oversight

Audit of the 2010 and 2011 Atlantic Coast Combined Federal Campaigns Boynton Beach, Florida

Published by the Office of Personnel Management, Office of Inspector General on 2014-02-03.

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 2010 AND 2011
                        ATLANTIC COAST
                  COMBINED FEDERAL CAMPAIGNS
                    BOYNTON BEACH, FLORIDA




                                           Report No. 3A-CF-00-13-049


                                          Date: February 3, 2014




                                                            --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 2010 AND 2011
                                       ATLANTIC COAST
                                 COMBINED FEDERAL CAMPAIGNS
                                   BOYNTON BEACH, FLORIDA


           Report No. 3A-CF-00-13-049                                             Date: February 3, 2014




                                                                                   ____________________________
                                                                                   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 2010 AND 2011
                              ATLANTIC COAST
                        COMBINED FEDERAL CAMPAIGNS
                          BOYNTON BEACH, FLORIDA


        Report No. 3A-CF-00-13-049                          Date: February 3, 2014

The Office of the Inspector General has completed an audit of the 2010 and 2011 Atlantic Coast
Combined Federal Campaigns (CFC). The United Way of Palm Beach County, located in
Boynton Beach, Florida, served as the Principal Combined Fund Organization (PCFO) during
both campaigns. Our main objective was to determine if the Atlantic Coast CFC was in
compliance with Title 5, Code of Federal Regulations, Part 950 (5 CFR 950), including the
responsibilities of both the PCFO and the Local Federal Coordinating Committee (LFCC). The
audit identified eight instances of non-compliance with the regulations (5 CFR 950) governing
the CFC and questions $1,381.

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

                                    AUDIT GUIDE REVIEW

•   Agreed-Upon Procedures Not in Compliance with the Audit Guide                       Procedural

    The Independent Public Accountant utilized by the LFCC to complete the Agreed-Upon
    Procedures for the 2010 campaign did not perform its review in accordance with the
    requirements of the Audit Guide.




                                                  i
                          BUDGET AND CAMPAIGN EXPENSES

•   Unallowable Campaign Expenses                                                         $1,381

    The PCFO charged the 2011 campaign $1,381 in unallowable expenses.

•   Employee Salary and Benefit Expenses                                             Procedural

    The PCFO did not properly track or account for its employee salary and benefit expenses that
    were charged to the CFC.

•   PCFO Application Missing Required Statements                                     Procedural

    The LFCC accepted and approved the PCFO’s application for the 2009 through 2011
    campaigns even though it included incomplete statements required by federal regulations.

•   Authorization of Campaign Expense Reimbursement                                  Procedural

    The PCFO’s campaign expense reimbursement was not authorized by the LFCC.

                     CAMPAIGN RECEIPTS AND DISBURSEMENTS

•   Pledge Form Errors                                                               Procedural

    We identified two pledge form errors where the PCFO recorded the wrong information.

•   Unauthorized One-Time Disbursements                                              Procedural

    The PCFO made one-time disbursements to 14 organizations and federations that received
    designations greater than the amount authorized by the LFCC.

                                        ELIGIBILITY

•   Missing Local Applications                                                       Procedural

    The PCFO could not locate two of the local federation applications that we selected for
    review.

                                 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.




                                                ii
                                    FRAUD AND ABUSE

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




                                              iii
                                                   CONTENTS
                                                                                                                         PAGE
       EXECUTIVE SUMMARY ............................................................................................i

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

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

III.   AUDIT FINDINGS AND RECOMMENDATIONS .................................................... 8

       A. AUDIT GUIDE REVIEW ...................................................................................... 8

            1. Agreed-Upon Procedures Not in Compliance with the Audit Guide ................. 8

       B. BUDGET AND CAMPAIGN EXPENSES ........................................................... 9

            1.   Unallowable Campaign Expenses ...................................................................... 9
            2.   Employee Salary and Benefit Expenses ............................................................ 10
            3.   PCFO Application Missing Required Statements ............................................. 12
            4.   Authorization of Campaign Expense Reimbursement ...................................... 13

       C. CAMPAIGN RECEIPTS AND DISBURSEMENTS ........................................... 14

            1. Pledge Form Errors ........................................................................................... 14
            2. Unauthorized One-Time Disbursements ........................................................... 15

       D. ELIGIBILITY ........................................................................................................ 16

            1. Missing Local Applications............................................................................... 16

       E. PCFO AS A FEDERATION ................................................................................. 17

       F. FRAUD AND ABUSE .......................................................................................... 17

IV.    MAJOR CONTRIBUTORS TO THIS REPORT ........................................................ 18

       APPENDIX A (The PCFO’s amended response to the draft report, dated
                   November 12, 2013)
       APPENDIX B (The LFCC’s response to the draft report, dated November 15, 2013)
                    I. INTRODUCTION AND BACKGROUND
INTRODUCTION

This report details the findings and conclusions resulting from our audit of the 2010 and 2011
Atlantic Coast 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 2011, it consisted of 197 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 (federal employees who are temporarily assigned to work directly on the CFC) to
assist in the campaign; ensuring that employees are not coerced to participate in the campaign;
and acting upon any problems relating to noncompliance with the policies and procedures of 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 forms and charity lists; 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; consulting with federated groups on the
operation of the local campaign; and for establishing and maintaining a system of internal
controls.

