oversight

Audit Report of the 2011 and 2012 Chesapeake Bay Area Combined Federal Campaigns

Published by the Office of Personnel Management, Office of Inspector General on 2014-12-23.

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 





                          AUDIT OF THE 2011 AND 2012 

                            CHESAPEAKE BAY AREA 

                        COMBINED FEDERAL CAMPAIGNS 


                                    Report Number 3A-CF-00-14--050 

                                          December 23, 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 oflnformation Act and made available to the public on the OIG webpage (http:llwww.opmgovlour-inspector-general),
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 ofthe 2011 and 2012 Chesapeake Bay Area
                                  Combined Federal C


Why Did We Conduct The Audit?            What Did We Find?

The main objective of the audit was to   We determined that the PCFO and LFCC need to strengthen their
determine if the Chesapeake Bay          procedures and controls related to Budget and Campaign
Area CFC was administered in             Expenses, Campaign Receipts and Disbursements, and Eligibility.
compliance with Title 5, Code of         Our audit identified eight areas requiring improvement.
Federal Regulations, Part 950,           1. 	 Budget and Campaign Expenses
including the responsibilities of both        • 	 We identified 23 expense transactions, totaling $794, which
the PCFO and the LFCC.                            were charged to the 2012 campaign in error.
                                              • 	 The PCFO did not recover all 2012 campaign expenses
What Did We Audit?                                from the gross receipts of the 2012 campaign.
                                              • 	 The PCFO did not request nor did the LFCC approve the
The Office of the Inspector General               final reimbursement of campaign expenses to the PCFO.
has completed a performance audit of     2. 	 Campaign Receipts and Disbursements
the responsibilities ofboth the PCFO          • 	 We identified 23 pledge forms with 8 types of errors.
and LFCC in regards to Budget and             • 	 We were unable to obtain evidence of the LFCC's approval
Campaign Expenses, Campaign                       for making and for setting the threshold for one-time
Receipts and Disbursements,                       disbursements for the 2012 campaign.
Eligibility, and Fraud and Abuse for          • 	 The PCFO did not properly release information for two
the 2012 campaign. Additionally, we               donors.
reviewed the PCFO's activities as a
                                              • 	 Our review of special events identified 10 events that were
Federation and the IPA's AUP audit
                                                  not in compliance with the CFC regulations and Office of
of the 2011 campaign. Our audit was               Personnel Management guidance.
conducted from June 23-27, 2014 at
                                         3. 	 Eligibility
the PCFO's offices in Baltimore,
                                              • 	 LFCC Member attendance did not meet quorum
Maryland. Additional audit work was
                                                  requirements and meetings were not held during crucial
completed at our offices in
                                                  periods of the campaign where oversight was needed.
Washington, D.C. and Cranberry
Township, Pennsylvania.




Michael R. Esser
Assistant Inspector General
for Audits
                    ABBREVIATIONS 



5 CFR 950   Title 5, Code of Federal Regulations, Part 950
AUP         Agreed-Upon Procedures
CFC         Combined Federal Campaign
CFR         Code of Federal Regulations
EEX         Employee Express
FTE         Full Time Equivalent/Employee
IPA         Independent Public Accountant
LE          Loaned Executives
LFCC        Local Federal Coordinating Committee
OCFC        Office of the Combined Federal Campaign
OIG         Office of the Inspector General
OPM         U.S. Office of Personnel Management
PCFO        Principal Combined Fund Organization
SQFT        Square Footage
SSN         Social Security Number
UWCM        United Way of Central Maryland




                                   II
I
                                    TABLE OF CONTENTS 


                                                                                                                                   Page 

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


             ABBREVIATIONS ..................................................................................................... ii 


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


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


    III. 	   AUDIT FINDINGS AND RECOMMENDATIONS .............................................. 10 


             A. AUDIT GUIDE REVIEW ..................................................................................... 10 


             B. BUDGET AND CAMPAIGN EXPENSES .......................................................... 10 

                1. Administrative Expenses ................................................................................. 10 

                2. Improper Matching of CFC Receipts and Expenses ........................................ 16 

                3. LFCC Approval of Campaign Expense Reimbursement.. ............................... 18 


             C. CAMPAIGN RECEIPTS AND DISBURSEMENTS ........................................... 19 

                1. Pledge Form Errors .......................................................................................... 19 

                2. One-Time Disbursements Not Approved by the LFCC .................................. 27 

                3. Donor Information Improperly Released .........................................................28 

                4. Fundraising Events ...........................................................................................30 


             D. ELIGIBILITY ........................................................................................................33 

                1. Attendance at LFCC Meetings .........................................................................33 


             E. PCFO AS A FEDERATION .................................................................................36 


             F. FRAUD AND ABUSE ..........................................................................................36 


    IV. 	    MAJOR CONTRIBUTORS TO THIS REPORT .................................................. 37 


             APPENDIX ................................................................................................................. 38 


             REPORT FRAUD, WASTE, AND MISMANAGEMENT ................................... .45 

       I. INTRODUCTION AND BACKGROUND 



Introduction
This final report details the findings and conclusions resulting from our audit of the 2011 and
2012 Chesapeake Bay Area CFCs. The audit was performed by the OPM's 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 2012, it consisted of 184 separate local campaign organizations located throughout
the United States, including Puerto Rico and the Virgin Islands, as well as overseas locations.
OPM's OCFC has the responsibility for management of the CFC. This responsibility 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 an LFCC and administered by a 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 LEs (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 LEs, 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 IP A 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. 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 ofthe PCFO and the LFCC.




                                                1                          Report No. 3A-CF-00-14-050
All findings from our previous audit of the Chesapeake Bay Area CFC (Report Number
3A-CF-00-038, dated June 6, 2006) have been satisfactorily resolved.

The initial results of our current audit were discussed with PCFO and LFCC officials during our
exit conference on June 26, 2014. A draft report was provided to both the PCFO and the LFCC
for review and comment on August 21, 2014. Their response to the draft report was considered
in preparation of this final report and is included as an Appendix.




                                               2                          Report No. 3A-CF-00-14-050
 II. OBJECTIVES, SCOPE, AND METHODOLOGY 



Objective
The primary purpose of this audit was to determine compliance with 5 CFR 950.

Our audit objective for the 2011 campaign was:
   Audit Guide Review
       • To determine ifthe IPA completed the AUP as outlined in the CFC Audit Guide.

Additionally, our audit objectives for the 2012 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 ifthe PCFO charged the campaign for interest expenses and ifthe
           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 ifthe 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 ofthe
         amounts pledged to them and that donor personal information was only released for
         those who requested the release of information.

   Eligibility
       • 	 To determine ifthe 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 ofthe LFCC.




                                                3	                         Report No. 3A-CF-00-14-050
   PCFO as a Federation
     • 	 To determine if the amounts received by the UWCM as a federation reconciled to
         those disbursed by the CFC; if the UWCM properly distributed funds to its federation
         members; if expenses charged by the UWCM (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 ifthey 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 2011 and 2012. The UWCM, located in Baltimore, Maryland,
served as the PCFO during both campaigns. The audit fieldwork was conducted at the PCFO's
office from June 23 through 27,2014. Additional audit work was completed at our Cranberry
Township, Pennsylvania, and Washington, D.C. offices.

The Chesapeake Bay Area CFC received campaign pledges, collected campaign receipts, and
incurred campaign administrative expenses for the 2011 and 2012 campaigns as shown below.

   Campaign                Total                      Total          I   Administratiw
     Year                 Pledges         I
                                                     Receipts              Expenses

      2011              $6,868,020                  $6,585,444              $564,107

      2012              $6,783,887                  $6,432,572              $496,221


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


                                               4	                         Report No. 3A-CF-00-14-050
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 2011 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 2012 campaign's budget and campaign expenses, we
performed the following procedures:

• 	 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 57
    transactions totaling $135,819 (from a universe of571 transactions totaling $496,221) that
    were charged to the 2012 CFC. Specifically, our sample was judgmentally selected using
    the following methodologies:
       ..,.. We selected 26 transactions greater than $500, totaling $98,219, from Temporary
               Help, Sub-Contract, and Marketing accounts;
       ..,.. 	 We selected 14 transactions greater than $200, totaling $5,278, from Local
               Transportation and Staff and Volunteer Development accounts;
       ..,.. 	 We selected 10 transactions, totaling $3,617, based on nomenclature review;
       ..,.. 	 We selected the two highest dollar transactions (six transactions in total), totaling
               $21,705, from allocated expense accounts (Salaries, Occupancy, and Depreciation);
               and
       ..,.. We selected all transactions (one), totaling $7,000, related to audit expense.

• 	 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 ifthey exceeded 110 percent
    ofthe approved budget.



