oversight

Audit of the 2008 and 2009 Greater New Orleans Area Combined Federal Campaigns New Orleans, Louisiana

Published by the Office of Personnel Management, Office of Inspector General on 2012-05-02.

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

                                                     U.S. OFFICE OF PERSONNEL MANAGEMENT
                                                           OFFICE OF THE INSPECTOR GENERAL
                                                                            OFFICE OF AUDITS




Final Audit Report
Subject:


                    AUDIT OF THE 2008 AND 2009
                   GREATER NEW ORLEANS AREA
                  COMBINED FEDERAL CAMPAIGNS
                    NEW ORLEANS, LOUISIANA




                                           Report No. 3A-CF-00-11-040


                                           Date:             May 2, 2012




                                                            --CAUTION--
This audit report has been distributed to Federal officials who are responsible for the administration of the audited program. This audit
report may contain proprietary data which is protected by Federal law (18 U.S.C. 1905). Therefore, while this audit report is available
under the Freedom of Information Act and made available to the public on the OIG webpage, caution needs to be exercised before
releasing the report to the general public as it may contain proprietary information that was redacted from the publicly distributed copy.
                                                     AUDIT REPORT



                                   AUDIT OF THE 2008 AND 2009
                                  GREATER NEW ORLEANS AREA
                                 COMBINED FEDERAL CAMPAIGNS
                                    NEW OLEANS, LOUISIANA


          Report No. 3A-CF-00-11-040                                               Date: May 2, 2012




                                                                                     ____________________________
                                                                                     Michael R. Esser
                                                                                     Assistant Inspector General
                                                                                       for Audits




                                                            --CAUTION--
This audit report has been distributed to Federal officials who are responsible for the administration of the audited program. This audit
report may contain proprietary data which is protected by Federal law (18 U.S.C. 1905). Therefore, while this audit report is available
under the Freedom of Information Act and made available to the public on the OIG webpage, caution needs to be exercised before
releasing the report to the general public as it may contain proprietary information that was redacted from the publicly distributed copy.
                                 EXECUTIVE SUMMARY




                          AUDIT OF THE 2008 AND 2009
                         GREATER NEW ORLEANS AREA
                        COMBINED FEDERAL CAMPAIGNS
                          NEW ORLEANS, LOUISIANA


       Report No. 3A-CF-00-11-040                            Date: May 2, 2012

The Office of the Inspector General has completed an audit of the 2008 and 2009 Greater New
Orleans Area Combined Federal Campaigns (CFC). The United Way of the Greater New
Orleans Area, located in New Orleans, Louisiana, served as the Principal Combined Fund
Organization (PCFO) during both campaigns. Our main objective was to determine if the
Greater New Orleans 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 the Local Federal
Coordinating Committee. The audit identified 4 instances of non-compliance with the
regulations (5 CFR 950) governing the CFC and questions $21,080.

The following findings represent the results of our audit work as of the date of this report.

                                    AUDIT GUIDE REVIEW

Our review of the Independent Public Accountant’s completion of the Agreed-Upon Procedures
for the 2008 campaign showed that it complied with the CFC Audit Guide.

                           BUDGET AND CAMPAIGN EXPENSES

•   Unallowable Campaign Expenses                                                           $21,080

    The PCFO was reimbursed $21,080 for expenses that were either related to another campaign
    or did not reflect the actual cost of administering the campaign.




                                                  i
                     CAMPAIGN RECEIPTS AND DISBURSEMENTS

•   One-Time Disbursements                                                           Procedural

    The PCFO did not distribute the correct amount of funds to organizations receiving one-time
    disbursements.

•   Notification of Undesignated Funds                                               Procedural

    The PCFO did not notify organizations and federations of the 2009 CFC of the amount of
    undesignated funds due to them.

•   Release of Contributor’s Information                                             Procedural

    The PCFO did not forward a contributor’s name and pledge amount to an organization after
    the individual indicated on the pledge form that they wished to have this information
    released.

                                        ELIGIBILITY

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

                                 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.

                                    FRAUD AND ABUSE

Our review of the PCFO’s anti-fraud policies and procedures indicated that they were sufficient
to detect and deter potential fraud and abuse activities.




                                               ii
                                                   CONTENTS
                                                                                                                         PAGE

       EXECUTIVE SUMMARY ............................................................................................i

  I.   INTRODUCTION AND BACKGROUND .................................................................. 1

 II.   OBJECTIVES, SCOPE, AND METHODOLOGY ...................................................... 3

III.   AUDIT FINDINGS AND RECOMMENDATIONS .................................................... 7

       A. AUDIT GUIDE REVIEW ...................................................................................... 7

       B. BUDGET AND CAMPAIGN EXPENSES ........................................................... 7

            1. Unallowable Campaign Expenses ...................................................................... 7

       C. CAMPAIGN RECEIPTS AND DISBURSEMENTS ........................................... 10

            1. One-Time Disbursements .................................................................................. 10
            2. Notification of Undesignated Funds.................................................................. 11
            3. Release of Contributor’s Information................................................................ 12

       D. ELIGIBILITY ........................................................................................................ 13

       E. PCFO AS A FEDERATION ................................................................................. 13

       F. FRAUD AND ABUSE .......................................................................................... 13

IV.    MAJOR CONTRIBUTORS TO THIS REPORT ........................................................ 14

       APPENDIX A (The PCFO and the LFCC’s response to the draft report, dated
                   March 7, 2012)

       APPENDIX B (The PCFO’s amended response to the draft report, dated
                   March 12, 2012)
                    I. INTRODUCTION AND BACKGROUND
INTRODUCTION

This report details the findings and conclusions resulting from our audit of the 2008 and 2009
Greater New Orleans Area Combined Federal Campaigns (CFC). 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 2009, it consisted of 226 separate local campaign organizations located throughout
the United States, including Puerto Rico and the Virgin Islands, as well as overseas locations.
The Office of the Combined Federal Campaign (OCFC) at OPM has the responsibility for
management of the CFC. This includes publishing regulations, memoranda, and other forms of
guidance to Federal offices and private organizations to ensure that all campaign objectives are
achieved.

Each CFC is 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 the eligibility of local voluntary organizations; selecting and
supervising the activities of the PCFO; encouraging Federal agencies to appoint Loaned
Executives to assist in the campaign; ensuring that employees are not coerced in any way in
participating in the campaign; and acting upon any problems relating to a voluntary agency’s
noncompliance with the policies and procedures of the CFC. Loaned Executives are Federal
employees who are temporarily assigned to work directly on the CFC.

The primary goal of the PCFO is to administer an effective and efficient campaign in a fair and
even-handed manner aimed at collecting the greatest amount of charitable contributions possible.
Its responsibilities include training loaned executives, coordinators, employee keyworkers and
volunteers; maintaining a detailed schedule of its actual CFC administrative expenses; preparing
pledge cards and brochures; distributing campaign receipts; submitting to an 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 Federal employee donations.
Compliance with these regulations is the responsibility of the PCFO and the LFCC. The PCFO
is also responsible for establishing and maintaining a system of internal controls.




                                               1
All findings from our previous audit of the Greater New Orleans Area CFC (Report Number
3A-CF-00-02-056, dated November 19, 2002), covering the 1999 and 2000 campaigns, have
been satisfactorily resolved.

The initial results of our audit were discussed with PCFO and LFCC officials during an exit
conference held on June 10, 2011. A draft report was provided to the PCFO and the LFCC for
review and comment on February 1, 2012. The PCFO and LFCC’s responses to the draft report
were considered in preparation of this final report and are included as Appendices.