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.




                                                1
The previous audit of the Atlantic Coast CFC, which covered the 2001 campaign, was not
considered when planning for this audit due to its age.

The initial results of our current audit were discussed with PCFO and LFCC officials during an
exit conference held on June 27, 2013. A draft report was provided to the PCFO and the LFCC
for review and comment on September 30, 2013. The PCFO’s and the 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 Atlantic Coast CFC was in compliance
with 5 CFR 950, including the activities of both the PCFO and the LFCC.

Our audit objective for the 2010 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 2011 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 PCFO charged the campaign for interest expenses and if the
      appropriate commercial loan was used.
   • To determine if expenses charged to the campaign were actual, reasonable, did not
      exceed 110 percent of the approved budget, and were properly allocated.

   Campaign Receipts and Disbursements
   • To determine if the pledge form format was correct and if the pledge form report agrees
     with the actual pledge form.
   • To determine if incoming pledge monies (receipts) were allocated to the proper campaign
     and if 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.
   • To determine if the charitable organization application process was open for the required
       30-day period; if the applications were appropriately reviewed 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.
   • To determine if any non-federal employees or retirees were members of the LFCC.

   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;



                                                 3
       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
   • To determine what policies and procedures the PCFO has in place related to detecting
      and preventing fraud and abuse and if they are adequate.

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 2010 and 2011. The United Way of Palm Beach County
(UWPBC), located in Boynton Beach, Florida, served as the PCFO during both campaigns. The
audit fieldwork was conducted at the PCFO’s office from June 24 through 28, 2013. Additional
audit work was completed at our Cranberry Township, Pennsylvania, and Washington, D.C.
offices.

The Atlantic Coast CFC received campaign pledges, collected campaign receipts, and incurred
campaign administrative expenses for the 2010 and 2011 campaigns as shown below.

    Campaign               Total                     Total                Administrative
      Year                Pledges                   Receipts                Expenses
      2010              $2,420,892                 $2,254,288               $346,021

      2011              $2,507,102                 $2,302,314               $331,378

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 form entries, and the
distributions 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.




                                               4
To accomplish our objective concerning the 2010 campaign (Audit Guide Review), we
compared the IPA’s working papers to the requirements of the CFC Audit Guide to verify that
the AUP steps were completed and properly documented.

In regard to our objectives concerning the 2011 campaign’s budget and campaign expenses, we
accomplished the following:

•   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 62
    transactions totaling $81,819 (from a universe of 282 transactions totaling $331,378) that
    were charged to the 2011 CFC. Specifically, we judgmentally selected 34 transactions,
    totaling $53,987, based on highest dollar amounts, and we selected 28 transactions, totaling
    $27,831, based on past auditor experience. We reviewed the sample to ensure that it
    included at least five allocated expenses.

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

•   Compared actual expenses to budgeted expenses to determine if they exceeded 110 percent
    of the approved budget.

To determine if the 2011 campaign’s receipts and disbursements were handled in accordance
with CFC regulations, we reviewed the following:

•   A sample of 76 pledge forms, totaling $15,412, out of a universe of 10,609 pledge forms,
    totaling $2,507,102, from the PCFO’s 2011 campaign pledge form detail schedule and
    compared the pledge information from the schedule to the actual pledge forms.
    Specifically, we judgmentally selected this sample by picking the first pledge form from the
    PCFO’s pledge form detail schedule and then selected every 141st pledge thereafter
    (10,609/75). We verified that our sample included all types of donations (i.e., cash,
    designated funds, and undesignated funds) and at least five pledge forms where the donor
    chose to release their personal information.

•   Distribution checks for a sample of 10 federations and organizations, totaling $709,733, out
    of a universe of 295 federations and organizations, totaling $1,969,305, to verify that the
    appropriate amount was distributed in a timely manner. We judgmentally selected this
    sample based on the highest paid local federation, the PCFO as a local federation, and the



                                               5
    two highest paid charities from each of the following categories; local organizations,
    national federations, national organizations, and international organizations.

•   One-time disbursements to verify that the PCFO properly calculated pledge loss and
    disbursed 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 the guidance issued by the OCFC.

•   A sample of 5 pledge notification and donor letters (from a universe of 295) to verify that
    the PCFO accurately notified the organizations of the amounts due to them and properly
    released the donor information by the date required by the federal regulations. We
    judgmentally selected this sample by picking the first five organizations that received
    designations from donors wishing to release their personal information.

•   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.

To determine if the LFCC and PCFO were in compliance with CFC regulations regarding
eligibility for the 2011 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 PCFO’s responses to questions regarding the process and procedures for the application
    evaluation process.

•   A sample of 10 local organization applications (from a universe of 62 local organization
    applications) to determine if the organizations met the federal requirements for participating
    in the CFC and if the LFCC sent the eligibility letters by the date required by the federal
    regulations. We judgmentally selected this sample based on the first five local federations
    (including the PCFO as a federation) and the first five local independent organizations listed
    alphabetically.

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

•   The LFCC member listings to verify that all members were active federal employees.


                                                6
To determine if the PCFO was in compliance with the CFC regulations as a federation
(UWPBC) for the 2011 campaign, we reviewed the following:

•   Data reported on the CFC Receipts Schedule, with supporting documentation, to verify that
    receipts were properly recorded.