                                                 5	                          Report No. 3A-CF-00-14-050
To determine ifthe 2012 campaign's receipts and disbursements were handled in accordance
with CFC regulations, we reviewed the following:

•   A sample of 151 pledge forms, with pledges totaling $550,891, out of a universe of 14,622
    pledge forms, with pledges totaling $6,783,887, from the PCFO's 2012 campaign pledge
    form schedules and compared the pledge information from the schedules to the actual
    pledge forms. The PCFO maintained two pledge form schedules which together
    encompassed the total pledges made to the Chesapeake Bay Area CFC: one schedule that
    contained donation information from federal agencies which keep employee information
    confidential for security reasons and another schedule that contained donation information
    from federal agencies which did not keep employee information confidential (donor names
    were included). For purposes of the sample selection we will refer to the schedule without
    donor names as "anonymous" and the schedule that included donor names as "detail."
    Specifically, we judgmentally selected the sample utilizing the following methodology:
       ~ We selected the top 50 (high dollar) detail paper pledge forms, totaling $143,974;
       ~ We selected 26 detail pledge forms where duplicate charity codes were identified,
           totaling $6,356;
       ~ We selected the top 25 (high dollar) detail electronic pledge forms, totaling $145,902;
       ~ We selected the top 20 (high dollar) anonymous electronic pledge forms, totaling
           $146,228;
       ~ We selected 10 detail pledge forms from individuals with more than 2 pledge forms
           listed, totaling $657;
       ~ We selected all (eight) anonymous paper pledge forms with pledges greater than
           $3,000, totaling $95,069;
       ~ We selected four detail pledge forms where a designated amount was listed with no
           associated charity code, totaling $1 ,052;
       ~ We selected the top two (high dollar) detail electronic pledge forms with
           undesignated funds, totaling $5,200;
       ~ We selected the top two (high dollar) anonymous paper pledge forms with designated
           funds, totaling $5,898; and
       ~ 	 If donors selected above had multiple pledge forms, we selected all remaining pledge
           forms for those donors. This resulted in the selection of four additional detail pledge
           forms, totaling $555.

• 	 Distribution checks for a sample of 10 federations and organizations, totaling $2,040,996 in
    disbursed funds, out of a universe of 584 federations and organizations, totaling $5,934,599,
    to verify that the appropriate amount was distributed in a timely manner. We judgmentally
    selected 10 agencies or federations (the top international federation, the top international
    independent organization, the top national federation, the top national independent




                                                6	                         Report No. 3A-CF-00-14-050
    organization, the top 3 local federations, and the top 3 local organizations all with the
    highest total disbursement amount) receiving quarterly or monthly disbursements.

• 	 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 10 pledge notification and donor letters (from a universe of2,922) 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 all 10 organizations pledged to by the first 3
     individuals in our pledge form sample 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 2012 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 208 local organization
    applications) to determine if the organizations met the requirements for participating in the
    CFC and if the LFCC sent the eligibility letters by the date required by the federal




                                                 7	                          Report No. 3A-CF-00-14-050
    regulations. We judgmentally selected the top five local federations and the top five local
    organizations with the highest amounts designated in the 2012 campaign.

 • 	 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.

To determine if the UWCM was in compliance with the CFC regulations as a federation for the
2012 campaign, we reviewed the following:

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

 • 	 The CFC Receipts Schedule and the total amounts received per campaign on the Federation
     Distribution Schedule to determine ifthe percentage of receipts assigned to each
     organization for each campaign agrees to the percentage of pledges for that organization
     from that campaign.

 • 	 Federation receipts for a sample of 17 receipts, totaling $297,578 (out of a universe of23
     receipts, totaling $414,821 ), to verify that the amounts received from each campaign were
     accurately reported. Receipts were received from five campaigns, monies from four
     campaigns were received monthly and a single distribution of receipts was received from
     the remaining campaign. We judgmentally selected the four largest receipts from the four
     campaigns which provided funds monthly and the lone receipt distribution from the
     remaining campaign.

 • 	 Distribution checks for a sample of 10 federation member agencies (totaling $240,006), out
     of a universe of 56 (with disbursements totaling $378,484), to verify that the appropriate
     amount was distributed in a timely manner. We judgmentally selected the top 10 federation
     members which received the most disbursements in the 2012 campaign. Additionally, we
     only reviewed the disbursement checks from the four months with the highest monthly
     disbursement amount (July 2013, August 2013, November 2013, and January 2014).

 • 	 The PCFO's annual report and agreements with its member agencies to determine if 

     member fees were reasonable and supported. 


Finally, to determine ifthe 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.




                                                8	                         Report No. 3A-CF-00-14-050
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.




                                               9                          Report No. 3A-CF-00-14-050
     III. AUDIT FINDINGS AND RECOMMENDATIONS


A.   AUDIT GUIDE REVIEW

     Our review of the IPA's examination of the CFC Audit Guide's AUP did not identify any
     deviations from the required review.

B.   BUDGET AND CAMPAIGN EXPENSES

     1. 	 Administrative Expenses

        We identified 23 expense transactions, with unallowable costs of $794, which were charged
        to the 20 12 campaign in error.

        5 CFR 950.1 06(a) states that the expenses recovered by the PCFO shall reflect the actual
        costs of administering the campaign. (Emphasis Added)

        Additionally, in a Memorandum dated March 28, 2012, OPM stated that none of its prior
        guidance to PCFO's authorized the expenditure ofCFC funds "for meals served as a
        convenience to members of the LFCC, or to employees of the PCFO or to the loaned
        executives and other CFC volunteers." Therefore, no meal costs, before or after the date of
        the memorandum, would be allowable costs to the CFC if for members ofthe LFCC, PCFO
        employees, LEs, or other CFC volunteers.

        Finally, 5 CFR 950.604 states the PCFO shall retain documents pertinent to the campaign for
        at least three completed campaign periods.

        We reviewed the expense sample to determine if the expenses charged were properly
        supported, accurately allocated using a reasonable methodology, valid CFC expenses,
        charged to the correct campaign, part of the original budget categories, and were allowable
        expenses. Our review identified 23 expense transactions that were incorrectly charged to the
        CFC resulting in $794 in unallowable expenses. Specifically, we identified the following:

            • 	 Incorrect Allocations totaling $43 8.

                ~ 	 Occupancy Expense: The 12 occupancy expense transactions charged to the CFC
                   were based on the budget rather than the actual amount. Specifically, 1112 of the
                   budgeted amount was charged to the CFC on a monthly basis. As a result, the
                   CFC was overcharged $438.



                                                  10 	                        Report No. 3A-CF-00-14-050
   ~ 	 Payroll Transactions: We identified the following areas of concern in regards to
       the payroll transactions reviewed.

       I. 	   The PCFO applied an incorrect allocation percentage to one employee during
              one of the five payroll periods reviewed. Per discussion with the PCFO, its
              payroll system during this time frame was a more manual system than it is
              now. Its current system has all of the allocations pre-programed and set.
              However, the old system required the allocation to be entered and it could be
              changed or entered incorrectly. The PCFO doesn't know why the percentage
              for this employee doesn't match the allocation record. The overall effect of
              the error was immaterial. However, the issue is questioned procedurally.

       2. 	   The PCFO was unable to provide supporting documentation for the
              allocations of three employees for two of the five payroll periods reviewed.
              Therefore, we could not verify the accuracy of the allocations to the CFC.
              The PCFO stated that the staff person charged with holding the allocation
              documentation has retired, and that it is unable to locate the documents to
              support the allocations for these employees. Additionally, of those
              employees, one did not have a consistent allocation rate, as would be expected
              during the same payroll periods.

• 	 Unallowable Expenses totaling $356.

   ~ 	 Bus  Tour: We identified one transaction, totaling $220, related to a bus tour
       offered to federal employees so that they might be more educated about the needs
       of the community and how some charities are addressing those needs. This cost is
       unallowable because, although informative, it is not a necessary cost of operating
       the campaign. Additionally, the cost was charged to the incorrect campaign as the
       tour was conducted in February 2013, after the close of campaign contributions
       for the 2012 campaign. As a result, this cost is unallowable.

   ~ 	 Meals:    We identified two transactions, totaling $136, related to meals provided to
       the LFCC. OPM stated in its memorandum of March 2012 that although its
       previous guidance allowed for meals related to campaign events (i.e., kickoff
       events or awards ceremonies), that guidance did not authorize the expenditure of
       funds for meals served as a convenience to members ofthe LFCC, employees of
       the PCFO, LEs, or other CFC volunteers. Discussion with the PCFO determined
       that it felt that the OPM memorandum was intended for campaigns going forward
       and did not apply to the 2012 campaign. We disagree and maintain that these
       meals have always been, and continue to be, unallowable costs.



                                          11 	                       Report No. 3A-CF-00-14-050
    •   General overhead expenses not allocated between campaigns properly:

        ~ 	 We identified 20 transactions related to general overhead expenses (payroll,
           occupancy, and depreciation) that were allocated fully to the 2012 campaign
           rather than to the multiple campaigns active at the time. Fifteen of these
           transactions are included in the incorrect allocations issue above and will be
           questioned in a separate finding (Improper Matching ofCFC Receipts and
           Expenses).

