct the PCFO to institute procedures to have the
Key Worke r contact the donor when obvious and easily correc table errors are
ident ified on a pledge card.

Recommendation 17

We recommend that the CFCO direct the PCFO to institute procedure s requiring
supervisory approval of all pledge card changes prior to their entry in the pledge card
database.




                                      17
     2.   LFCC Approval of One-Time Disbursements                                  Procedural

          The PCFO made one-time disbursements to agencies with gross designations of $500
          and below before receiving approval from the LFCC.

          5 CFR 950.901 (i)(3) states that the PCFO "may make one-time disbursements to
          organizations receiving minimal donations from Federal employees. The LFCC must
          determine and authorize the amount of these one-time disbursements."

          Our review found that the PCFO disbursed one-time payments to all agencies with
          gross designations of $500 or less on March 31,2009. However , according to the
          LFCC meeting minutes , the one-time disbursement of these funds was actuall y
          approved on April 8, 2009 . Per discussion with the PCFO, this error in timing
          occurred because the PCFO was away at a CFC workshop when the initial payments
          for 2008 went out and approval was sought after their return. According to the
          PCFO, this was not typical, and they normally obtained approval in advance .

          Even though the approval of one-time disbursements has been a regular occurrence in
          the past, the approval should have been obtained before the payments were made.

          PCFD Comments:

          The PCFO agrees with the finding and stated that this procedure has been corrected
          and reflected in the LFCC minutes. The PCFO also stated that this procedure is
          covered in the LFCC Training held in January.

          DI G Co mme nts:

          The PCFO did not provide any specific procedures in its corrective action plan. We
          ask that the CFCO follow-up with the PCFO, obtain the specific proced ures to
          address the issue, and advise the PCFO as to the adequacy of the procedures.

          R ecom men dation 18

          We recommend that the CFCO ensure that the PCFO understands that the LFCC must
          determine and authorize the amount of one-time disbursements before the payments
          are actually made.

D.   ELIGIBILITY

     Our review of the campaign' s eligibility processes showed that the Island County CFC
     complied with the applicable provisions of 5 CFR 950.




                                              18

E.   PCFO AS A FEDERATION

     Our review of the PCFO ' s activities as a federation showed that it complied with the
     applicable provisions of 5 CFR 950.




                                               19

              IV. MAJOR CONTRmUTORS TO THIS REPORT

Special Audit s Group


                   Senior Team Leader

             Auditor


                    Group Chief,




                                        20

                                                                                     APPENDIX


                                       2007 and 2008

                           COJ\ilBINED FEDERAL CAMPAIGNS

                                   OF ISLA1~D CO UNTY

                             OAK, HARBOR, WASHI NG TON


Report no. 3A-CF-00-10-037                             Response Date: October 6, 20 10
                                                             Revi sed: January 6,20 11

Response from United Way of Island County se rving as the Principal Combined Fund
Organization (PCFO)

                                  AUDI T G UID E REVIE\V

   •   Agreed- Upon Procedures Not In Compliance with the Audit Guide

       The Independent Public Acco untant did not complete all the agreed - upon procedures in
       accordance w ith the Audit Guide .

       PCFO Response: We are in the process of reviewing all the agreed-upon procedures in
       accordance 'w ith the Audit Guide that were not com plet ed by the Indep endent Public
       Acco untant. We will in the future insure that those procedures are corrected and that the
       IPA follows OPM Aud it Gu idelines. We will also advise IPA to contact OPM to obtain
       clarification , when necessary.


                              BUDGET AND CAMPAGN EXP ENSES

   •   LFCC Approval of Ca m pa ign Expense Reimbursement

       The PCFO did not submit its expenses related to the 200 8 campaign to the LFCC for
       appr oval prior to reimbursement.

       PCFO Response: We agree with the finding.

          Corrective Action Plan:

           We have since confinned that the cam paign expens e reim bursement approval is
           reflected in the LFCC minutes and has since been corrected .

   •   Unallowa ble E xpenses Cha r ged to the 2008 Campaign

       The PCFO charged an unallowable expe nse, tota ling $955 , to the 2008 cam paign .