•   The CFC Distribution Schedule to ensure that the UWPBC did not disburse any funds to
    member agencies not participating in the CFC.

•   Distribution checks for a sample of 6 federation member agencies, totaling $2,374, out of a
    universe of 28 federation member agencies, totaling $32,412, to verify that the appropriate
    amount was distributed in a timely manner. We judgmentally selected this sample by
    picking the first member agency in alphabetical order and then every fifth member agency
    thereafter.

•   The UWPBC’s annual report and 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.




                                                 7
            III. AUDIT FINDINGS AND RECOMMENDATIONS
A. AUDIT GUIDE REVIEW

  1. Agreed-Upon Procedures Not in Compliance with the Audit Guide                  Procedural

     The IPA utilized by the LFCC to complete the AUPs for the 2010 campaign did not
     perform its review in accordance with the requirements of the Audit Guide.

     The Audit Guide contains specific procedures to be followed during the examination by
     the IPA with the primary objective of determining LFCC and PCFO compliance with
     5 CFR 950 and OPM guidance.

     We reviewed the IPA’s work papers and audit report to determine if it followed all of the
     AUPs required by the Audit Guide and if the findings were properly reported. During
     our review, we noted one deficiency related to one-time disbursements where the IPA
     failed to identify and report as a finding nine organizations that received one-time
     disbursements with designations over $1,000.

     “Receipts and Disbursement of Funds” Step 7, required the IPA to determine if all one-
     time disbursements were for pledge amounts below the LFCC approved ceiling and
     report as a finding all instances where one-time disbursements were made for pledge
     amounts above the LFCC approved ceiling. The LFCC approved one-time disbursements
     to organizations that received designations of less than $1,000.

     The IPA failed to report this as a finding because it thought one-time disbursements were
     based on disbursements net of expenses and not gross designations (pledge amounts).

     Because the IPA misunderstood the AUPs for reviewing one-time disbursements and
     failed to report this as a finding, the PCFO continued its practice of issuing one-time
     disbursements based on the net amount of funds received instead of the amount pledged
     to the organization.

     Recommendation 1

     We recommend that the OCFC direct the LFCC to meet with the IPA prior to and during
     the audit to discuss the AUPs, encourage the IPA to ask questions, and ensure that the
     IPA fully understands its duties.

     LFCC Comments:

     The LFCC agrees with this recommendation and stated that it will meet with the IPA to
     ensure that it fully understands the CFC regulations and encourage it to ask questions if
     necessary.




                                              8
B. BUDGET AND CAMPAIGN EXPENSES

  1. Unallowable Campaign Expenses                                                        $1,381

     The PCFO charged the 2011 campaign $1,381 for unallowable expenses.

     OPM’s Directive Prohibiting the Approval of Costs Incurred for Meals and
     Entertainment, dated March 28, 2012, emphasized that past guidance did not authorize
     the expenditure of funds for meals served as a convenience to members of the LFCC, the
     PCFO, loaned executives, or CFC volunteers.

     Additionally, 5 CFR 950.106(b) states that the PCFO may only recover campaign
     expenses from receipts collected for that campaign, and 5 CFR 950.105(b) states that the
     PCFO is responsible for conducting an effective and efficient campaign in a fair and
     even-handed manner aimed at collecting the greatest amount of charitable contributions.

     We reviewed a sample of campaign expenses charged to the 2011 campaign to determine
     if the expenses were actual, reasonable, properly allocated, and supported. Our review of
     the PCFO’s expenses and supporting documentation identified the following unallowable
     expenses:

     •   Three expenses, totaling $731, were for meals at CFC training events. The PCFO
         explained that these meals were charged to the CFC in the past and approved by the
         LFCC. It also considered the food and beverage costs to be beneficial to the
         campaign since it kept the trainees on-site and allowed the training to restart on time.

     •   One expense in the amount of $650 was for tickets to a sporting event. The LFCC
         purchased the tickets as an award for the two federal agencies that solicited the
         greatest amount of CFC funds for the 2010 campaign and then submitted an invoice
         to the PCFO for reimbursement from the 2011 campaign. While the expense itself
         was generally considered an allowable expense by PCFOs and LFCCs prior to
         OPM’s Directive, the PCFO should not have been reimbursed using 2011 campaign
         funds since it related to the 2010 campaign. However, since the 2010 campaign is
         closed, we will not ask that this expense be reimbursed.

     As a result of charging unallowable expenses to the 2011 campaign, $1,381 was not
     disbursed to the organizations and federations participating in the CFC.

     Recommendation 2

     We recommend that the OCFC direct the PCFO to distribute $731 as undesignated funds
     to the charities participating in the 2012 campaign.




                                              9
   LFCC Comments:

   The LFCC agrees with this recommendation and stated that it will request documentation
   from the PCFO that shows the amounts have been distributed as undesignated funds to
   the 2012 campaign.

   PCFO Comments:

   The PCFO disagrees with this recommendation and stated that the expenses in question
   were incurred prior to the issuance of the memo from the OPM Director regarding the
   prohibition of expenses on food and entertainment.