As a result of the 23 transactions identified, the CFC was overcharged $794.

Recommendation 1

We recommend that the OCFC and LFCC ensure that the PCFO reimburses the CFC $794
related to the unallowable charges and incorrect allocations identified in the finding.

PCFO/LFCC Response:

The PCFO and LFCC agree with this recommendation as it applies to the amounts
questioned for the bus tour and meals and state that the PCFO will reimburse the CFC for
these charges. Additionally, the LFCC states that it will ensure this type of expense is not
approved for future campaigns. However, the PCFO disagrees with the amounts questioned
related to occupancy expense. The specific reasoning for this disagreement is addressed in
its response to Recommendation 3.

OIG Comments:

We accept the PCFO and LFCC response in regards to the bus tour and meals. However, we
do not agree with the PCFO's assessment of occupancy expense. Our specific objections
will be addressed in our comments to Recommendation 3.

Recommendation 2

We recommend that the OCFC and LFCC ensure that the PCFO has procedures in place to
ensure that meals provided to members of the LFCC, PCFO employees, to LEs, or to other
CFC volunteers are not charged to the CFC in the future.




                                           12 	                        Report No. 3A-CF-00-14-050
LFCC Response:

The LFCC agrees with this recommendation and states that it has not approved any costs for
meals since the issuance of the Memorandum regarding meal and/or food expenditures, and
that it will not approve any cost of this type for future campaign budgets.

OIG Comments:

We accept the LFCC's response. However, the LFCC should note that its responsibility to
ensure that these costs are not charged to the CFC extends beyond the campaign budget. It
should also institute procedures to ensure that expenditures submitted by the PCFO are
reviewed to ensure that these types of costs are not reimbursed to the PCFO as well.

Recommendation 3

We recommend that the OCFC and LFCC direct the PCFO to ensure that all allocations
charged to the CFC are based on actual amounts and not budgeted amounts (especially for
general overhead allocations).

PCFO Response:

The PCFO disagrees with this recommendation and states that occupancy expense was based
on a reasonable allocation methodology approved by the LFCC that was applied consistently
throughout the campaign. Specifically, the PCFO maintains that the allocation methodology
used to determine an appropriate share of occupancy expense is outlined during the budget
process and is approved by the LFCC. It is a mathematical calculation that includes a
combination ofFTEs, SQFT, and space for LEs. Once the amount ofthe expense is
calculated, the expense is converted into a percentage. The percentage is then applied against
the monthly invoice. Because the monthly invoice to the PCFO has no variable cost
components within it, the expense will not fluctuate during the campaign. Therefore, the
budget and the actual expense would be the same.

Consequently, "The PCFO is following CFC regulation 5 CFR 950.106 permitting the PCFO
to recover the actual costs for administering the campaign and CFC Memo 2013-04 stating
that the actual costs need to be reasonable, allowable and necessary. Reasonable is measured
by what is appropriate or fair. In determining what is appropriate and fair, the PCFO used
the best information available to provide the percentage of occupancy expense being
allocated to the campaign using square footage, PCFO staff and the LE space, providing the
calculation used for reasonableness, and the statement that the total expense reflected in the
allocation included the LE space. During the budget proposal process, the LFCC did a



                                            13                         Report No. 3A-CF-00-14-050
      detailed review of our allocation and approved our methodology as being reasonable and fair.
      That allocation which represents the actual use of the allocated space, represented as a
      percentage ofthe entire square footage ofthe space, was appropriately applied to the monthly
      invoice for occupancy."

      OIG Comments:

      We disagree with the PCFO's opinion regarding this recommendation. It states that "Once
      the amount of the expense is calculated, the expense is converted into a percentage." This is
      not correct. Actually, the estimated FTEs utilized by the CFC are converted into a
      percentage and that percentage is multiplied by the total SQFT of the PCFO's office space.
      The utilized SQFT total is then multiplied by the rate per square foot in the PCFO's lease
      agreement to determine occupancy expense. The PCFO then adds a six percent fee for
      operating expenses related to the CFC's occupancy of its space to get to a total and actual
      occupancy expense. The table below illustrates the various components and totals for the
      occupancy expense:

                                         Occupancy Expense Illustration
                                   OIG                   PCFO Rounded                     Occupm1c) Expense
                                Calculation                    Totals                    Overcharge to the CFC
Rate Per SQFT                     $19.23       $19.23
CFC FTE Percentage                4.68%        4.68%
Total SQFT                        31,721       31,721
CFC SQFT                           1,485        1,485
CFC Occupancy Cost               $28,548      $28,548         $29,000
CFC Operating                     $1,713       $1,713          $1,700
Expense (6%)
"Actual" Occupancy                $30,261                            $30,700                       $438 1
Expense
Monthly Occupancy                  $2,522                            $2,558          Equals amounts charged to CFC by
                                                                                  ,' the PCFO in April2012 through
Expense (Actual/12)
                                                                                     February 2013 (II months).


      The PCFO in its budget process rounded both occupancy and operating expenses (occupancy
      expense from $28,548 to $29,000 and operating expenses from $1,713 to $1, 700) to a total of
      $30,700 (versus $30,261). The $30,700 was then charged to the CFC in monthly
      installments at $2,558 per month (except for March 2012 which was based on a prior year
      occupancy expense calculation). The PCFO is confusing its rounded figures for actual costs
      in its calculation. It would be correct if it used the "actual" costs, but rounded amounts are
      not actual costs and caused the PCFO to charge the CFC $438 in excess of the actual
      occupancy expense amount.

1
    The actual amount charged to the CFC was $30,699 (due to $2,557 charged in March 2012 and rounding).


                                                        14                             Report No. 3A-CF-00-14-050
Lastly, the PCFO states that because CFC Memorandum 2013-04 indicates that actual costs
need to be reasonable, allowable and necessary, and it believes that its allocation
methodology is reasonable, then the costs should not be questioned. We disagree and
maintain that the PCFO misconstrued the intent of the Memorandum. The Memorandum is
not talking about unreasonable allocations, but unreasonable expenses that are exorbitant and
excessive, which is not the case in this finding. The issue here is simply that the amount
charged to the CFC was based on a total actual allocated expense that was rounded up (nearly
$500) and then charged as a monthly fee to the CFC, rather than charging the CFC 1/12 of
the actual allocated expense total. The PCFO's responsibility is to charge actual costs to the
CFC, and that was not done by it in regards to occupancy expense.

Recommendation 4

We recommend that the OCFC and LFCC ensure that the PCFO reviews its payroll
allocations made during the current campaign to ensure that all allocations to the CFC are
accurate by correcting any errors identified.

PCFO Response:

The PCFO partially agrees with this recommendation. It states that "Once the campaign
budget is approved, payroll allocation updates are made to the automated Payroll system.
Any adjustments or changes in staffing during the year will be made by the Accounting staff
to ensure the records are accurate and to correct any errors. The PCFO will review the staff
allocation quarterly, ensuring the allocations in place accurately reflect any staff changes.
The LFCC will ensure this review has been performed in quarterly budget/contract review
meetings." Additionally, the "PCFO believes that this was a unique and unusual
circumstance, as the result of a more manually-based process being used, and the instance
cited occurred outside of our normal procedures and thus the partial agreement."

OIG Comments:

The PCFO's statement that the allocation variance identified was outside its normal
procedures is not correct. Based on discussions with the PCFO (as stated in the finding), the
payroll system changed from a manual-based system to a more automated system during the
scope of our audit. System changes are a normal part of business operations and are not a
"unique and unusual circumstance" that would alleviate the PCFO of its responsibility to
accurately report costs to the CFC.




                                            15                         Report No. 3A-CF-00-14-050
   Recommendation 5

   We recommend that the OCFC and LFCC ensure that the PCFO maintains backup copies of
   all allocation methodology records in order to comply with records retention requirements
   included in the CFC regulations.

   PCFO Response:

   The PCFO agrees with this recommendation and states that the LFCC has directed it to
   maintain historical allocation calculations and changes that comply with the CFCs
   documentation retention requirements.

2. Improper Matching of CFC Receipts and Expenses                                    Procedural

   The PCFO did not recover all2012 campaign expenses from the gross receipts of the 2012
   campmgn.

   5 CFR 950.1 06(a) states that "The PCFO shall recover from the gross receipts of the
   campaign its expenses, approved by the LFCC, reflecting the actual costs of administering
   the local campaign."

    Additionally, CFC Memorandum 2008-09 goes on to clarify this regulation by stating that
    expenses for the campaign are incurred over a two-year period (for the 2012 campaign this
                        would be March 2012 through March 2014). It should be noted that
    The expenses        during any one calendar or fiscal year there are always, at least, two
charged to the 2012 campaigns operating at the same time. Concurrently, one campaign is
campaign included
                        starting up planning and collecting pledges while another campaign is
   some expenses
  related to either     receiving  and disbursing funds. Therefore, the costs should not only be
   prior or future      allocated between the CFC and the PCFO's other lines of business, but
     campaigns.         also between the different CFC campaigns operating simultaneously.