                                             2
               II. OBJECTIVES, SCOPE, AND METHODOLOGY
OBJECTIVES

The primary purpose of our audit was to determine if the Greater New Orleans Area CFC was in
compliance with 5 CFR 950, including the activities of both the PCFO and the LFCC. Our audit
objective for the 2008 campaign was:

   Audit Guide Review
   • To determine if the IPA completed the Agreed-Upon Procedures (AUP) as outlined in the
      CFC Audit Guide.

Additionally, our audit objectives for the 2009 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 Receipts 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 properly notified of the
     amounts pledged to them and that donor personal information was only released for those
     who requested the release of information.

   Eligibility
   • 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 in a timely manner;
       and if the appeals process 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 documented properly;
     and if the disbursements made to the federation members were accurate.

   Fraud and Abuse
   • Determine what policies and procedures the PCFO has in place relating to detecting and
      preventing fraud and abuse and if they are adequate.


                                               3
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 2008 and 2009. The United Way of the Greater New Orleans
Area, located in New Orleans, Louisiana, served as the PCFO during both campaigns. The audit
fieldwork was conducted at the offices of the PCFO from June 6 through 10, 2011. Additional
audit work was completed at our Cranberry Township, Pennsylvania, and Washington, D.C.
offices.

The Greater New Orleans Area CFC received campaign pledges, collected campaign receipts,
and incurred campaign administrative expenses for the 2008 and 2009 campaigns as shown
below.

    Campaign                  Total                         Total                   Administrative
      Year                   Pledges                       Receipts                   Expenses
       2008                $1,451,325                     $1,396,333                   $244,551

       2009                $1,289,110                     $1,239,492                   $260,727 1

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 reliability.

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
Memoranda issued by the OCFC.

To accomplish our objective concerning the 2008 campaign (Audit Guide Review), we reviewed
the CFC Audit Guide to verify that the IPA completed and documented the AUP steps.

In regard to our objectives concerning the 2009 campaign’s budget and campaign expenses, we
accomplished the following:

1
 The PCFO incurred $261,800 in expenses for the 2009 campaign, but only requested reimbursement for the
budgeted amount of $260,727.


                                                      4
       •   Reviewed the PCFO’s application to verify that 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 in a timely manner.

       •   Traced and reconciled amounts on the PCFO’s Schedule of Actual Expenses to the
           PCFO’s general ledger.

       •   Reviewed the PCFO’s budgeted expenses, the LFCC’s approval of the budget, and
           matched a sample of actual expenses to supporting documentation. Our sample included
           44 transactions (totaling $72,161) from a universe of 215 transactions (totaling $216,152
           in direct costs 2). We judgmentally selected this sample based on transactions with high
           dollar amounts, accruals, audit fees, and items which may not have been beneficial to the
           campaign.

       •   Reviewed the LFCC meeting minutes and verified that the LFCC authorized the PCFO’s
           reimbursement of campaign expenses.

       •   Compared the budgeted expenses to actual expenses, and determined if actual expenses
           exceeded 110 percent of the approved budget.

To determine if the 2009 campaign’s receipts and disbursements were handled in accordance
with CFC regulations, we reviewed the following:

       •   A sample of the first 50 pledge cards (with total designations of $19,555) out of a
           universe of 5,128 pledge cards (with a total pledged of $1,276,932) from the PCFO’s
           2009 campaign Pledge Card Report and compared the pledge information from the report
           to the actual pledge cards.

       •   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.

       •   Pledge Notification 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.

       •   Donor letters sent by the PCFO to organizations to verify that the letters properly notified
           the organization of the donors who wished to be recognized.


2
    We did not sample transactions related to indirect costs since they were associated with all lines of business.


                                                             5
   •   CFC receipts and distributions from the PCFO’s campaign bank statements, campaign
       receipts and agency disbursements, and campaign expense support to verify whether the
       PCFO accurately recorded and disbursed all campaign receipts and disbursements.

   •   All bank statements used by the PCFO to verify that the PCFO was properly accounting
       for and distributing funds.

   •   The PCFO’s cutoff procedures and bank statements to verify that funds were allocated to
       the appropriate campaign year.

To determine if the LFCC and PCFO were in compliance with CFC regulations regarding
eligibility for the 2009 campaign, we reviewed the following:

   •   The public notice to prospective charitable organizations to determine if the LFCC
       accepted applications from organizations for at least 30 days.

   •   Campaign charity lists to determine if they contained all required information.

   •   The process and procedures for the application evaluation process.

   •   Eligibility letters to verify that they were properly sent by the LFCC.

   •   The LFCC’s processes and procedures for responding to appeals from organizations.

To determine if the PCFO was in compliance with the CFC regulations as a federation (United
Way of the Greater New Orleans Area) for the 2009 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 the United Way of the Greater New
       Orleans Area did not disburse any funds to member agencies not participating in the
       CFC.

   •   The United Way of the Greater New Orleans Area’s agreements with its member
       agencies to determine if member fees were reasonable and supported.

Finally, to determine if the policies and procedures related to the detection and prevention of
fraud and abuse were adequate, we reviewed the PCFO’s responses to our fraud and abuse
questionnaire.

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.




                                                 6
                 III. AUDIT FINDINGS AND RECOMMENDATIONS
A.    AUDIT GUIDE REVIEW

      Our review of the IPA’s completion of the AUPs for the 2008 campaign showed that it
      complied with the applicable provisions of the CFC Audit Guide.

B.    BUDGET AND CAMPAIGN EXPENSES

      1.     Unallowable Campaign Expenses                                                              $21,080

             The PCFO was incorrectly reimbursed $21,080 for three expenses that related to the
             2008 campaign, one expense that belonged to the 2010 campaign, and two expenses
             that did not reflect the actual cost of administering the 2009 campaign.

             5 CFR 950.106(b) states that the PCFO may only recover campaign expenses from
             receipts that are collected for that campaign.

             In addition, 5 CFR 950.106(a) states that the PCFO shall recover, from the gross
             receipts of the campaign, its expenses reflecting the actual costs of administering the
             campaign. Furthermore, 5 CFR 950.104(b)(17) states that the LFCC is responsible
             for only allowing the PCFO’s reimbursement of campaign expenses that are
             legitimate CFC costs.

             We reviewed 44 expense transactions, totaling $72,161, to determine if the expenses
             reflected the actual cost of administering the 2009 campaign. During our review, we
             indentified the following expenses as being incorrectly charged to the 2009
             campaign:

             •   $10,622 3 for CFC incentives purchased at the start of the 2008 campaign. The
                 PCFO purchased CFC star label pins, pens, flashlights, patriotic fans, and CFC
                 bags in December 2008. Since the solicitation of funds for the 2008 campaign
                 ended in December 2008, this expense clearly related to the 2008 campaign and
                 should have been reimbursed using 2008 campaign receipts.

                 PCFO and LFCC’s Comments:

                 The PCFO and LFCC agree with this finding. As a corrective action plan, the
                 PCFO will attempt to order all incentives at the start of the campaign and all
                 check requests will have the fall campaign identifying the correct campaign year.

             •   $7,5003 in audit fees for the 2008 campaign. This expense was for the IPA’s
                 audit of the 2008 campaign, which took place in 2010. This expense should not
                 have been recovered using 2009 campaign receipts since it belonged to the 2008

3
 As a result of the 2008 campaign being closed, we will not include recommendations related to the $10,622 and
$7,500 undercharged to that campaign.