   OIG Comments:

   We acknowledge the PCFO’s comments. However, as stated in the finding, OPM’s
   Directive emphasized that past guidance did not authorize the expenditure of funds for
   meals served as a convenience to members of the LFCC, the PCFO, loaned executives, or
   CFC volunteers. Therefore, the meal expenses, totaling $731, were unallowable since
   they were served as a convenience to members of the LFCC, the PCFO, loaned
   executives, or CFC volunteers.

   Recommendation 3

   We recommend that the OCFC and LFCC verify that the PCFO has implemented policies
   and procedures to ensure that the CFC expenses are allocated to the campaign period to
   which they relate and not merely to the campaign during which they were incurred.

   PCFO and LFCC Comments:

   The PCFO and LFCC agree with the recommendation. The PCFO stated that it has
   instituted a review process to ensure that expenses are charged to the correct period.
   Additionally, the LFCC stated that it will follow-up with the PCFO to ensure that the
   issue is not repeated in the future.

2. Employee Salary and Benefit Expenses                                          Procedural

   The PCFO charged the campaign its budgeted expense for employee salaries and
   benefits. Additionally, the PCFO estimated the full amount based on a calendar year
   instead of allocating the proportionate share to each campaign.

   CFC Memorandum 2006-5 part D states, “Final expenses charged to the campaign for all
   categories must equal the actual amount of expenses incurred through direct invoiced
   costs and the allocated expenses based on actual incurred amounts, not the budgeted
   expense.”




                                           10
Additionally, 5 CFR 950.106 states that (a) the PCFO shall recover from the gross
receipts of the campaign its expenses reflecting the actual costs of administering the
campaign and (b) the PCFO may only recover campaign expenses from receipts collected
for that campaign period.

We reviewed a sample of campaign expenses charged to the 2011 campaign to determine
if the expenses were actual, reasonable, properly allocated, and supported. Our review of
the employees’ salary and benefit expenses found that the PCFO was not tracking the
amount of time its employees worked on each campaign. Instead, it charged the full
amount of the employees’ salaries and benefits that were approved by the LFCC in its
campaign budget, which was based on a full calendar year instead of allocating it among
the active campaigns.

Each campaign period spans approximately 27 months. As an example, the 2011
campaign began with PCFO activities in January 2011, had a campaign solicitation
period from September to December 2011, and disbursed funds from January 2012
through March 2013. As a result of this extended campaign period, there could be up to
three campaigns incurring administrative expenses at the same time.

Because the PCFO did not track its employees’ salaries and benefits based on the actual
time spent working on each campaign, the accuracy of the administrative expenses could
not be verified and funds from other campaigns were used to reimburse the PCFO.

Recommendation 4

We recommend that the OCFC and LFCC ensure that the PCFO implements a payroll
time-tracking system to track its employees’ time spent working on each active
campaign.

PCFO’s Comments:

The PCFO agrees with this recommendation and stated that it has implemented a payroll
time tracking system that will track each employee’s work on CFC activities by
campaign.

Recommendation 5

We recommend that the OCFC ensures that the LFCC reviews the PCFO’s expense for
employee salaries and benefits to verify that the amounts are based on the actual time
spent working on each campaign.

LFCC Comments:

The LFCC agrees with this recommendation and stated that it will request regular written
activity reports from the PCFO to assist it in verifying that the salary and benefit expense




                                         11
   charged to future campaigns is based on actual costs and is related to the campaign in
   question.

3. PCFO Application Missing Required Statements                                  Procedural

   The LFCC chose the UWPBC as the PCFO for a multi-year agreement (2009 through
   2011) even though the PCFO’s signed application contained incomplete statements
   required by federal regulations.

   5 CFR 950.105(c)(2) states that any organization wishing to be selected as the PCFO
   must submit an application that includes a statement signed by the applicant’s local
   director or equivalent pledging to:

   (i)    “administer the CFC fairly and equitably,

   (ii)   conduct campaign operations, such as training, kick-off and other events, and
          fiscal operations, such as banking, auditing, reporting and distribution
          separate from the applicant’s non-CFC operations, and

   (iii) abide by the directions, decisions, and supervision of the LFCC and/or Director.”

   Prior to the start of the 2009 campaign, the PCFO and LFCC entered into a multi-year
   agreement for the PCFO to administer the 2009 through 2011 campaigns. The objectives
   of our audit included a review of the PCFO’s application to ensure that it was complete,
   included all of the signed statements pledging to administer the campaign according to
   federal regulations, and that it was submitted to the LFCC by the deadline listed in the
   public notice soliciting PCFO applications.

   We reviewed the PCFO’s application to ensure that it was signed by an appropriate
   official and it contained all of the required language per 5 CFR 950.105(c). During our
   review, we found that the application language contained incomplete statements when
   compared to the federal regulations. Specifically,

   1. The first statement was missing the word “administer”.

   2. The second statement was missing the language, “such as training, kick-off and other
      events, and fiscal operations, such as banking, auditing, reporting and distribution.”

   3. The third statement was missing the word, “directions”.

   The PCFO stated that the incomplete language in the application was an oversight. The
   PCFO has modified and updated the language used in the PCFO application to correct the
   issue going forward. The LFCC accepted the application because it believed the
   language conveyed the same meaning and message as the language within the federal
   regulations.




                                           12
   As a result of selecting a PCFO application with incomplete statements, the PCFO never
   pledged its commitment to administer the campaign according to federal regulations and
   never fully understood its responsibilities.