   Specifically, we found that the PCFO charged the 2012 campaign all expenses recorded
   between March 1, 2012 and March 31,2013. Additionally, our expense review identified
   transactions related to general overhead expenses (salaries, benefits, occupancy, and
   depreciation) that were not allocated between the multiple campaigns operating during the
   lifecycle of the 2012 campaign. Instead, all general overhead expenses were charged fully to
   the 2012 campaign.




                                               16                         Report No. 3A-CF-00-14-050
The PCFO indicated that its payroll system doesn't track using a time and effort system, but
rather an FTE allocation is made based on the total estimated time devoted to CFC work for
each staff position (evaluated yearly). To the extent possible, the PCFO separates expenses
that are directly allocable to a specific campaign. However, expenses incurred that are
related to more than one campaign are allocated to the campaign currently in operation.

As a result of not properly matching CFC receipts and expenses, the PCFO did not accurately
report the expenses related to the 2012 campaign.

Recommendation 6

We recommend that the OCFC and LFCC direct the PCFO to institute policies and
procedures in its expense system to accurately track and record campaign expenses
throughout the two-year campaign period.

PCFO Response:

The PCFO partially agrees with this recommendation. It states that "To the extent possible"
it will work to allocate campaign expenses among campaigns that are running concurrently.
Additionally, the PCFO states that it will determine the most effective and efficient way to
ensure the greatest accuracy when allocating costs between concurrently running campaigns.
The LFCC states that it will ensure that a methodology is identified and implemented for
future campaigns. However, the PCFO is concerned that its accounting system may not have
the capabilities to address the recommendation completely.

OIG Comments:

While the PCFO states that it will work to comply with the recommendation, its statement
that it will make this effort "To the extent possible" concerns us. The UWCM in its PCFO
application agreed that it would follow the directions of OPM (which include the
regulations), not that it would follow the directions of OPM "to the extent possible." We
understand that there may be complications which might make our recommendation difficult
to implement within the PCFOs accounting system. However, this does not preclude the
PCFO from then further allocating costs (manually) between campaigns running
concurrently, which may require the PCFO to maintain a cross walk to its system-generated
reports.




                                           17                          Report No. 3A-CF-00-14-050
3. LFCC Approval of Campaign Expense Reimbursement                               Procedural

  The PCFO did not request nor did the LFCC approve the final reimbursement of $3,608 to
  the PCFO for the 2012 campaign expenses.

  According to 5 CFR 950.106(a), "The PCFO shall recover from the gross receipts ofthe
  campaign its expenses, approved by the LFCC, reflecting the actual costs of administering
  the local campaign."
                                                                            The LFCC did not
  Additionally, 5 CFR 950.1 04(b )(17), states the LFCC is responsible      formally review or
  for "Authorizing to the PCFO reimbursement of only those campaign             approve the
                                                                               PCFO's final
  expenses that are legitimate CFC costs and are adequately
                                                                            campaign expense
  documented."                                                                reimbursement.

  We reviewed the meeting minutes and supporting documents to determine if the LFCC
  authorized the PCFO's reimbursement of campaign expenses. Our review found that the
  LFCC did approve the reimbursement of$488,613 in May 2013. However, the LFCC did
  not provide supporting documentation of the approval of the final expense reimbursement to
  the PCFO for the amount of$3,608 made in March 2014.

  The LFCC stated that this reimbursement was mentioned to other LFCC members and
  discussed informally with the PCFO. However, it was unable to provide any documentation
  supporting an official approval by the LFCC.

  As a result of the LFCC not reviewing and approving the final expense reimbursement,
  unallowable, non-CFC, or non-2012 campaign expenses could have been reimbursed to the
  PCFO.

  Recommendation 7

  We recommend the OCFC ensures that the PCFO understands that it must submit all expense
  reimbursement requests to the LFCC for review and approval prior to making reimbursement
  of those expenses.

  PCFO/LFCC Response:

  The PCFO and LFCC agree with this recommendation and state that future requests for
  reimbursement will be fully documented in writing to the LFCC.




                                            18                         Report No. 3A-CF-00-14-050
        Recommendation 8

        We recommend that the OCFC ensures that the LFCC understands its responsibility to
        authorize and approve all PCFO campaign expense reimbursements for all future campaigns.

        PCFO/LFCC Response:

        The PCFO and LFCC agree with this recommendation and state that future requests for
        reimbursement will be approved by the full LFCC at a scheduled and convened LFCC
        meeting.

C.   CAMPAIGN RECEIPTS AND DISBURSEMENTS

     1. 	 Pledge Form Errors                                                               Procedural

        Our review ofthe PCFO's pledge form database identified 23 pledge forms with 8 types of
        errors.

        We reviewed a sample of pledge forms to determine ifthe actual pledge form data matched
        the PCFO's pledge database. Specifically, we determined ifthe following pledge form data
        agreed to the database information:
        • 	 donor name;
        • 	 charity code number and amount donated;
        • 	 total amount donated; and
        • 	 donor's choice to release or not to release name, home address, email address and/or
            pledge amount.

        Finally, we also reviewed the pledge forms to determine if any changes or edits identified
        were made by the donor only, if the paper pledge forms reviewed did not include more than
        five designations (per form), and if the donor signed the payroll deduction authorization (if a
        payroll deduction was required).

        Our review of the pledge forms identified the following errors:

        Charity Designations Recorded Incorrectly

        • 	 Four pledge forms were recorded incorrectly in the pledge form database. Specifically,
            the charity code indicated by the donor was missing (blank), the annual amount to the
            charity was incorrect and an invalid amount was included as undesignated funds.




                                                     19 	                        Report No. 3A-CF-00-14-050
• 	 One pledge form where the donor entered "N/A" as the amount to be donated to a
    charity. However, the total gift amount was input as the amount donated to the charity in
    the pledge form database rather than inputting a donation amount of $0.

Cash Donation Not Recorded

• 	 One pledge form where an amount donated via cash or check was not recorded in the
    pledge form database.

Pledge Form Alterations

• 	 We identified eight pledge forms where alterations to either the total gift or annual
    amount were noted. However, we could not determine who made the changes.

5 CFR 950.1 05( d)(l) states that the PCFO is responsible for "honoring employee
designations."

Additionally, 5 CFR 950.105(d)(3) states that the PCFO is responsible to make sure
"keyworkers are trained to check to ensure the pledge form is legible on each copy .... "

As a result of the pledge form input errors identified, undocumented alterations on the pledge
forms, and missing charity codes, the PCFO did not accurately honor all donors' wishes as
required by the regulations.

Recommendation 9

We recommend that the OCFC and LFCC direct the PCFO to review and strengthen its
existing procedures to ensure that its pledge form database reflects the actual pledges made
by the donors on the pledge form.

PCFO/LFCC Response:

The PCFO and LFCC agree with this recommendation. The PCFO states that it has provided
the vendor tasked with data entry of pledge information procedures and guidance in the past
related to the importance of accurate data entry and has reemphasized them. Additionally,
the PCFO monitors the accuracy of the data entry and provides the vendor guidance with
regards to any recurring issues and the requirements of the regulations.

However, the PCFO and LFCC disagree with the four pledge forms questioned as "Charity
Designations Recorded Incorrectly." For each ofthe pledge forms, the 501(c)(3) status of the



                                            20 	                         Report No. 3A-CF-00-14-050
charity pledged to was revoked during the distribution of funds to the charities. As a result,
the PCFO states that it moved the unpaid designation balance to undesignated funds.

OIG Comments:

We appreciate that the PCFO and LFCC have reemphasized procedures with its pledge form
data entry vendor. However, this does not answer our recommendation to strengthen the
procedures, but merely continues the practice which allowed the errors to occur in the first
place.

In regards to the pledge forms disputed by the PCFO and LFCC, we were not provided any
documentation to support the claims made and cannot remove them from the finding.

Recommendation 10

We recommend that the OCFC and LFCC direct the PCFO to institute procedures related to
pledge forms with alterations that cannot be verified as made by the donor, to ensure that the
changes were made by the donor. The procedures could include having the keyworkers
ensure that pledge forms are initialed by the donor if changes are present or by sending
pledge forms back to the donor for verification.

PCFO/LFCC Response:

The PCFO and LFCC agree with this recommendation. The LFCC states that it provided
guidance at the start ofthe current campaign (2014) to the PCFO, LEs, and campaign
volunteers in regards to pledge form mathematical accuracy, changes, number of pledges per
form, and ensuring designated amounts match the total gift on the pledge form. In the case
of any form that requires correction, it will be returned to the donor, updated, and initialed by
the donor and not a campaign volunteer.