                                                        7
                 campaign. Additional guidance on how to account for the audit expenses was
                 provided by the OCFC in CFC Memorandum 2008-09.

                 PCFO and LFCC’s Comments:

                 The PCFO and LFCC agree with this finding. Since audit fees are accrued based
                 on a fee schedule provided in the engagement letter with the IPA, the PCFO will
                 accrue the correct amount that correlates to the campaign year actually being
                 audited.

             •   $234 4 for recognition lunches held at the beginning of the 2008 campaign. In
                 January and February 2009, the LFCC held two luncheons to recognize certain
                 individuals for the work they did for the CFC. Since the solicitation of funds for
                 the 2008 campaign had just ended in December 2008, these expenses clearly
                 related to work performed during the 2008 campaign and should have been
                 reimbursed using 2008 campaign receipts.

                 PCFO and LFCC’s Comments:

                 The PCFO and LFCC agree with this finding. As part of its corrective action plan
                 the PCFO stated, “Recognition lunches will be charged to the campaign year for
                 which the recognition is being given. All check requests will be required to
                 include the fall campaign year benefited by the expense in order to ensure that
                 charges are recorded in the proper year.”

             •   $989 for a public notice soliciting the 2010 PCFO. On December 31, 2009, the
                 PCFO purchased an advertisement in the Times Picayune newspaper to solicit
                 PCFO applications for the 2010 campaign. This cost should have been
                 reimbursed using 2010 campaign receipts.

                 PCFO and LFCC’s Comments:

                 The PCFO and LFCC agree with this finding. The PCFO will redistribute $989 to
                 the 2009 campaign and request reimbursement for the same amount from the
                 2010 campaign. The PCFO will charge expenses to the campaign year benefited
                 by the expense, regardless of invoice date. In addition, all check requests will be
                 required to include the campaign year benefited by the expense in order to ensure
                 that charges are recorded in the proper year.

             •   $1,413 for lunch expenses. We identified 13 instances where 2009 campaign
                 receipts were used to reimburse lunch costs incurred during LFCC meetings,
                 loaned executive meetings, and general meetings. We believe these were not
                 legitimate CFC expenses since they did not reflect the actual cost of administering
                 the 2009 campaign. Furthermore, providing meals during meetings was

4
 As a result of the 2008 campaign being closed, we will not include a recommendation related to the $234
undercharged to that campaign.


                                                        8
    counterproductive to the CFC’s goal of collecting the greatest amount of
    charitable contributions possible. Therefore, these expenses should not have been
    charged to the 2009 campaign.

    PCFO and LFCC’s Comments:

    The PCFO and LFCC agree with this finding. The PCFO will pay $1,413 back to
    the 2009 campaign and will clearly denote recognition and training lunches on all
    future check requests to avoid any confusion, as it maintains that lunches for these
    purposes are allowable campaign costs.

    OIG’s Comment

    We agree that during the scope of this audit, special events such as recognition
    lunches could be considered allowable campaign costs when the events honored
    outstanding accomplishments by individuals or groups working on the CFC. That
    being said, the Director of OPM has recently issued a new directive to all PCFOs
    and LFCCs regarding the allowability of meals at campaign events. Effective
    March 28, 2012, costs incurred for meals and entertainment expenses are no
    longer considered allowable costs and should not be charged against the proceeds
    of the campaign.

•   $322 for flower arrangements. The PCFO sent four associates flowers as a
    sympathy, birthday, or get well token. Again, we believe these were not
    legitimate CFC expenses since they did not reflect the actual cost of administering
    the 2009 campaign or help in collecting the greatest amount of charitable
    contributions.

    PCFO and LFCC’s Comments:

    The PCFO and LFCC agree with this finding. The PCFO will pay $322 back to
    the 2009 campaign and will no longer use CFC funds to pay for flowers.

Because the PCFO misunderstood the true campaign expense period and the LFCC
did not properly review expenses to ensure that they were legitimate CFC costs,
organizations participating in the 2009 CFC lost $21,080 in Federal employee
contributions.

Recommendation 1

For expenses related to the 2010 campaign, we recommend that the OCFC direct the
PCFO to redistribute $989 to the 2009 campaign and request reimbursement for the
same amount from the 2010 campaign.




                                     9
          Recommendation 2

          We recommend that the OCFC and the LFCC ensure that the PCFO implements
          procedures to track and allocate expenses to the correct campaign year according to
          CFC Memorandum 2008-09.

          Recommendation 3

          For expenses that were not legitimate CFC costs and did not reflect the actual cost of
          administering the 2009 campaign, we recommend the OCFC direct the PCFO to pay
          back $1,735 ($1,413 + $322) to the 2009 campaign.

          Recommendation 4

          We recommend that the OCFC ensures that the LFCC understands its role in the
          review and approval of all costs charged to the CFC and that it follows the directive,
          relating to meals and entertainment costs, issued by the Director of OPM so that those
          expenses plus other unallowable expenses are not charged to future campaigns.

C.   CAMPAIGN RECEIPTS AND DISBURSEMENTS

     1.   One-Time Disbursements                                                     Procedural

          The PCFO did not distribute the correct amount of funds to organizations receiving
          one-time disbursements.

          5 CFR 950.901(i)(3) allows the PCFO to make one-time disbursements to
          organizations receiving minimal donations when approved by the LFCC. The LFCC
          must determine and authorize the amount of these one-time disbursements. The one-
          time disbursements will be reduced for estimated pledge loss and administrative
          expenses according to guidelines issued in CFC Memorandum 2008-09.

          We reviewed the PCFO’s policies and procedures for one-time disbursements, as well
          as the one-time disbursements listed on the PCFO’s Distribution Schedule. We
          determined that the LFCC approved one-time disbursements for organizations
          receiving gross designations of $250 or less. We also found that the PCFO accurately
          calculated the average pledge loss at 7.4 percent. Using this percentage, we
          recalculated the one-time disbursements and compared our amounts to the actual
          disbursements made by the PCFO. Our comparison showed that the PCFO overpaid
          $319 to organizations receiving one-time disbursements. The PCFO is aware of this
          issue and attributes the error to its CFC software.

          As a result of one-time disbursements being miscalculated, the PCFO overpaid the
          organizations that received one-time disbursements and underpaid all other
          organizations that received regular CFC distributions.




                                              10
     PCFO and LFCC’s Comments:

     The PCFO and LFCC agree with this finding. The 2009 campaign was the only year
     where one-time disbursements were made. After these funds were disbursed, the
     PCFO discovered that its CFC software was not capable of calculating these
     payments correctly. As a result, the PCFO is no longer doing one-time
     disbursements.

     Recommendation 5

     If the PCFO decides to resume making one-time disbursements, we recommend that
     the LFCC ensures that the PCFO calculates and distributes one-time disbursements
     using the instructions provided in CFC Memorandum 2008-09.

2.   Notification of Undesignated Funds                                        Procedural

     The PCFO did not notify organizations and federations of the 2009 CFC of the
     amount of undesignated funds allocated to them.

     5 CFR 950.901(i)(1) states that the PCFO shall notify organizations and federations
     of the amounts designated to them and their member agencies, and of the amount of
     undesignated funds allocated to them.

     We reviewed 10 designation and donor letters to determine if the PCFO notified
     federations and organizations on time and if the letters included both designated and
     undesignated pledge amounts. During our review, we found that the letters only
     notified the federations and organizations of the amounts designated directly to them
     and their member agencies by donors. The letters did not indicate the amount of
     undesignated funds.