   Recommendation 6

   We recommend that the OCFC and LFCC require the PCFO to resubmit its 2012 and
   2013 applications with signed statements that match the exact language required by
   5 CFR 950.105(c).

   PCFO Comments:

   The PCFO agrees with this recommendation and will resubmit the 2012 and 2013
   applications using the exact language specified by the regulations.

   Recommendation 7

   We recommend that the OCFC ensures that the LFCC reviews the PCFO applications for
   completeness and verifies that all of the required language is included and accurate
   before selecting a PCFO to administer the CFC.

   LFCC Comments:

   The LFCC agrees with this recommendation and stated that it has requested the OCFC to
   provide it with training on this issue.

4. Authorization of Campaign Expense Reimbursement                               Procedural

   The PCFO’s campaign expense reimbursement was not authorized by the LFCC.

   5 CFR 950.104(b)(17) states that it is the responsibility of the LFCC to authorize the
   PCFO’s reimbursement of only those campaign expenses that are legitimate CFC costs
   and are adequately documented.

   Additionally, CFC Memorandum 2008-09 states that the approval of actual expenses by
   the LFCC is separate from the approval of the expense budget. The LFCC must review
   actual expenses, authorize full or partial reimbursement, and document this authorization
   in its meeting minutes.

   We reviewed the LFCC meeting minutes to determine if the PCFO’s 2011 campaign
   expense reimbursement was authorized by the LFCC. We found that the meeting
   minutes documented the budgetary items and individual expenses that were presented for
   review, but the LFCC never authorized the total reimbursement amount.

   After discussions with both the LFCC and the PCFO, we found that they were both under
   the impression that only the budgeted expense amount needed approval and the PCFO



                                           13
     could reimburse itself for all expenses that didn’t exceed the budget. They were not
     aware that the PCFO needed the LFCC’s authorization to take a full or partial
     reimbursement of campaign expenses.

     Because the LFCC and the PCFO failed to follow the proper authorization procedures for
     campaign expense reimbursements, the PCFO could have been reimbursed for an amount
     that exceeds the actual and allowable expenses incurred for each campaign. Additionally,
     because the PCFO never requested authorization for the reimbursement amount, the
     LFCC was limited in its ability to provide oversight of the CFC.

     Recommendation 8

     We recommend that the OCFC ensures that the LFCC review and authorize all of the
     PCFO’s campaign expense reimbursements prior to any funds being removed from the
     CFC.

     LFCC Comments:

     The LFCC agrees with this recommendation and stated that it has requested the OCFC to
     provide it with training on this issue.

     Recommendation 9

     We recommend that the OCFC and LFCC verify that the PCFO implements procedures
     to submit the full or partial reimbursement amounts to the LFCC for approval prior to
     taking campaign funds.

     PCFO Comments:

     The PCFO agrees with this recommendation and stated that it will provide the LFCC with
     monthly financial reports and will begin to submit requests to the LFCC to approve the
     reimbursement of actual expenditures in the future.

C. CAMPAIGN RECEIPTS AND DISBURSEMENTS

  1. Pledge Form Errors                                                           Procedural

     We identified two pledge form errors where the PCFO recorded the wrong information.

     5 CFR 950.105(d)(1) states that it is the responsibility of the PCFO to honor employee
     designations.

     We reviewed a sample of 76 pledge forms to determine if the information on the forms
     matched the PCFO’s 2011 campaign pledge form detail schedule. Specifically, we
     verified the donor names, charity codes, amounts donated, total amounts, and the donor’s
     choice to release their personal information. During our review, we identified two pledge



                                            14
   forms where the information did not match the PCFO’s pledge tracking database.
   Specifically, we identified the following errors:

   •   We identified one pledge form where the donor wished to release his name and the
       amount of the donation to the designated charity but the PCFO failed to record this
       information in its database; and

   •   We identified one pledge form where the donor’s name on the pledge form did not
       match the name recorded in the PCFO’s pledge tracking database.

   The PCFO stated that these were data entry errors where the pledge processor either did
   not check the appropriate release fields or confused one donor’s name with another.

   As a result of these two mistakes, the donor’s wishes were not met, and the wrong
   identity could have been sent to charities for recognition.

   Recommendation 10

   We recommend that the OCFC and LFCC verify that the PCFO institutes quality
   assurance procedures to help ensure the accuracy of its pledge form data entries.

   PCFO Comments:

   The PCFO agrees with this recommendation and stated that it will supplement its quality
   assurance procedures to help ensure the accuracy of the pledge form data entry process.

2. Unauthorized One-Time Disbursements                                           Procedural

   The PCFO made one-time disbursements to 14 organizations and federations that
   received designations above the amount authorized by the LFCC.

   5 CFR 950.901(i) states that the LFCC must authorize and determine the amount of one-
   time disbursements. The LFCC’s meeting minutes, dated January 18, 2012, authorized
   one-time disbursement for organizations with designations of $1,000 or less.

   Additionally, CFC Memorandum 2008-09 states that the sum of the designations (gross
   pledges) determines whether an organization is subject to a one-time disbursement.