Mathematical Errors Handled Incorrectly

• 	 We identified one pledge form where the total gift and annual amount to the charity were
    input incorrectly. According to the pledge form, the donor's total gift was $2,499.96.
    However, the "annual amount" to the charity was $2500. The PCFO did not recognize
    the total gift as $2,499.96 and adjust the charity designation as required by the
    regulations.

• 	 We identified one pledge form where the total gift was $2,000.18 with designations of
    $400.036 to five charities. Rather than reduce all five charity designations to $400.03



                                             21 	                        Report No. 3A-CF-00-14-050
   (with $0.03 as undesignated funds), the PCFO rounded four up to $400.04 and one down
   to $400.02.

5 CFR 950.402(d) states "In the event the PCFO receives a pledge form that has designations
that add up to less than the total amount pledged, the PCFO must honor the total amount
pledged and treat the excess amount as undesignated funds." Additionally it states, "In the
event that a PCFO receives a pledge form that has a total amount pledged that is less than the
sum of the individual designations, the PCFO must honor the designations by assigning a
proportionate share of the total gift to each organization designated."

As a result of not properly handling pledge forms with mathematical errors, the PCFO did
not follow the requirements of 5 CFR 950.402(d) and did not meet its responsibility of
honoring employee designations.

Recommendation 11

We recommend that the OCFC and LFCC direct the PCFO to ensure that its data entry
processors understand the requirements of 5 CFR 950.402(d) and that the information input
in the pledge form database is adjusted correctly in those cases.

PCFO/LFCC Response:

The PCFO and LFCC agree with this recommendation. As previously stated in its response
to recommendation number nine, the PCFO has reemphasized the data entry procedures to its
pledge form data entry vendor. Additionally, as previously stated in its response to
recommendation number 10, the LFCC provided guidance to its campaign volunteers to
ensure that designated amounts match the total gift on the pledge form, as well as to verify
pledge form mathematical accuracy.

OIG Comments:

We appreciate that the LFCC has made mathematical accuracy a point of emphasis with its
campaign volunteers. However, we recognize that pledge forms with mathematical errors
will slip through occasionally, and simply reemphasizing procedures that do not appear to be
working properly to its data entry vendor does not seem adequate.

Donor Release of Information Incorrectly Recorded

• 	 We identified three pledge forms where the pledge form database incorrectly indicated
    the release of the donor's email address when the donor did not provide that information.



                                            22 	                       Report No. 3A-CF-00-14-050
   Specifically, the pledge form database maintained by the PCFO indicated "Yes" in the
   column which designated if a donor chose to release any information to a charity when
   the donor did not include any information to be released (no address or email address was
   provided by the donor).

5 CFR 950.105(d)(6) states that the PCFO is responsible for "Honoring the request of
employees who indicate on the pledge form that their name, contact information and
contribution amounts not be released to the organization(s) that they designated."

As a result of incorrectly indicating the release of the donor's email address, the PCFO ran
the risk of charities contacting the employees without their consent.

Recommendation 12

We recommend that the OCFC and LFCC direct the PCFO to institute procedures to ensure
that its pledge form database includes "Yes" indicators for release of donor information
(address or email address) only when that information is provided by the donor.

PCFO/LFCC Response:

The PCFO and LFCC disagree with this recommendation and state that the data entry system
used is preset with a "no" indicator for release of address, email, and/or amount pledged.
The system requires the "no" indicator to be changed to "yes" if the donor chooses to release
personal information and they feel that this process ensures the strongest ability to avoid the
unauthorized release of information. However, they agree that the three pledge forms
reviewed incorrectly indicated the release of donor information.

OIG Comments:

The response of the PCFO and LFCC is concerning to us as they feel that the present process,
which permitted the release of donor information improperly, is adequate. We understand
that this is a manual system (for paper pledge forms). However, the lack of concern
presented by the PCFO and LFCC in regards to the issue is alarming. According to the
regulations, the PCFO is responsible for honoring the request of employees who indicate on
the pledge form that their personal information not be released to charities. However, errors
made by inadvertently releasing donor information are critical, because those individuals
may choose to not donate to the CFC in the future as a result of the error.




                                            23                          Report No. 3A-CF-00-14-050
Payroll Copy of Pledge Form Not Forwarded Properly

• 	 We identified two pledge forms where the payroll office copy of the pledge form (white
    copy) was maintained by the PCFO for a donation made via payroll deduction. The
    payroll office copy of the pledge form includes an area for the donor's SSN, while all
    backing copies have that information redacted (blacked out).

5 CFR 950.901(c)(l) states, "The CFC Pledge Form, in conformance with
§950.402, is the only form for authorization of the CFC payroll allotment .... "

Additionally, 5 CFR 950.901 (c)(2) states "The original copy of each paper pledge form
(payroll allotment authorization or an acceptable electronic version) should be transmitted to
the contributor's servicing payroll office as promptly as possible .... "

Finally, the 2012 CFC Brochure states that the PCFO "will ensure delivery of the correct
copy to the payroll office." Therefore, the correct copy to be delivered to the payroll offices
is the white copy that does not redact the SSN.

As a result of the PCFO retaining the "payroll office" copy, it ran the risk of accidentally
releasing the donors SSN and not providing the payroll office with pertinent information to
ensure that the payroll deductions would be recognized.

Recommendation 13

We recommend that the OCFC and LFCC ensure that the PCFO has instituted procedures to
ensure that all "Payroll Office" copies of pledge forms with payroll deductions are sent to the
appropriate payroll office and not maintained by the PCFO.

PCFO/LFCC Response:

The PCFO and LFCC agree with this recommendation and state that the LFCC has provided
guidance to the PCFO and campaign volunteers to ensure that the payroll copies of paper
pledge forms are sent to the appropriate payroll offices. However, the PCFO disagrees that
these forms were the actual payroll copies, and states that they were actually photocopies of
the payroll forms.

OIG Comments:

We do not agree with the PCFO's contention that the pledge form copies maintained are
photocopies and not original pledge forms, as this was not identified during our review.



                                             24 	                        Report No. 3A-CF-00-14-050
However, if the pledge forms reviewed were photocopies, the PCFO is then also in violation
ofCFC Memorandum 2007-08 because the pledge forms maintained included donor SSNs.
According to the memorandum, "Campaigns are reminded that it is not permissible to
collect, store, or temporarily use a donor's SSN. Any campaign collecting or storing donor
SSNs must immediately remove and permanently destroy such records, whether held in
electronic or paper format."

Discrepancy Between Pledge Form and Actual Donor Information

• 	 We identified one pledge form where the donor's information on the pledge form did not
    match the actual check information (two different individuals). Additionally, as the
    pledge form indicated the release of address, the information released would not be for
    the actual donor of the funds in question.

In response to our Pledge Form Policies and Procedures Questionnaire, the PCFO stated that
when checks are collected it matches the check to the pledge form to ensure completeness.

As a result of not accurately matching the pledge form to the check information, the PCFO
released the wrong individual's information to the charity.

Recommendation 14

We recommend that the OCFC and LFCC ensure that the PCFO follows its stated policies
and procedures to ensure that it matches pledge form data to donor checks to ensure that the
data input in the pledge form database is correct.

PCFO/LFCC Response:

The PCFO and LFCC agree with this recommendation. The LFCC states that it has directed
the PCFO, LEs, and campaign volunteers to match pledge form names with those on checks
in support of the forms. Additionally, the LFCC has directed that a notation be placed on the
pledge form and the associated check if received in support of a special event.

However, the PCFO and LFCC disagree that the pledge form identified was in error. They
believe that the pledge form identified was payment in support of a special event that the
pledge form represented, and included a combination of cash and donor check information
that reflected the overall total collected for the event.




                                           25 	                        Report No. JA-CF-00-14-050
OIG Comments:

We appreciate that the PCFO and LFCC agree. However, the procedures that the LFCC has
outlined, regarding matching pledge form names with those on the check in support of the
forms, is the procedure that was not followed for the pledge form questioned. The LFCC has
not explained what will be done to ensure that the procedure is followed.

In regards to the disagreement with the pledge form identified in error, the PCFO and LFCC
are incorrect. The pledge form questioned was for $14 (listed as "Check/Cash") and
included the check number of the check (copy) which was also included in the
documentation maintained by the PCFO. Therefore, the contention that the pledge form
questioned represented the total collected at a special event is unfounded.

Excess Pledges on Paper Pledge Form

• 	 We identified one pledge form which had six designations when, according to the CFC
    brochure, only a maximum of five designations are allowed on a pledge form.

According to the 2012 CFC Brochure, "Additional designations may be completed on a
second pledge form." It also states, "To give to more organizations than can be added to the
pledge form, complete additional pledge forms and staple them together. The top pledge
form must contain the sum of all pledges."

Additionally, the PCFO's website states "You may designate to the organizations ofyour
choice where indicated on your pledge card. Additional designations must be completed on
a second pledge card." (Emphasis Added)

As a result of accepting paper pledge forms with more than five designations, the PCFO is
running a greater risk of receiving pledge forms where the designations are difficult to
determine due to donors squeezing more than five designations on the same form.