     As a result of the PCFO not notifying federations and organizations of the amount of
     undesignated funds allocated to them and their member agencies, the federations and
     organizations did not have an accurate estimate of how much they would each receive
     for participating in the 2009 campaign. Not knowing the amount of these funds could
     restrict the planning and budgeting abilities of the CFC organizations and federations
     depending upon the monies donated by Federal employees.

     PCFO and LFCC’s Comments:

     The PCFO and LFCC agree with this finding. As a corrective action plan, the PCFO
     will deliver written and electronic notice of the amount of designated and
     undesignated funds allocated to the federations, their member agencies, and all
     independent charitable organizations.




                                         11
     Recommendation 6

     We recommend that the LFCC ensures that the PCFO notifies organizations of the
     amount of undesignated funds allocated to them.

3.   Release of Contributor’s Information                                         Procedural

     The PCFO did not forward a contributor’s name and pledge amount to an
     organization after the individual indicated on the pledge form that they wished to
     have this information released.

     5 CFR 950.601(c) states that it’s the responsibility of the PCFO to forward the
     contributor information for those who have indicated that they wish this information
     released to the recipient organization directly, if the organization is independent, and
     to the organization’s federation if the organization is a member of a federation.

     We reviewed 50 pledge forms to determine if the information filled out by
     contributors was correctly entered into the PCFO’s pledge form database. The CFC
     pledge forms have a section where contributors can check boxes requesting to release
     their information to organizations they donate to in order to be acknowledged for
     their donation. If a contributor checks one or more of the boxes labeled “pledge
     amount”, “home address”, or “home email”, then their check mark authorizes the
     CFC to release the contributor’s name and the corresponding information to the
     designated organization(s).

     For further review, we also compared 10 of the 50 pledge forms to the designation
     and donor lists sent to organizations receiving funds in the 2009 campaign to
     determine if the contributor’s information was properly released. During this review,
     we found one pledge form where a contributor wished to release their name and
     pledge amount, but the designation and donor list sent to the recipient organization
     did not include this information. The PCFO believes this error was caused by a
     mistake in its pledge form database since the database authorized the release of the
     contributor’s pledge amount but not their name.

     Because the designation and donor list did not properly include this contributor’s
     name and pledge amount, the contributor was not given the opportunity to be
     acknowledged by the organization for their donation.

     PCFO and LFCC’s Comments:

     The PCFO and LFCC agree with this finding. For a corrective action plan, they will
     ensure that the CFC pledge card is clear as to what information should be released,
     and that the data entry staff is fully trained on the acknowledgment portion of the
     pledge card. They also commented that in this case, the donor’s name appeared as
     “anonymous” with the gift amount listed on the report.




                                          12
          Recommendation 7

          We recommend that the LFCC ensures that the PCFO properly releases contributor
          information when the pledge form indicates that the information should be released.

D.   ELIGIBILITY

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

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.

F.   FRAUD AND ABUSE

     Our review of the PCFO’s anti-fraud policies and procedures indicated that they were
     sufficient to detect and deter potential fraud and abuse activities.




                                              13
             IV. MAJOR CONTRIBUTORS TO THIS REPORT
Special Audits Group

             , Auditor-In-Charge


                  , Group Chief,

              , Senior Team Leader




                                     14
                     CAMPAIGN RECEIPTS AND DISBURSEMENTS

•   One-Time Disbursements                                                           Procedural

    The PCFO did not distribute the correct amount of funds to organizations receiving one-time
    disbursements.

•   Notification of Undesignated Funds                                               Procedural

    The PCFO did not notify organizations and federations of the 2009 CFC of the amount of
    undesignated funds due to them.

•   Release of Contributor’s Information                                             Procedural

    The PCFO did not forward a contributor’s name and pledge amount to an organization after
    the individual indicated on the pledge form that they wished to have this information
    released.

                                        ELIGIBILITY

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

                                 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.

                                    FRAUD AND ABUSE

Our review of the PCFO’s anti-fraud policies and procedures indicated that they were sufficient
to detect and deter potential fraud and abuse activities.




                                               ii
                                                   CONTENTS
                                                                                                                         PAGE

       EXECUTIVE SUMMARY ............................................................................................i

  I.   INTRODUCTION AND BACKGROUND .................................................................. 1

 II.   OBJECTIVES, SCOPE, AND METHODOLOGY ...................................................... 3

III.   AUDIT FINDINGS AND RECOMMENDATIONS .................................................... 7

       A. AUDIT GUIDE REVIEW ...................................................................................... 7

       B. BUDGET AND CAMPAIGN EXPENSES ........................................................... 7

            1. Unallowable Campaign Expenses ...................................................................... 7

       C. CAMPAIGN RECEIPTS AND DISBURSEMENTS ........................................... 10

            1. One-Time Disbursements .................................................................................. 10
            2. Notification of Undesignated Funds.................................................................. 11
            3. Release of Contributor’s Information................................................................ 12

       D. ELIGIBILITY ........................................................................................................ 13

       E. PCFO AS A FEDERATION ................................................................................. 13

       F. FRAUD AND ABUSE .......................................................................................... 13

IV.    MAJOR CONTRIBUTORS TO THIS REPORT ........................................................ 14

       APPENDIX A (The PCFO and the LFCC’s response to the draft report, dated
                   March 7, 2012)

       APPENDIX B (The PCFO’s amended response to the draft report, dated
                   March 12, 2012)
                    I. INTRODUCTION AND BACKGROUND
INTRODUCTION

This report details the findings and conclusions resulting from our audit of the 2008 and 2009
Greater New Orleans Area Combined Federal Campaigns (CFC). 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 2009, it consisted of 226 separate local campaign organizations located throughout
the United States, including Puerto Rico and the Virgin Islands, as well as overseas locations.
The Office of the Combined Federal Campaign (OCFC) at OPM has the responsibility for
management of the CFC. This includes publishing regulations, memoranda, and other forms of
guidance to Federal offices and private organizations to ensure that all campaign objectives are
achieved.

Each CFC is 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 the eligibility of local voluntary organizations; selecting and
supervising the activities of the PCFO; encouraging Federal agencies to appoint Loaned
Executives to assist in the campaign; ensuring that employees are not coerced in any way in
participating in the campaign; and acting upon any problems relating to a voluntary agency’s
noncompliance with the policies and procedures of the CFC. Loaned Executives are Federal
employees who are temporarily assigned to work directly on the CFC.

The primary goal of the PCFO is to administer an effective and efficient campaign in a fair and
even-handed manner aimed at collecting the greatest amount of charitable contributions possible.
Its responsibilities include training loaned executives, coordinators, employee keyworkers and
volunteers; maintaining a detailed schedule of its actual CFC administrative expenses; preparing
pledge cards and brochures; distributing campaign receipts; submitting to an 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 Federal employee donations.
Compliance with these regulations is the responsibility of the PCFO and the LFCC. The PCFO
is also responsible for establishing and maintaining a system of internal controls.




                                               1
All findings from our previous audit of the Greater New Orleans Area CFC (Report Number
3A-CF-00-02-056, dated November 19, 2002), covering the 1999 and 2000 campaigns, have
been satisfactorily resolved.

The initial results of our audit were discussed with PCFO and LFCC officials during an exit
conference held on June 10, 2011. A draft report was provided to the PCFO and the LFCC for
review and comment on February 1, 2012. The PCFO and LFCC’s responses to the draft report
were considered in preparation of this final report and are included as Appendices.