       PCFO Re sponse: We agree with the finding.
       Corrective Action Plan:

       $954.72 was reimbursed to the CFC and disbursement to member agenc ies of the
       2008 cam paign were made 1-7-2011. CFe Policy an d Procedures for the e FC notes
       that no membership dues to United Way of America will be charged to the CFC .

•   Insufficient and Undocumented Allocation Methods

    The allocation methods used by the peF O to allocate cost to the 20 08 campaig n were
    insufficient and were not supported by adequate documentation . Additiona l we identifi ed
    a number of t ransact ions wh ich used incorrect allocation percentages or where the OIG
    and the PCFO could not reconcile the amo unt charged to the gene ral ledger.

    PCFO Resp onse: We agree with the findin g.

       Corrective Action Plan:

       We have insured that allocation methods will be supported by ade quate
       documentation. CFC Policy and Proced ures stat e that direct costs are allocated at
       100%. Rent, utilities, office supplies. postage, equipment ma intenance, ins urance and
       technical support are allo cated at 35% to CFC , 65% allocated United Way ofIs land
       Coun ty. Sa laries and ben efits are charged at 38% to CFC, 62% alloca ted to United
       Way.

•   Campaign Expenses Charged to the Wrong Campaign Year

    The PCFO did not properly match its expenses to campa ign rece ipts charged the 2008
    campaign expenses re lated to the 2006 and 2007 campaigns.

    PCFO Response: We agree with this finding.

       Corrective Action Plan:

       This issue was due to the budget bein g set based on a calenda r yea r, January through
       December instead of the campaign year, March to February. The PCFO shall
       estab lish an annual budget for the period of March 1 through February 28. The annu al
       budget shall contain estimated costs to be accrued for the Independent Pub ic
       Acco untant (IPA ) audit for that campaign.

•   PCFO Applications Missing Required Language

    The United Way of Island County's applica tion to serve as peOF did not included all of
    the specific language required by the regulations.

    PCFO Respon se: We agree with the find ing.




                                             2
      Corrective Action Plan:

      The missing language will be included in future applications. Future PCFO
      applications will included the words "and/or Director" in the statement that the PCFO
      would be "subject to the decisions and supervision of the LFCC and/or Director."

                  CAMPAIGN RECEIPTS AND DISBURSEMENTS

•	 Pledge Card Errors

   The PCFO _incorrectly input 13 pledge cards causing it to not follow the CFC Donor's
   wishes.

   PCFO Response: We agree with the finding.

      Corrective Action Plan:

      If PCFO find s any mathematical or agency code errors, the PCFO shall notify the
      Unit Coordinator or Key Worker requesting they contact the person making the
      pledge to request they correct the error.

      If PCFO is unable to resolve the error on the pledge form, the follow ing actions will
      occur:
      •	 Tf the error is a mathematical error resulting in the entire pledge amount NOT
          being assigned to a charity, the remaining amount will be assigned as
          Undesignated Funds.
      •	 If the error is a mathematical error resul ting in the sum of the pledge(s) exceeding
          the total amount pledged, the amount pledge to each charity will be reduced
          proportionally so the sum is equal to the total amount pledged.
      •	 If the error is an incorrect agency code , the funds will be assigned as
          Undesignated Funds.

      Recommendation 15: This was due to clerical error by previous administrative
      assistant.

      Recommendation 16: This procedure is covered in Unit Coordinator/Key Worker
      Training attended by the federal emp loyees that volunteer for the CFC.

      Recommendation 17: This is covered in the Corrective Action Plan above.

•	 LFCC Approval of One-Time Disbursements

   The PCFO made one-time disbursements for the 2008 campaign before obtaining
   approval from the LFCC.

   PCFO Response: We agree with the finding.




                                            3
   Corrective Action Plan:

   This proce dure has since been corrected and reflected in the LF CC minutes. This
   procedure is covered in the LFCC Training held in Jan uary .


Submitted by:
                United Way of Island Co unty

                PO Box 798

                Oak Harbor, WA 98277





                                        4