Recommendation 15

We recommend that the OCFC and LFCC direct the PCFO to train its keyworkers so that
pledge forms with more than five designations are returned to the donor and that an
additional pledge form is completed. If not, the PCFO should only recognize those
designations entered in the appointed areas for designations on the pledge form.




                                           26 	                        Report No. 3A-CF-00-14-050
   PCFO/LFCC Response:

   The PCFO and LFCC agree with this recommendation. The LFCC states that it has provided
   guidance to the PCFO and campaign volunteers with regards to limiting the number of
   charities per pledge form.

   OIG Comments:

   We appreciate that the PCFO and LFCC agree. However, the guidance referred to by the
   LFCC was incomplete. It should be clear in its guidance that only a maximum of five charity
   codes may be included on paper pledge forms. If donors using paper pledge forms wish to
   donate to more than five charities, additional pledge forms must be used. Lastly, the LFCC
   did not address that the PCFO should only recognize those designations entered in the
   appointed areas for designations on the pledge form.

2. One-Time Disbursements Not Approved by the LFCC                                 Procedural

   We were unable to identify evidence of the LFCC's determination and authorized amount for
   one-time disbursements for the 2012 campaign.

     One-time          5 CFR 950.901 (i)(3) states that the "LFCC must determine and
disbursements were     authorize the amount" of one-time disbursements that are made.
    improperly 

  determined and 

                       Additionally, 5 CFR 950.101 defines the LFCC as "the group of Federal
 authorized by the
LFCC chairperson.      officials designated by the Director to conduct the CFC .... "

   We reviewed the LFCC meeting minutes for the 2012 campaign, especially those minutes
   preceding the payment of one-time disbursements by the PCFO, to identify where the LFCC
   determined and authorized the amount for one-time disbursements. Our review of the
   minutes did not identify any mention of one-time disbursements.

   The PCFO provided a copy of an email from the former CFC Director (PCFO employee)
   stating that the LFCC had approved making the disbursements and the threshold for the 2012
   campaign. However, the email did not include the actual approval by the LFCC. Discussion
   with the LFCC indicated that it was aware of the one-time disbursements and that approval
   may have been made informally by the LFCC chairperson.

   As the LFCC is defined as a "group of Federal officials," the chairperson cannot make
   approvals that are required to be made by the group. Therefore, the one-time disbursements
   made for the 2012 campaign were not properly approved as is required by the regulations.



                                             27                         Report No. 3A-CF-00-14-050
   Recommendation 16

   We recommend that the OCFC ensures that the LFCC has instituted procedures to determine
   if one-time disbursements are to be made and approve the threshold level for one-time
   disbursements on a yearly basis.

   LFCC Response:

   The LFCC agrees with this recommendation and states that it has set the approval of the
   making and setting the threshold level for one-time disbursements as a regular LFCC
   meeting agenda item on an annual basis.

   Recommendation 17

   We recommend that the OCFC ensures that the LFCC has instituted procedures to ensure that
   all decisions and/or approvals required of it are recorded in its meeting minutes.

   LFCC Response:

   The LFCC agrees with this recommendation and states that, along with decisions related to
   one-time disbursements, it has also set regular LFCC meeting agenda items for other
   annually occurring approvals that it must make according to the regulations.

3. Donor Information Improperly Released                                              Procedural

   The PCFO did not properly release information for two donors.

   5 CFR 950.601 (c) states that it is the PCFO's responsibility to forward donor information to
   the charitable organizations if the donor indicates that they wish to release the information.

   Pledge forms and other electronic pledging options available to the donors give the option to
   release any or all of the following: home address, email address, and amount of pledge.

   Additionally, the pledge information provided to donors of the 2012 campaign states that
   "Any information you enter below will be released, along with your name, to the charity(ies)
   to which you made a pledge."

   We identified five charities to which the pledges for two donors were not properly released.
   Specifically, these donors chose to release their address and amount. In one case only the




                                               28                          Report No. JA-CF-00-14-050
amount was released and the donor's name was not. In the other case, the donor provided
their home address. However, no information was released.

As a result of not releasing the donor's information as requested, the PCFO did not honor the
employee's request.

Recommendation 18

We recommend that the OCFC and LFCC direct the PCFO to institute procedures to ensure
that personal information that donors wish to release to charities is transmitted to the charities
properly.

PCFO Response:

The PCFO agrees with the recommendation. However, it disagrees that it erred in not
releasing the information in both cases questioned.

For one pledge form, the PCFO states that it had "a previously recorded request from the
employee ... asking that their account be marked 'anonymous' ... overriding any request
received via individual pledge." However, in hindsight the PCFO and LFCC agree that the
basis for releasing donor information should be based only upon the pledge form and will no
longer use a previously recorded request as an override.

Additionally, in relation to the other pledge form questioned, the PCFO feels that it was
correct in not releasing the donor's information. The pledge was made electronically (via
EEX), and the PCFO acknowledges that the electronic system will only allow a donor to
enter in their personal information (home address or email) if they wish to release it.
However, the information forwarded to the PCFO indicated a "NO" in the field utilized by it
for purposes of releasing the information and, as a result, it did not release the information.
The PCFO feels that making a change to its system to recognize completed fields, in lieu of
the release of information field, would be significant and costly. It asks that EEX be required
to ensure that the information provided to campaigns be verified as accurate prior to release.

OIG Comments:

We accept the PCFO's response in regards to the donor whose information was not released
due to a previous request and are pleased that it will discontinue the practice going forward.

However, we do not agree with its stance in regards to the donor information not released
due to conflicting information received from EEX. It is still the final responsibility of the



                                             29                           Report No. JA-CF-00-14-050
   PCFO to ensure that the information for donor's indicating their wish to release information
   is released in the end. We would not expect the PCFO to make significant and costly
   changes to its systems, but we are disappointed that it did not provide additional manual
   procedures (to either review the EEX information for correctness or its information once
   EEX information is imported) to reasonably attempt to fulfill its responsibility, rather than
   pass its responsibility on to others.

4. 	 Fundraising Events                                                                Procedural

   Our review of special events identified 10 events that were not in compliance with the CFC
   regulations and OPM guidance.

   Specifically, we reviewed 10 special event pledge forms to determine the following:
   • 	 if the events were cleared by the agencies ethics officials;
   • 	 if the donors were given the option of designating to specific organizations of their
       choice;
   • 	 if funds unaccompanied by a pledge form were accounted for as undesignated 

       contributions and distributed according to the regulations; and 

   • 	 if the fundraiser solicited funds for individual organizations or ifthe event was held on
       behalf of an individual organization.

   Our review of the special events identified 10 CFC fundraisers that were not in compliance
   with the CFC regulations and supporting memoranda. Specifically, we identified the
   following issues:

   Special Events not Reviewed by Agency Officials

   We were unable to determine if any of the special events reviewed were approved by agency
   ethics officials as required by OPM.

   According to the LFCC, and/or agencies, all of the special events were approved. However,
   no supporting documentation was available because the approvals appear to have been
   verbal.

   Additionally, we determined that specific approval of five events (all from the same agency)
   may not have been obtained because the events were not considered "unusual or different
   from prior year fundraisers."

   The LFCC stated that during its annual training for LEs and keyworkers it specifically
   addresses special fundraising events and informs them that they must seek both general



                                                30 	                        Report No. 3A-CF-00-14-050
counsel and ethics office approvals from their home agency prior to each event. However,
there was no requirement to provide the approvals to the LFCC or PCFO.

5 CFR 950.602(b) states, "Any Special CFC fundraising event and prize or gift should be
approved in advance by the ethics officials." According to CFC Memorandum 2011-07 "The
word 'should' in this sentence is used as a form of 'shall' which means this is a
requirement." (Emphasis Added)

Additionally, the memorandum states that agency coordinators and/or keyworkers planning
events within a federal agency must receive the approval of the agency ethics official prior to
holding the event. LFCCs, PCFOs, and/or volunteers planning campaign-wide or multiple
agency events must receive the approval of the agency ethics officials for all agencies
involved.

As a result of not requiring fundraising event organizers to maintain and provide proof of the
event's approval by the agency's ethics officials for every fundraising event, we were unable
to determine if any of the special events reviewed were approved by the agencies' ethics
officials.

Recommendation 19

We recommend that the OCFC and LFCC direct the PCFO to institute policies and
procedures that require the agency coordinators and/or keyworkers planning special events to
receive the approval of the agency ethics official in writing prior to holding each event.
Additionally, the written approval should be maintained with the keyworker envelopes
relating to the special event.

PCFO/LFCC Response:

The PCFO and LFCC disagree with this recommendation and state that it is their opinion that
its responsibility was limited to ensuring that agency personnel involved in the campaign
were aware of the requirements surrounding fundraising events and not that it was required to
collect all approvals as required by the finding.