                                             2
               II. OBJECTIVES, SCOPE, AND METHODOLOGY
OBJECTIVES

The primary purpose of our audit was to determine if the Greater New Orleans Area CFC was in
compliance with 5 CFR 950, including the activities of both the PCFO and the LFCC. Our audit
objective for the 2008 campaign was:

   Audit Guide Review
   • To determine if the IPA completed the Agreed-Upon Procedures (AUP) as outlined in the
      CFC Audit Guide.

Additionally, our audit objectives for the 2009 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 Receipts 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 properly notified of the
     amounts pledged to them and that donor personal information was only released for those
     who requested the release of information.

   Eligibility
   • 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 in a timely manner;
       and if the appeals process 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 documented properly;
     and if the disbursements made to the federation members were accurate.

   Fraud and Abuse
   • Determine what policies and procedures the PCFO has in place relating to detecting and
      preventing fraud and abuse and if they are adequate.


                                               3
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 2008 and 2009. The United Way of the Greater New Orleans
Area, located in New Orleans, Louisiana, served as the PCFO during both campaigns. The audit
fieldwork was conducted at the offices of the PCFO from June 6 through 10, 2011. Additional
audit work was completed at our Cranberry Township, Pennsylvania, and Washington, D.C.
offices.

The Greater New Orleans Area CFC received campaign pledges, collected campaign receipts,
and incurred campaign administrative expenses for the 2008 and 2009 campaigns as shown
below.

    Campaign                  Total                         Total                   Administrative
      Year                   Pledges                       Receipts                   Expenses
       2008                $1,451,325                     $1,396,333                   $244,551

       2009                $1,289,110                     $1,239,492                   $260,727 1

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 reliability.

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
Memoranda issued by the OCFC.

To accomplish our objective concerning the 2008 campaign (Audit Guide Review), we reviewed
the CFC Audit Guide to verify that the IPA completed and documented the AUP steps.

In regard to our objectives concerning the 2009 campaign’s budget and campaign expenses, we
accomplished the following:

1
 The PCFO incurred $261,800 in expenses for the 2009 campaign, but only requested reimbursement for the
budgeted amount of $260,727.


                                                      4
       •   Reviewed the PCFO’s application to verify that 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 in a timely manner.

       •   Traced and reconciled amounts on the PCFO’s Schedule of Actual Expenses to the
           PCFO’s general ledger.

       •   Reviewed the PCFO’s budgeted expenses, the LFCC’s approval of the budget, and
           matched a sample of actual expenses to supporting documentation. Our sample included
           44 transactions (totaling $72,161) from a universe of 215 transactions (totaling $216,152
           in direct costs 2). We judgmentally selected this sample based on transactions with high
           dollar amounts, accruals, audit fees, and items which may not have been beneficial to the
           campaign.

       •   Reviewed the LFCC meeting minutes and verified that the LFCC authorized the PCFO’s
           reimbursement of campaign expenses.

       •   Compared the budgeted expenses to actual expenses, and determined if actual expenses
           exceeded 110 percent of the approved budget.

To determine if the 2009 campaign’s receipts and disbursements were handled in accordance
with CFC regulations, we reviewed the following:

       •   A sample of the first 50 pledge cards (with total designations of $19,555) out of a
           universe of 5,128 pledge cards (with a total pledged of $1,276,932) from the PCFO’s
           2009 campaign Pledge Card Report and compared the pledge information from the report
           to the actual pledge cards.

       •   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.

       •   Pledge Notification 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.

       •   Donor letters sent by the PCFO to organizations to verify that the letters properly notified
           the organization of the donors who wished to be recognized.


2
    We did not sample transactions related to indirect costs since they were associated with all lines of business.


                                                             5
   •   CFC receipts and distributions from the PCFO’s campaign bank statements, campaign
       receipts and agency disbursements, and campaign expense support to verify whether the
       PCFO accurately recorded and disbursed all campaign receipts and disbursements.

   •   All bank statements used by the PCFO to verify that the PCFO was properly accounting
       for and distributing funds.

   •   The PCFO’s cutoff procedures and bank statements to verify that funds were allocated to
       the appropriate campaign year.

To determine if the LFCC and PCFO were in compliance with CFC regulations regarding
eligibility for the 2009 campaign, we reviewed the following:

   •   The public notice to prospective charitable organizations to determine if the LFCC
       accepted applications from organizations for at least 30 days.

   •   Campaign charity lists to determine if they contained all required information.

   •   The process and procedures for the application evaluation process.

   •   Eligibility letters to verify that they were properly sent by the LFCC.

   •   The LFCC’s processes and procedures for responding to appeals from organizations.

To determine if the PCFO was in compliance with the CFC regulations as a federation (United
Way of the Greater New Orleans Area) for the 2009 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 the United Way of the Greater New
       Orleans Area did not disburse any funds to member agencies not participating in the
       CFC.

   •   The United Way of the Greater New Orleans Area’s agreements with its member
       agencies to determine if member fees were reasonable and supported.

Finally, to determine if the policies and procedures related to the detection and prevention of
fraud and abuse were adequate, we reviewed the PCFO’s responses to our fraud and abuse
questionnaire.

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.




                                                 6
                 III. AUDIT FINDINGS AND RECOMMENDATIONS
A.    AUDIT GUIDE REVIEW

      Our review of the IPA’s completion of the AUPs for the 2008 campaign showed that it
      complied with the applicable provisions of the CFC Audit Guide.

B.    BUDGET AND CAMPAIGN EXPENSES

      1.     Unallowable Campaign Expenses                                                              $21,080

             The PCFO was incorrectly reimbursed $21,080 for three expenses that related to the
             2008 campaign, one expense that belonged to the 2010 campaign, and two expenses
             that did not reflect the actual cost of administering the 2009 campaign.

             5 CFR 950.106(b) states that the PCFO may only recover campaign expenses from
             receipts that are collected for that campaign.

             In addition, 5 CFR 950.106(a) states that the PCFO shall recover, from the gross
             receipts of the campaign, its expenses reflecting the actual costs of administering the
             campaign. Furthermore, 5 CFR 950.104(b)(17) states that the LFCC is responsible
             for only allowing the PCFO’s reimbursement of campaign expenses that are
             legitimate CFC costs.

             We reviewed 44 expense transactions, totaling $72,161, to determine if the expenses
             reflected the actual cost of administering the 2009 campaign. During our review, we
             indentified the following expenses as being incorrectly charged to the 2009
             campaign:

             •   $10,622 3 for CFC incentives purchased at the start of the 2008 campaign. The
                 PCFO purchased CFC star label pins, pens, flashlights, patriotic fans, and CFC
                 bags in December 2008. Since the solicitation of funds for the 2008 campaign
                 ended in December 2008, this expense clearly related to the 2008 campaign and
                 should have been reimbursed using 2008 campaign receipts.

                 PCFO and LFCC’s Comments:

                 The PCFO and LFCC agree with this finding. As a corrective action plan, the
                 PCFO will attempt to order all incentives at the start of the campaign and all
                 check requests will have the fall campaign identifying the correct campaign year.

             •   $7,5003 in audit fees for the 2008 campaign. This expense was for the IPA’s
                 audit of the 2008 campaign, which took place in 2010. This expense should not
                 have been recovered using 2009 campaign receipts since it belonged to the 2008

3
 As a result of the 2008 campaign being closed, we will not include recommendations related to the $10,622 and
$7,500 undercharged to that campaign.