   We reviewed one-time disbursements made by the PCFO to determine if it properly
   calculated pledge loss and disbursed funds in accordance with the ceiling amount
   established by the LFCC. During our review of the 2011 campaign disbursements, we
   identified 14 organizations and federations that received one-time disbursements of
   $1,000 or less but had designations greater than $1,000. Additionally, we calculated the
   actual amount of pledge loss incurred by the 2011 campaign to determine how the
   organizations were affected by the application of pledge loss.




                                           15
     The PCFO agreed that these 14 disbursements were based on the amount of funds being
     distributed instead of the amount designated. It also stated that some of its employees
     were new hires and didn’t know that the sum of designations determines if an
     organization or federation receives a one-time disbursement.

     As a result of the PCFO not properly training its new employees or making them fully
     aware of the CFC regulations, the 14 organizations who received unauthorized one-time
     disbursements ended up with additional funds since the estimated pledge loss applied to
     one-time disbursements (7.59 percent) was lower than the actual pledge loss incurred by
     organizations receiving quarterly disbursements (8.25 percent). The additional funds
     received were considered immaterial.

     Recommendation 11

     We recommend that the OCFC and LFCC verify that the PCFO only issues one-time
     disbursements to organizations and federations with designations below the amount
     authorized by the LFCC.

     Recommendation 12

     We recommend that the OCFC and LFCC ensure that the PCFO staff fully understands
     the guidance and federal regulations applicable to the CFC, including how to determine
     whether an organization or federation receives a one-time disbursement.

     PCFO Comments:

     The PCFO agrees with these recommendations and stated that it will begin issuing one-
     time disbursements to organizations with gross designations below the authorized
     threshold and will ensure that its staff fully understands the regulations applicable to one-
     time disbursements.

D. ELIGIBILITY

  1. Missing Local Applications                                                       Procedural

     The PCFO could not locate two of the local federation applications that we selected for
     review.

     5 CFR 950.604 requires the PCFO to retain documents pertinent to the campaign for at
     least three completed campaign periods (i.e., 2011 campaign documentation must be
     retained through the 2014 campaign, ending with the final distribution in 2016).

     As part of our audit, we reviewed a sample of five local federation applications and five
     independent organization applications to determine if they provided the required
     documentation to participate in the CFC and if the LFCC made accurate eligibility
     determinations once the applications were reviewed. When we requested the applications
     from the PCFO, it was unable to locate two of the local federation applications. After


                                              16
     reviewing the eligibility notification letters, we were able to confirm that these two local
     federations received approval to participate in the CFC, but we were unable to determine
     if their applications were complete or properly reviewed. The PCFO stated that the two
     applications were likely misplaced.

     Because the PCFO could not locate two of the local federation applications, we were
     unable to complete our review to ensure that the appropriate documentation was provided
     and reviewed by the PCFO or LFCC for participation in the CFC.

     Recommendation 13

     We recommend that the OCFC and LFCC verify that the PCFO retains documents
     pertinent to the campaign for at least three completed campaign periods as required by
     5 CFR 950.604.

     PCFO Comments:

     The PCFO agrees with this recommendation and stated that it has implemented filing and
     storage procedures to improve record keeping and retention.

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 policies and procedures for fraud and abuse indicated that they
  were sufficient to detect and deter potential fraud and abuse activities.




                                              17
             IV. MAJOR CONTRIBUTORS TO THIS REPORT
Special Audits Group

              , Auditor-In-Charge


                 , Group Chief,

              , Senior Team Leader




                                     18
                                                                                            APPENDIX A
                             ATLANTIC COAST
                      COMBINED FEDERAL CAMPAIGN
Serving Broward, Indian River, Martin, Miami-Dade, Monroe, Okeechobee, Palm Beach, and St. Lucie Counties


        PCFO Response to IG Draft Report No. 3A-CF-00-13-049
       Audit of 2010 and 2011 Atlantic Coast Combined Federal Campaign
Received on September 30, 2013
Response Date: October 30, 2013
Revision: November 12, 2013

Campaign Name: Atlantic Coast Combined Federal Campaign (CFC)
CFC Code: 0189
Local Federal Coordinating Committee (LFCC) Chair: W. Kevin Farmer
Executive Director of FEB/ LFCC Vice Chair:
Principal Combined Fund Organization (PCFO): United Way of Palm Beach County
Interim Chief Executive Officer: Laura George



The PCFO would like to thank                    , Auditor-In-Charge, and other members of the
Office of the Inspector General (OIG) for their help and guidance through the CFC compliance
audit process. The collegiality and responsiveness of the OIG team made our experience a very
positive one and it allowed us to progress through the audit process efficiently.

Our responses to the audit report for the 2010 and 2011 Atlantic Coast Combined Federal
Campaign are as follows:



                                          Deleted by the OIG
                                    Not Relevant to the Final Report



    B. BUDGET AND CAMPAIGN EXPENSES

1. Unallowable Campaign Expenses - $1,381
The PCFO charged the 2011 campaign four unallowable expenses totaling $1,381.

Expense 1 of 4: an amount of $650 was charged for tickets to a sporting event in the wrong
campaign year.




                                    2600 Quantum Boulevard, Boynton Beach, Florida 33426
                                       Telephone: (561) 375-6612 * Fax: (561) 375-6666
                                                                                            APPENDIX A
                             ATLANTIC COAST
                      COMBINED FEDERAL CAMPAIGN
Serving Broward, Indian River, Martin, Miami-Dade, Monroe, Okeechobee, Palm Beach, and St. Lucie Counties


PCFO Response:                     PCFO concurs with the IG’s recommendation.