OIG Comments:

We do not agree with the PCFO and LFCC's opinion related to this recommendation and
finding. CFC Memorandum 2011-07 (dated November 10,2011, prior to the 2012
campaign) states that those planning special fundraising events within federal agencies must
receive the approval of agency ethics officials prior to holding the event. It then goes on to



                                            31                          Report No. 3A-CF-00-14-050
state that the LFCC, PCFO, and/or LEs must receive the approvals of the ethics officials for
all agencies involved. As such, it is our opinion that the language of the Memorandum
makes it mandatory that the PCFO and LFCC not only provide guidance regarding
fundraising events, but also collect and maintain the documentation to ensure that each
fundraising event meets the requirements of the regulations and other CFC guidance.

Special Events with Designations to Specific Charities

We identified two special events where the funds collected were designated to individual
organizations.

5 CFR 950.602(c) states, "In all approved special fundraising events the donor must have the
option of designating to a specific participating organization or federation or be advised that
the donation will be counted as an undesignated contribution and distributed according to
these regulations."

5 CFR 950.105(c)(2)(ii) states that the PCFO is responsible to "conduct campaign operations,
such as training, kick-off and other events .... "

As a result of collecting funds for specific charities, the agencies holding the events did not
follow the requirements of 5 CFR 950.602(c) and the PCFO did not properly distribute funds
in accordance with 5 CFR 950.501(a).

Recommendation 20

We recommend that the OCFC direct the LFCC to ensure that agency coordinators, LEs, and
keyworkers are trained to understand the requirements of5 CFR 950.602(c).

PCFO/LFCC Response:

The PCFO and LFCC agree with this recommendation and state that the campaign's annual
training for campaign volunteers has included the requirements related to agency ethics
official's approval for fundraising events for many years. Additionally, they have instituted
written procedures that require evidence be maintained of the written approval of ethics
officials, the collection of funds, and that pledge forms are available at the events.




                                            32                          Report No. 3A-CF-00-14-050
        Recommendation 21

        We recommend that the OCFC require the LFCC to institute procedures to ensure that
        donations at fundraising events without a valid pledge form by the donor are not directed to
        any specific charity, but counted as undesignated funds.

        PCFO/LFCC Response:

        The PCFO and LFCC did not address this recommendation in their response.

        OIG Comments:

        The OCFC should ensure that the LFCC and PCFO have procedures to ensure that
        fundraising events are not set up to have all funds collected benefit any one or two charities
        as was discovered in our audit. The events should be set up to solicit funds for the CFC
        generally and allow the donors the opportunity (through the availability of paper pledge
        forms) to designate to a charity if they wish. Any monies that are received without a pledge
        form should be counted as undesignated funds and not later be tallied and added to a generic
        pledge form for the event going to a specific charity.

D.   ELIGIBILITY

     1. Attendance at LFCC Meetings                                                        Procedural

        The LFCC did not achieve its quorum requirements for 4 of its 11 meetings, and 5 of its 12
        members did not attend at least 50 percent of the meetings held during the 2012 campaign.
        Additionally, the LFCC did not hold meetings during the time frame of January through
        April 2012, an extremely important time frame for planning and decision making for the
        2012 campaign. Finally, the LFCC's by-laws permit "authorized representatives" to attend
        in place of absent LFCC members.

     The LFCC did not
                             According to 5 CFR 950.101, the LFCC is the group of federal officials
     achieve quorum at
       over 113 of its 
     designated by OPM to conduct the CFC in a particular community.
       meetings and 

      nearly half of its 
   Additionally, 5 CFR 950.104(a) states that "All members ofthe LFCC
     membership didn't       should develop an understanding of campaign regulations and
     attend 50 percent       procedures." 5 CFR 950.104 goes on to state that the LFCC is
      of the meetings.       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 LEs to assist in the campaign; ensuring that



                                                    33                          Report No. 3A-CF-00-14-050
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.

Lastly, the LFCC's by-laws state that its meetings "must have a quorum consisting of a
majority of its voting members or their authorized representatives."

Our review of the LFCC meeting minutes and list of LFCC member terms of service
determined that the LFCC did not meet its quorum requirements for 4 of its 11 meetings held
between May 2012 and March 2014. Additionally, during this same time frame, 5 of its 12
members (excluding those added in March 2014) did not attend 50 percent, or more, of the
meetings.

Discussions with the LFCC, and review of its by-laws, determined that it has a required
membership which includes individuals representing the local Federal Executive Board and
chairs of committees' set up by the LFCC to assist in coordinating the campaign.
Additionally, the LFCC seeks membership from all large agencies in its local area. While
the LFCC stated that "In many instances, member absence from a meeting was excused, and
we did have a quorum ... whenever we needed a decision", it should be noted that the LFCC
meeting minutes did not record any members as being excused from any meetings, and the
LFCC did state that its July 2013 meeting was unofficial due to lack of a quorum.

Additionally, we noted that the LFCC did not hold meetings during the period of January
through April 2012. This time frame is when many important campaign decisions and
approvals (such as selection of or renewal of the PCFO, approval of one-time disbursements,
and approval of campaign expense reimbursement) occur and, therefore, is of concern.

The LFCC stated that it had a significant turnover in its membership (including its
chairperson) from calendar year 2011 to 2012 and spent this time transitioning the chair and
recruiting new members. No meetings were held during this time as the LFCC had limited
personnel and "The only significant decision that needed to be made during that time as an
LFCC was the approval to exercise the option year" of the PCFO (that decision was made via
email vote). We understand that turnover and participation in the LFCC can be problematic.
However, this did not excuse the existing members from meeting and making the necessary
decisions for the campaign.

Lastly, although we appreciate the fact that the LFCC has documented its governance of the
CFC through its by-laws, the inclusion of"authorized representatives" sitting in for absent
LFCC members is a regulation violation as well. The CFC regulations state that LFCC
members "should develop an understanding of campaign regulations and procedures."



                                           34                         Report No. 3A-CF-00-14-050
Consequently, "authorized representatives," who are not required to develop this level of
understanding, will not have a full knowledge of LFCC and CFC activities if an important
approval or decision has to be made.

As a result of not meeting its quorum requirements and having many members not attending
meetings regularly, the LFCC runs the risk of making invalid decisions or approvals.
Additionally, by not holding meetings from January through April2012, the LFCC put the
PCFO in the position of either delaying campaign activities until it met or moving forward
with activities without proper approvals by the LFCC. Finally, by permitting "authorized
representatives" of LFCC members to attend in their place, the LFCC runs the risk of
decisions or approvals being made without the full knowledge base of the LFCC present.

Recommendation 22

We recommend that the OCFC ensure that the LFCC has modified its by-laws to include
procedures to excuse members who cannot attend (with prior approval) and to record those
excused in the LFCC meeting minutes to reduce the numbers required for a quorum.

LFCC Response:

The LFCC agrees with this recommendation and stated that it's "by-laws have been modified
to provide a procedure to excuse LFCC members with prior approval, and recording that
approval in the meeting minutes."

Recommendation 23

We recommend that the OCFC ensure that the LFCC has made changes to ensure that it
meets during periods when approvals required by the federal regulations are to be made.

LFCC Response:

The LFCC stated that monthly meeting dates and times have been established, along with
monthly meeting topics/approval requirements to ensure consistency from year to year
regarding regularly occurring topics/approvals.

Recommendation 24

We recommend that the OCFC direct the LFCC to modify its by-laws to remove the option
for "authorized representatives" to attend in place of absent LFCC members.




                                           35                         Report No. 3A-CF-00-14-050
        LFCC Response:

        The LFCC agrees with this recommendation and stated it has revised its by-laws to remove
        the option for "authorized representatives" to sit-in for members at meetings.

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.




                                                    36                         Report No. 3A-CF-00-14-050
 IV. MAJOR CONTRIBUTORS TO THIS REPORT 



Special Audits Group

                 , Senior Team Leader

               Auditor




                 , Group Chief,




                                        37   Report No. 3A-CF-00-14-050
                                                                                  APPENDIX 





            Chesapeake Bay Area Combined Federal Campaign
                             Local Federal Coordinating Committee 

                                31 Hopkins Plaza, Room 81 OB 

                                     Baltimore, ~fD 21201 

                                        www.cbacfc.org 


2 October 2014

U.S. Office ofPersonnel Management
Office of the Inspector General
Deleted by OIG- Not Relevant to Final Re ort
1900 E Street, NW, Room 6400
Washington, DC 2 0415-11 00

Re: Report No. 3A-CF-00-14-050

Deleted by OIG- Not Relevant to Final Report

The following responses represent a collaborative effort on behalf of the PCFO, United Way of
Central Maryland (UWCM) and the LFCC leadership regarding your recent audit of the 2011
and 2012 Chesapeake Bay Area Combined Federal Campaign (CBACFC).