                                                        7
                 campaign. Additional guidance on how to account for the audit expenses was
                 provided by the OCFC in CFC Memorandum 2008-09.

                 PCFO and LFCC’s Comments:

                 The PCFO and LFCC agree with this finding. Since audit fees are accrued based
                 on a fee schedule provided in the engagement letter with the IPA, the PCFO will
                 accrue the correct amount that correlates to the campaign year actually being
                 audited.

             •   $234 4 for recognition lunches held at the beginning of the 2008 campaign. In
                 January and February 2009, the LFCC held two luncheons to recognize certain
                 individuals for the work they did for the CFC. Since the solicitation of funds for
                 the 2008 campaign had just ended in December 2008, these expenses clearly
                 related to work performed during the 2008 campaign and should have been
                 reimbursed using 2008 campaign receipts.

                 PCFO and LFCC’s Comments:

                 The PCFO and LFCC agree with this finding. As part of its corrective action plan
                 the PCFO stated, “Recognition lunches will be charged to the campaign year for
                 which the recognition is being given. All check requests will be required to
                 include the fall campaign year benefited by the expense in order to ensure that
                 charges are recorded in the proper year.”

             •   $989 for a public notice soliciting the 2010 PCFO. On December 31, 2009, the
                 PCFO purchased an advertisement in the Times Picayune newspaper to solicit
                 PCFO applications for the 2010 campaign. This cost should have been
                 reimbursed using 2010 campaign receipts.

                 PCFO and LFCC’s Comments:

                 The PCFO and LFCC agree with this finding. The PCFO will redistribute $989 to
                 the 2009 campaign and request reimbursement for the same amount from the
                 2010 campaign. The PCFO will charge expenses to the campaign year benefited
                 by the expense, regardless of invoice date. In addition, all check requests will be
                 required to include the campaign year benefited by the expense in order to ensure
                 that charges are recorded in the proper year.

             •   $1,413 for lunch expenses. We identified 13 instances where 2009 campaign
                 receipts were used to reimburse lunch costs incurred during LFCC meetings,
                 loaned executive meetings, and general meetings. We believe these were not
                 legitimate CFC expenses since they did not reflect the actual cost of administering
                 the 2009 campaign. Furthermore, providing meals during meetings was

4
 As a result of the 2008 campaign being closed, we will not include a recommendation related to the $234
undercharged to that campaign.


                                                        8
    counterproductive to the CFC’s goal of collecting the greatest amount of
    charitable contributions possible. Therefore, these expenses should not have been
    charged to the 2009 campaign.

    PCFO and LFCC’s Comments:

    The PCFO and LFCC agree with this finding. The PCFO will pay $1,413 back to
    the 2009 campaign and will clearly denote recognition and training lunches on all
    future check requests to avoid any confusion, as it maintains that lunches for these
    purposes are allowable campaign costs.

    OIG’s Comment

    We agree that during the scope of this audit, special events such as recognition
    lunches could be considered allowable campaign costs when the events honored
    outstanding accomplishments by individuals or groups working on the CFC. That
    being said, the Director of OPM has recently issued a new directive to all PCFOs
    and LFCCs regarding the allowability of meals at campaign events. Effective
    March 28, 2012, costs incurred for meals and entertainment expenses are no
    longer considered allowable costs and should not be charged against the proceeds
    of the campaign.

•   $322 for flower arrangements. The PCFO sent four associates flowers as a
    sympathy, birthday, or get well token. Again, we believe these were not
    legitimate CFC expenses since they did not reflect the actual cost of administering
    the 2009 campaign or help in collecting the greatest amount of charitable
    contributions.

    PCFO and LFCC’s Comments:

    The PCFO and LFCC agree with this finding. The PCFO will pay $322 back to
    the 2009 campaign and will no longer use CFC funds to pay for flowers.

Because the PCFO misunderstood the true campaign expense period and the LFCC
did not properly review expenses to ensure that they were legitimate CFC costs,
organizations participating in the 2009 CFC lost $21,080 in Federal employee
contributions.

Recommendation 1

For expenses related to the 2010 campaign, we recommend that the OCFC direct the
PCFO to redistribute $989 to the 2009 campaign and request reimbursement for the
same amount from the 2010 campaign.




                                     9
          Recommendation 2

          We recommend that the OCFC and the LFCC ensure that the PCFO implements
          procedures to track and allocate expenses to the correct campaign year according to
          CFC Memorandum 2008-09.

          Recommendation 3

          For expenses that were not legitimate CFC costs and did not reflect the actual cost of
          administering the 2009 campaign, we recommend the OCFC direct the PCFO to pay
          back $1,735 ($1,413 + $322) to the 2009 campaign.

          Recommendation 4

          We recommend that the OCFC ensures that the LFCC understands its role in the
          review and approval of all costs charged to the CFC and that it follows the directive,
          relating to meals and entertainment costs, issued by the Director of OPM so that those
          expenses plus other unallowable expenses are not charged to future campaigns.

C.   CAMPAIGN RECEIPTS AND DISBURSEMENTS

     1.   One-Time Disbursements                                                     Procedural

          The PCFO did not distribute the correct amount of funds to organizations receiving
          one-time disbursements.

          5 CFR 950.901(i)(3) allows the PCFO to make one-time disbursements to
          organizations receiving minimal donations when approved by the LFCC. The LFCC
          must determine and authorize the amount of these one-time disbursements. The one-
          time disbursements will be reduced for estimated pledge loss and administrative
          expenses according to guidelines issued in CFC Memorandum 2008-09.

          We reviewed the PCFO’s policies and procedures for one-time disbursements, as well
          as the one-time disbursements listed on the PCFO’s Distribution Schedule. We
          determined that the LFCC approved one-time disbursements for organizations
          receiving gross designations of $250 or less. We also found that the PCFO accurately
          calculated the average pledge loss at 7.4 percent. Using this percentage, we
          recalculated the one-time disbursements and compared our amounts to the actual
          disbursements made by the PCFO. Our comparison showed that the PCFO overpaid
          $319 to organizations receiving one-time disbursements. The PCFO is aware of this
          issue and attributes the error to its CFC software.

          As a result of one-time disbursements being miscalculated, the PCFO overpaid the
          organizations that received one-time disbursements and underpaid all other
          organizations that received regular CFC distributions.




                                              10
     PCFO and LFCC’s Comments:

     The PCFO and LFCC agree with this finding. The 2009 campaign was the only year
     where one-time disbursements were made. After these funds were disbursed, the
     PCFO discovered that its CFC software was not capable of calculating these
     payments correctly. As a result, the PCFO is no longer doing one-time
     disbursements.

     Recommendation 5

     If the PCFO decides to resume making one-time disbursements, we recommend that
     the LFCC ensures that the PCFO calculates and distributes one-time disbursements
     using the instructions provided in CFC Memorandum 2008-09.

2.   Notification of Undesignated Funds                                        Procedural

     The PCFO did not notify organizations and federations of the 2009 CFC of the
     amount of undesignated funds allocated to them.

     5 CFR 950.901(i)(1) states that the PCFO shall notify organizations and federations
     of the amounts designated to them and their member agencies, and of the amount of
     undesignated funds allocated to them.

     We reviewed 10 designation and donor letters to determine if the PCFO notified
     federations and organizations on time and if the letters included both designated and
     undesignated pledge amounts. During our review, we found that the letters only
     notified the federations and organizations of the amounts designated directly to them
     and their member agencies by donors. The letters did not indicate the amount of
     undesignated funds.