Corrective Action Plan:            The PCFO has implemented a review process to identify and
                                   charge expenses to the correct campaign period.

Expense 2, 3 & 4: unallowable expenses of $731 were charged for meals at 3 CFC training
events.

PCFO Response:                     PCFO disagrees that the $731 should be reimbursed through the
                                   unrestricted pool of the 2012 campaign and respectively request
                                   your concurrence.

Reason:                            These expenses took place prior to the receipt of the memo from
                                   the OPM Director on March 28, 2012 regarding the prohibition of
                                   expenses on food and entertainment.



                                          Deleted by the OIG
                                    Not Relevant to the Final Report



2. Employee Salary and Benefit Expenses
The PCFO charged the campaign the budgeted expense for employee salaries and benefits
instead of allocating these expenses based on the actual costs incurred. Accordingly, the PCFO
did not track its employees’ salaries and benefits based on the actual time spent working on each
campaign. Additionally, the PCFO charged all salary and benefit costs in the year incurred, not
to the campaign benefited.

PCFO Response:                     PCFO concurs with the IG’s recommendations.

Corrective Action Plan:            PCFO has implemented a time-tracking system for payroll which
                                   is now tracking each employee’s time on CFC business and
                                   correspondingly, business unrelated to CFC.
                                   PCFO will modify its time and attendance system to capture
                                   multiple active campaigns.




                                    2600 Quantum Boulevard, Boynton Beach, Florida 33426
                                       Telephone: (561) 375-6612 * Fax: (561) 375-6666
                                                                                            APPENDIX A
                             ATLANTIC COAST
                      COMBINED FEDERAL CAMPAIGN
Serving Broward, Indian River, Martin, Miami-Dade, Monroe, Okeechobee, Palm Beach, and St. Lucie Counties


                                          Deleted by the OIG
                                    Not Relevant to the Final Report


3. PCFO Application Missing Required Statements.
The finding indicates that incomplete language was used in the 2011 PCFO application.

PCFO Response:                     PCFO concurs with the IG’s recommendations.

Corrective Action Plan:            PCFO will resubmit 2012 and 2013 applications and submit all
                                   future applications to the LFCC with signed statements using the
                                   exact language specified in the regulations.

4. Authorization of Campaign Expense Reimbursement
The finding indicates that the PCFO’s total campaign expense reimbursement was not authorized
by the LFCC.

PCFO Response:                     PCFO concurs with the IG’s recommendations.

Corrective Action Plan:            PCFO will continue to provide monthly financial reports for the
                                   LFCC to review and will begin to submit a request to the LFCC to
                                   approve the transfer of actual expenditures from CFC funds before
                                   doing so.

    C. CAMPAIGN RECEIPTS AND DISBURSEMENTS

1. Pledge Form Errors
The finding indicates that there were 2 pledge form errors where the PCFO recorded the wrong
information.

PCFO Response:                     PCFO concurs with the IG’s recommendations.

Corrective Action Plan:            PCFO will supplement quality assurance procedures to help ensure
                                   the accuracy of the pledge form data entry process.

2. Unauthorized One-Time Disbursements
The PCFO made one-time disbursements to 14 organizations and federations that received
designations above the amount authorized by the LFCC.

PCFO Response:                     PCFO concurs with the IG’s recommendations.




                                    2600 Quantum Boulevard, Boynton Beach, Florida 33426
                                       Telephone: (561) 375-6612 * Fax: (561) 375-6666
                                                                                            APPENDIX A
                             ATLANTIC COAST
                      COMBINED FEDERAL CAMPAIGN
Serving Broward, Indian River, Martin, Miami-Dade, Monroe, Okeechobee, Palm Beach, and St. Lucie Counties



Corrective Action Plan:            PCFO will begin to issue one-time disbursements to organizations
                                   and federations with designations below the “gross” amount
                                   authorized by the LFCC. PCFO will ensure that all staff fully
                                   understands the regulations applicable to the CFC one-time
                                   disbursements.

    D. ELIGIBILITY

1. Missing Local Applications
The PCFO could not locate two of the local federation applications that the IG selected for
review.

PCFO Response:                     PCFO concurs with the IG’s recommendations.

Corrective Action Plan:            PCFO will retain documents pertinent to the campaign for at least
                                   3 completed campaign periods as required by 5 CFR 950.604 and
                                   it has implemented filing and storage procedures to improve record
                                   keeping and retention.