     As a result of the PCFO not notifying federations and organizations of the amount of
     undesignated funds allocated to them and their member agencies, the federations and
     organizations did not have an accurate estimate of how much they would each receive
     for participating in the 2009 campaign. Not knowing the amount of these funds could
     restrict the planning and budgeting abilities of the CFC organizations and federations
     depending upon the monies donated by Federal employees.

     PCFO and LFCC’s Comments:

     The PCFO and LFCC agree with this finding. As a corrective action plan, the PCFO
     will deliver written and electronic notice of the amount of designated and
     undesignated funds allocated to the federations, their member agencies, and all
     independent charitable organizations.




                                         11
     Recommendation 6

     We recommend that the LFCC ensures that the PCFO notifies organizations of the
     amount of undesignated funds allocated to them.

3.   Release of Contributor’s Information                                         Procedural

     The PCFO did not forward a contributor’s name and pledge amount to an
     organization after the individual indicated on the pledge form that they wished to
     have this information released.

     5 CFR 950.601(c) states that it’s the responsibility of the PCFO to forward the
     contributor information for those who have indicated that they wish this information
     released to the recipient organization directly, if the organization is independent, and
     to the organization’s federation if the organization is a member of a federation.

     We reviewed 50 pledge forms to determine if the information filled out by
     contributors was correctly entered into the PCFO’s pledge form database. The CFC
     pledge forms have a section where contributors can check boxes requesting to release
     their information to organizations they donate to in order to be acknowledged for
     their donation. If a contributor checks one or more of the boxes labeled “pledge
     amount”, “home address”, or “home email”, then their check mark authorizes the
     CFC to release the contributor’s name and the corresponding information to the
     designated organization(s).

     For further review, we also compared 10 of the 50 pledge forms to the designation
     and donor lists sent to organizations receiving funds in the 2009 campaign to
     determine if the contributor’s information was properly released. During this review,
     we found one pledge form where a contributor wished to release their name and
     pledge amount, but the designation and donor list sent to the recipient organization
     did not include this information. The PCFO believes this error was caused by a
     mistake in its pledge form database since the database authorized the release of the
     contributor’s pledge amount but not their name.

     Because the designation and donor list did not properly include this contributor’s
     name and pledge amount, the contributor was not given the opportunity to be
     acknowledged by the organization for their donation.

     PCFO and LFCC’s Comments:

     The PCFO and LFCC agree with this finding. For a corrective action plan, they will
     ensure that the CFC pledge card is clear as to what information should be released,
     and that the data entry staff is fully trained on the acknowledgment portion of the
     pledge card. They also commented that in this case, the donor’s name appeared as
     “anonymous” with the gift amount listed on the report.




                                          12
          Recommendation 7

          We recommend that the LFCC ensures that the PCFO properly releases contributor
          information when the pledge form indicates that the information should be released.

D.   ELIGIBILITY

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

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.

F.   FRAUD AND ABUSE

     Our review of the PCFO’s anti-fraud policies and procedures indicated that they were
     sufficient to detect and deter potential fraud and abuse activities.




                                              13
             IV. MAJOR CONTRIBUTORS TO THIS REPORT
Special Audits Group

             , Auditor-In-Charge


                  , Group Chief,

              , Senior Team Leader




                                     14
                                                                                                Appendix A

                                                                           COMBINED FEDERAL CAMPAIGN
                                                                           for the Greater New Orleans Area
                                                                                           2515 Canal Street
                                                                                       New Orleans, LA 70119
                                                                                              [504J 827.6819


  March 7, 2012


  Stephanie M. Oliver 

  Group Chief 

  Special Audits Group 

  Office of Personnel Management 

  Office of the Inspector General 

  Attention: Stephanie M. Oliver 

  1900 E Street, NW, Room 6400 

  Washington, DC 20415-1100 


  Re: Draft of Audit Report No. 3A-CF-OO-ll-040

  Dear Ms. Oliver:

  Enclosed is our response to your draft report detailing the results of your audit of the 2008 and
  2009 Greater New Orleans Area Combined Federal Campaigns (CFC). The United Way for the
  Southeast Louisiana (Formally for the Greater New Orleans, located in New Orleans, Louisiana,
  served as the Principal Combined Fund Organization during the campaigns. The audit identified
  four instances of non-compliance with Title 5, Code ofFederal Regulations, Part 950, the
  regulations governing the CFC.

  The New Orleans Federal Executive Board and United Way for SELA have reviewed the draft
  audit and are responding jointly. We have indicated in our comments whether we agree or
  disagree with the findings and recommendations. Also where indicated, we have provided a
  corrective action plan which have been or will be implemented for necessary corrective
  measures.

  If you need any assistance during your review of our, please contact Linda Steinhauser, CFC 

  Director, at (504) 827-6819. 


  Sincerely,

  h~·
  ~::ey;:
  Chair
  The New Orleans Federal Executive Board
  PO Box 53206
  New Orleans, LA 70153-3206




-www.cfcgno.org~--------------------~-----------
March 7, 2007
Re: Draft of Audit Report No. 3A-CF-OO-ll-040

~.                         ~
Mr. Michael Williamson
Chief Operating Officer
United Way for the Greater New Orleans Area
2515 Canal Street
New Orleans, LA 70119


Enclosure

cc: 	   Mark W. Lambert
        Director, Internal Oversight and Compliance

        Janet L. Barnes
        Deputy Director, Internal Oversight and Compliance

        Keith Willingham
        Director, Office of the Combined Federal Campaign

        Mary E. Capule
        Office of the Combined Federal Campaign
United Way for the Greater New Orleans Area

Combined Federal Campaign

Audit of the 2008 and 2009 Greater New Orleans Combined Federal Campaigns

Audited Comments and Corrective Action Plan




                                    Budget and Campaign Expenses

   1.   Unallowable Campaign Expenses


        Finding: $10,622 for 'CFC incentives purchased at the end ofthe 2008 campaign. The PCFO
        purchased CFC star label pins, pens, flashlights, patriotic fans, and CFC bags in December 2008.
        Since the solicitation of funds for the 2008 campaign ended in December 2008, this expense
        clearly related to the 2009 campaign and should have been reimbursed using 2009 campaign
        receipts.




                                        Deleted by the OIG 

                                  Not Relevant to the Final Report 





        Finding: $7,500 in audit fees for the 2008 campaign. This expense was for the IPA's AUP audit
        of the 2008 campaign, which took place in 2010. This expense should not have been recovered
        using 2009 campaign receipts since it belonged to the 2008 campaign.


                Response: We agree with this finding. However, we would like to note that the correct
                audit fee that should have been charged to the 2009 campaign was $7,800, and we only
                charged $7,500 so we actually undercharged the 2009 campaign by $300, and not
                overcharged them.


                Corrective Action Plan: Audit fees are accrued based on a fee schedule provided in the
                engagement letter with the IPA. We will accrue the correct fee amount that correlates
                to the campaign year actually being audited.
Finding: $234 for recognition lunches held at the beginning of the 2009 campaign. In January
2009 and February 2009, the LFCC held two lunches to recognize certain individuals for the work
they did for the CFe. Since the solicitation of funds for the 2008 campaign had just ended in
December 2008, these expenses clearly related to work performed during the 2008 campaign
and should have been reimbursed using 2008 campaign receipts.


        Response: We agree with this finding.


        Corrective Action Plan: Recognition lunches will be charged to the campaign year for.
        which the recognition is being given. All check requests will be required to include the
        fall campaign year benefited by the expense in order to ensure charges are recorded in
        the proper year.


Finding: $989 for a public notice soliciting the 2010 PCFO. On December 31,2009, the PCFO
purchased an advertisement in the Times Picayune newspaper to solicit PCFO applications for
the 2010 campaign. This cost should have been reimbursed using 2010 campaign receipts.


        Response: We agree with this finding.


        Corrective Action Plan: We will redistribute the amount ($989) to the 2009 campaign
        and request reimbursement for the same amount from the 2010 campaign. We will
        charge expenses to the campaign year benefited by the expense regardless of invoice
        date. All check requests will be required to include the campaign year benefited by the
        expense in order to ensure charges are recorded in the proper year.



Finding: $1,413 for lunch expenses. We identified thirteen instances where 2009 campaign
receipts were used to reimburse lunch costs incurredduring LFCC meetings, loaned executive
meetings,and general meetings. We believe these were not legitimate CFC expenses since they
did not reflect the actual cost of administering the 2009 campaign. Furthermore, providing
meals during meetings was counterproductive to the CFC's goal of collecting the greatest
amount of charitable contributions possible. Therefore, these expenses should not have been
charged to the 2009 campaign.


        Response: We agree with this finding. However, we believe some of these expenses
        related to training and recognition lunches, but were not clearly marked for that
        purpose. Had they been marked as such, they would have been allowable expenses for
        the 2009 campaign.
             Corrective Action Plan: We will pay the full amount ($lA13) back to the 2009
             campaign. We will clearly denote recognition and training lunches on all future check
             requests to avoid any confusion.


     Finding: $322 for flower arrangements. The PCFO sent four associates flowers as either
     sympathy, birthday, or get well token. Again, we believe these were not legitimate CFC
     expenses since they did not reflect the actual cost of administering the 2009 campaign or help in
     collecting the greatest amount of charitable contributions.


             Response: We agree with this finding.


             Corrective Action Plan: We will pay this amount ($322) back to the 2009 campaign.
             We will no longer use CFC funds to pay for flowers.


                                  Campaign Receipts and Disbursements


1.    One Time Disbursements


       Findings: The PCFO did not distribute the correct amount of funds to organizations receiving
       one time disbursements.


             Response: We agree with this finding.


             Corrective Action Plan: The 2009 campaign was the only year we did one time
             disbursements, after which we discovered the CFC software was not capable of
             calculating these payments correctly. We are no longer doing one time disbursements.


2.    Notification of Undesignated Funds


        Findings: The PCFO failed to notify organizations of the amount of undesignated funds
        allocated to them.


             Response: We agree with this finding.

             Corrective Action Plan: We will notify organizations of the amounts designated to
             them and their member agencies, and of the undesignated funds allocated to
             them. We will deliver written and electronic notice of the amounts designated
             and undesignated to the Federations, their member agencies and all
             independent charitable organizations.
3.   Release of Contributor's Information

      Findings: The PCFO did not forward a contributor's name and pledge amount to an
      organization after the individual indicated on the pledge form that they wished to have this
      information released.

           Response: We agree with this finding.

           Corrective Action Plan: We will ensure that the CFC pledge card is clear as to what
           information should be released and that the data entry staff is fully trained on the
           acknowledgment portion of the pledge card. In this case the donor's name appeared as
           "anonymous" with the gift amount listed on the report.
                                                                                                         AppendixB




                                                    Deleted by the OIG 

                                              Not Relevant to the Final Report 





From: Linda Steinhauser [mailto:LindaS@UnitedWaySELA.orq]
Sent: Monday, March 12,2012 12:11 PM
To: Johnson, Luke Z
Cc: Debra Modlin; Jamene Dahmer; Barre, Kathy - OCFO
Subject: RE: Response to Draft of Audit Report No. 3A-CF-00-11-040

Hi Luke, Please find our amended response to the first part of finding #1:

                     Response: We agree with this finding.



Corrective Action Plan: In the future, every attempt will be made to order all incentives at the start of the
campaign and
                        all check request will have the fall campaign identifying the correct campaign year.

Thanks, Linda

Linda Steinhauser
Director
Combined Federal Campaign for the Greater New Orleans Area

2515 Canal Street    I New Orleans, LA 70119
ph: 504.827.6819    I cell: 985.707.3686 I fax: 504.821.4378 I   lindas@unitedwaysela.orq

cfcgno.org




From: Johnson, Luke Z [mailto:LukeJohnson@opm.gov]



file://H:\SAG Group\Audits_Grp Docs\SAG Audits\Audit Responses\CFC's\FY 2011 \GN...                     3/26/2012
                                                                                                      Page 2 of3


Sent: Monday, March 12, 2012 8:26 AM
To: Linda Steinhauser
Subject: RE: Response to Draft of Audit Report No. 3A-CF-00-ll-040

Hi Linda,

I was reviewing your response to the GNOLA CFC draft report and found a typo in the first part of finding #1 (the
only finding where you disagreed). Your response states,

Finding: $10,622 for CFC incentives purchased at the end of the 2008 campaign. The PCFO purchased CFC star
label pins, pens, flashlights, patriotic fans, and CFe bags in December 2008. Since the solicitation offunds for the
2008 campaign ended in December 2008, this expense clearly related to the 2009 campaign and should have been
reimbursed using 2009 campaign receipts.

Response: We disagree with this finding. Solicitation for the Fall 2008 campaign was extended to January 15,
2009 due to the disruption of Hurricanes Gustav and Ike which occurred in September 2008. These incentives
were purchased to meet the demand from the late running campaign.

Our draft report questioned this amount since it was charged to the 2009 campaign and not the 2008 campaign.
The draft report states,

$10,622 for CFC incentives purchased at the start of the 2008 campaign. The PCFO purchased CFC star label pins,
pens, flashlights, patriotic fans, and CFC bags in December 2008. Since the solicitation offunds for the 2008
campaign ended in December 2008, this expense clearly related to the 2008 campaign and should have been
reimbursed using 2008 campa.ign receipts.

Based on your response, do you agree with our finding that $10,622 in 2008 CFC incentives were accidently
charged to the 2009 campaign instead ofthe 2008 campaign? If you agree with ourfinding, please send me a
quick write up showing the amendment to your response for thefirst part of finding #1. Thank you.

Sincerely,

Luke Johnson, Senior Team Leader
O±lice of the Inspector General
U. S. Office of Personnel Management
800 Cranberry Woods Drive, Suite 130
Cranberry Township, PA 16066
Email: luke.;ohnson@opm.gov
Phone: 724-741-0729
Fax: 724-741-0750

From: Linda Steinhauser [mailto:LindaS@UnitedWaySELA.orq]
Sent: Wednesday, March 07, 2012 3:38 PM
To: Oliver, Stephanie G
Subject: Response to Draft of Audit Report No. 3A-CF-00-11-040

Hi Stephanie, attached is the joint FEB/United Way of SELA response to the GIG audit. I will send the original in
the mail. Please let me know if you need any other information. Thanks, Linda

Linda Steinhauser 

Director 

Combined Federal Campaign for the Greater New Orleans Area 





file://H:\SAG Group\Audits_Grp Docs\SAG Audits\Audit Responses\CFC's\FY 2011 \GN...                     3/2612012
                                                                                                Page 3 of3


2515 Canal Street   I    New Orleans, LA 70119
ph: 504.827.6819    I   cell: 985.707.3686 I fax: 504.821.4378   I   lindas@unitedwaysela.org

cfcgno.org




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