                                    2600 Quantum Boulevard, Boynton Beach, Florida 33426
                                       Telephone: (561) 375-6612 * Fax: (561) 375-6666
                                                    ~~·
                             ATLANTIC COAST
                      COMBINED FEDERAL CAMPAIGN
Serving Broward, Indian River, Martin, Miami-Dade, Mouroe, Okeechobee, Palm Beach, mrd St. L11cie Counties




                                                                                 ,\ r   t--z,r {~
Laura George, Interim CEO                                                      Date




~   -




                                         ••           ,
                                                      ••    opment




                                    2600 Quanhtm Boulevard, Boynton Bench, Florida 33426
                                       Telephone: (561) 375-6612 .. Fax : (561) 375-6666
                                                                                                    APPENDIX B


                             ATLANTIC COAST COMBINED FEDERAL CAMPAIGN
                Serving Broward, Indian River, Martin, Miami-Dade, Monroe, Okeechobee, Palm Beach, and St. Lucie Counties

                        2600 Quantum Boulevard ▪ Boynton Beach ▪ FL 33426 ▪           www.AtlanticCoastCFC.org




November 15, 2013


                    r, Group Chief
U.S. Office of Personnel Management
Office of the Inspector General
Special Audits Group
Washington, D.C. 20415
                                                                           Campaign Name: Atlantic Coast CFC
                                                                                            CFC Code: 0189
Dear            ,

Thank you for providing the Atlantic Coast CFC’s Local Federal Coordinating Committee (LFCC)
with an opportunity to review your draft report entitled Audit of the 2010 and 2011 Atlantic Coast
Combined Federal Campaigns, Boynton Beach, Florida (3A-CF-00-13-049), dated September 27,
2013. On behalf of the LFCC members, we agree with the findings, conclusions, and
recommendations of the report.

To address the findings and recommendations identified in the draft report, we have requested
training from the Office of Combined Federal Campaign for our LFCC members and we plan to
send a letter to the PCFO directing them to make the identified corrections and requesting
documentation on the required changes. Please see the attached document for the specific corrective
actions we plan to implement.

The Atlantic Coast LFCC values the OIG’s insight as we continue our efforts to safeguard the
integrity of and funds entrusted to the campaign. Should you have any questions or need additional
information, please feel free to contact me.


Sincerely,




W. Kevin Farmer
LFCC Chairperson



cc:
      Office of the Combined Federal Campaign


                                                        1
                                                                                                    APPENDIX B


                             ATLANTIC COAST COMBINED FEDERAL CAMPAIGN
                Serving Broward, Indian River, Martin, Miami-Dade, Monroe, Okeechobee, Palm Beach, and St. Lucie Counties

                        2600 Quantum Boulevard ▪ Boynton Beach ▪ FL 33426 ▪           www.AtlanticCoastCFC.org



                              LFCC Proposed Corrective Actions

Recommendation 1: We recommend that the LFCC meet with the IPA prior to and during the
audit to discuss the AUPs, encouraging the IPA to ask questions, and ensure that the IPA fully
understands the CFC and its regulations so that it may complete the audit steps accurately.

LFCC Comment: The LFCC agrees with this recommendation. We will meet with the IPA to
ensure that they fully understand CFC regulations. We will also provide them with LFCC
members contact information so that they can reach out to us if there are questions.

Recommendation 2: We recommend that the OCFC and the LFCC require the PCFO to institute
accounting procedures to ensure that CFC expenses are allocated to the campaign period to
which they relate and not merely to the campaign during which they were incurred.

LFCC Comment: The LFCC agrees with this recommendation. (Deleted by the OIG – Not
Relevant to the Final Report) We will also request copies of any new accounting procedures
or an explanation of what changes they made to their current procedures to ensure that this issue
is not repeated.

Recommendation 3: We recommend that the OCFC direct the PCFO to distribute $731 as
undesignated funds to the charities participating in the 2012 campaign.

LFCC Comment: The LFCC agrees with this recommendation. We will require the PCFO to
provide documentation to show that the funds have been distributed as undesignated to charities
participating in the 2012 campaign.



                                         Deleted by the OIG
                                   Not Relevant to the Final Report



Recommendation 5: We recommend that the LFCC verify that the PCFO’s expense for
employee salaries and benefits is based on actual costs incurred for each campaign prior to
authorizing the PCFO’s expense reimbursement.

LFCC Comment: The LFCC agrees with this recommendation. We will be sending the PCFO a
letter directing them to institute a timecard system that tracks the amount of time each
PCFO/CFC employee worked as well which of the three campaigns they worked on during the
time period. In addition, we will be requesting a regular (weekly/biweekly/monthly) written



                                                        2
                                                                                                   APPENDIX B


                            ATLANTIC COAST COMBINED FEDERAL CAMPAIGN
               Serving Broward, Indian River, Martin, Miami-Dade, Monroe, Okeechobee, Palm Beach, and St. Lucie Counties

                       2600 Quantum Boulevard ▪ Boynton Beach ▪ FL 33426 ▪           www.AtlanticCoastCFC.org



activity report on what work was accomplished by all individuals paid by the campaign. We will
use this information to verify the expense reimbursement.



                                        Deleted by the OIG
                                  Not Relevant to the Final Report



Recommendation 7: We recommend that the OCFC ensures that the LFCC review the PCFO
applications for completeness, and verifies that all of the required language is included and
accurate before selecting a PCFO to administer the CFC.

LFCC Comment: The LFCC agrees with this recommendation. The LFCC has submitted a
request to OCFC to provide our members training on this issue.

Recommendation 8: We recommend that the OCFC ensure that the LFCC understand its
responsibility to review and authorize all of the PCFO’s campaign expense reimbursements prior
to any funds being removed from the CFC.

LFCC Comment: The LFCC agrees with this recommendation. The LFCC has submitted a
request to OCFC to provide our members training on this issue.



                                        Deleted by the OIG
                                  Not Relevant to the Final Report




                                                       3