                       Deleted by OIG- Not Relevant to Final Report

                         BUDGET AND CAMPAIGN EXPENSES

   •   Administrative Expenses

       Deleted by OIG- Not Relevant to Final Report

       Unallowable Expense- Bus Tour- $220

                            The PCFO and LFCC agree with this finding. Deleted by 0 IG
       Not Relevant to Final Report. The PCFO will reimburse the CFC for this charge, and
       the LFCC will ensure expenses of these types are not approved for future campaigns.

       Unallowable Expense- Meals- $136

                             The PCFO and LFCC agree with this finding. Deleted by OIG
       Not Relevant to Final Report. While we agree with the finding, it is regretful that the
       PCFO would be required to pay for these expenses after being approved by the LFCC.
       The LFCC Chair will reimburse the CFC for these charges totaling $136. The LFCC has
       not, since March 28,2012 (the release date of the Memorandum regarding meal and/or
       food expenditures) and will not approve any cost of this type for future campaign
       budgets.


                                          38                            Report No. 3A-CF-00-14-050
Incorrect Allocations- $438

Occupancy: The PCFO disagrees with the finding that states that the PCFO reimburse
the CFC $438 for overcharging occupancy expense. Occupancy is an allocated expense
based on a reasonable allocation methodology approved by the LFCC. The calculated
percentage was applied consistently to the actual monthly occupancy invoices of the
PCFO throughout the campaign.

The PCFO disagrees with the finding that states that the CFC was charged for occupancy
based on budget and not actual expense. Occupancy is an allocated expense. The
allocation methodology to determine an appropriate share of this expense is outlined
during the budget process and approved by the LFCC - a mathematical computation that
includes a combination of FTEs, square footage, and space for LEs. Once the amount of
the expense is calculated, the expense is converted into a percentage. The percentage is
applied against the monthly invoice. Because the monthly invoice to the PCFO has no
variable cost components within it, the expense is not going to fluctuate during the
campaign; the budget and the actual expense would be the same.

The PCFO is following CFC regulation 5 CFR 950.106 permitting the PCFO to recover
the actual costs for administering the campaign and CFC Memo 2013-04 stating that the
actual costs need to be reasonable, allowable and necessary. Reasonable is measured by
what is appropriate or fair. In determining what is appropriate and fair, the PCFO used
the best information available to provide the percentage of occupancy expense being
allocated to the campaign using square footage, PCFO staff and the LE space, providing
the calculation used for reasonableness, and the statement that the total expense reflected
in the allocation included the LE space. During the budget proposal process, the LFCC
did a detailed review of our allocation and approved our methodology as being
reasonable and fair. That allocation which represents the actual use of the allocated
space, represented as a percentage of the entire square footage of the space, was
appropriately applied to the monthly invoice for occupancy.

Payroll Transactions: The PCFO partially agrees with this finding. Once the campaign
budget is approved, payroll allocation updates are made to the automated Payroll system.
Any adjustments or changes in staffing during the year will be made by the Accounting
staff to ensure the records are accurate and to correct any errors. The PCFO will review
the staff allocation quarterly, ensuring the allocations in place accurately reflect any staff
changes. The LFCC will ensure this review has been performed in quarterly
budget/contract review meetings. In addition, the LFCC has directed the PCFO to
maintain historical allocation calculations and changes in order to comply with records
retention requirements as indicated in the CFC regulations. The PCFO believes that this
was a unique and unusual circumstance, as the result of a more manually-based process
being used, and the instance cited occurred outside of our normal procedures and thus the
partial agreement.




                                      39                               Report No. 3A-CF-00-14-050
Improper Matching of CFC Receipts and Expenses                                Procedural

Tracking campaign expenses: The PCFO partially agrees with this finding. To the extent
possible and going forward, the PCFO will work with the LFCC to adopt a stronger
allocation of expense among campaigns that are concurrently running. We are reviewing
system options and determining the most effective and efficient way to ensure the
greatest accuracy with regard to this distribution. The LFCC will ensure a
calculation/application methodology is identified and implemented for the 2014
campaign period and all future campaigns.

The PCFO is going to have to analyze the capability of our system to address the finding
to the best of our ability. The partial agreement stems from the PCFO's belief that we
can address some of the allocations between campaigns quickly but may experience
limitations for others.

LFCC Approval of Campaign Expense Reimbursement                               Procedural

The PCFO and LFCC agree with this finding, and agree that the request and approval of
supplemental reimbursement was not documented. The LFCC will ensure that all future
requests for reimbursement by the PCFO are fully documented in writing, and that
reimbursement be approved by the full LFCC at a scheduled and convened LFCC
meeting.

                 CAMPAIGN RECEIPTS AND DISBURSEMENTS

Pledge Form Errors                                                            Procedural




Importedfrom "Detailed Response with Regard to     Spec~fic   Pledge Card Errors"
provided by the LFCC on October 2, 20 I4.

Error #I~ Samples #32, #52, #93, and #98- PCFO verified that the correct 5 digit code
was entered for the pledge initially, but was revised to undesignated funds after the fact
as a result ofthe IRS revoking the 50 I c3 status for that organization. This agency was
revoked during the payout cycle year, therefore only the unpaid designation balance was
moved to undesignated.

The PCFO currently, and has for many years, provided the Pledge Processing Vendor
with a detailed, written procedure with regard to data entry. We have reviewed this


                                    40                              Report No. 3A-CF-00-14-050
guidance, which includes the procedures with regard to the correction process for pledge
card errors (missing information, mathematical inaccuracies, improper charity codes) as
well as the requirement to change release authorization fields to 'yes' where required, and
have re-emphasized the importance of proper data entry to the current vendor. The
PCFO regularly monitors the accuracy of data entry, and provides guidance with regard
to any recurring issues (specific to an individual employee or process) as well as adhering
to the requirements of 5 CFR 950.402( d) and will continue to do so on a recurring basis.

The data entry system used to manually enter paper pledge cards is preset with a 'no'
indicator for release of name, address and pledge amount to require the data entry clerk to
change the indicator to 'yes' where indicated on the pledge form. We feel this process
ensures the strongest ability to avoid unauthorized release of donor information. We
agree that three ofthe pledge forms reviewed authorized the release of the employee's
email address, and that action was not taken as a result of the 'no' indicator not being
changed to 'yes' in the database.

The LFCC provided guidance at the start of this year's campaign (2014) to the PCFO, as
well as to the Loaned Executives, and as part of Coordinator and Keyworker training
with regard to pledge card accuracy, pledge card changes, limiting the number of
charities per pledge card, as well as ensuring designated amounts match the overall total
on each pledge card. In the case that any pledge card requires correction, it will be
returned to the donor for updating and require initialing by the donor, and not that of the
keyworker or coordinator.

The LFCC has provided guidance to the PCFO, Loaned Executives and Federal Agency
coordinators to ensure the payroll copies of pledge forms are provided to the appropriate
payroll offices. There were two pledge forms identified as payroll copies in the audit.
The PCFO disagrees that these forms are the actual payroll copies, and are actually
photocopies ofthe payroll forms.

Imported from "Detailed Response with Regard to Specific Pledge Card Errors"
provided by the LFCC on October 2, 2014.

Error# 7- Samples# 156 and 157- The pledgeforms on file are not the actual payroll
copy, but are photocopies ofthe payroll copy. The PCFO pulled the envelope which
contained these pledge cards, and ident?fied them as photocopies ofthe pledge card, with
blue post-it flags from the audit affixed to each copy.

The LFCC has directed the PCFO, Loaned Executives and Federal Agency coordinators
to match pledge forms names with those on checks in support of those forms, as well as
to identify on the check and pledge form when a donor provides a check in support of a
Special Event. We believe the pledge form identified with mismatched check
information was payment in support of the special event that the pledge card represented,
and included a combination of cash and donor check that reflected the overall total
collected for the event.



                                     41                              Report No. JA-CF-00-14-050
Deleted by OIG- Not Relevant to Final Report

One-Time Disbursements not Approved by the LFCC                                Procedural

The LFCC agrees with this finding. The LFCC had previously approved a threshold, but
did not review and determine a new threshold annually unless a change was deemed
necessary. The LFCC has created a template of standard meeting agenda items for each
month of the year to ensure required approvals, to include setting one-time disbursement
thresholds, approval of PCFO reimbursement, and other annually recurring approvals and
decisions are made consistently from campaign year to campaign year. This template has
been provided to the OCFC for review.

Deleted by OIG- Not Relevant to Final Re ort

Donor Information Released Improperly                                          Procedural

The PCFO partially disagrees with this finding.

The first pledge referenced identifies a pledge with five designations, and the flag
received in a report from the electronic pledging system, Employee Express (EEX)
indicates the employee authorized the release of their name, address and amount. This
information was not released as the result of a previously recorded request from the
employee directly, asking that their account be marked 'anonymous', overriding any
request received via individual pledge. Deleted by OIG- Not Relevant to Final
Llhri.Jd As such, the pledge amount was released, but no personal information was. The
PCFO and LFCC agree that the basis of this release should be based solely on the current
pledge card in hand, and will no longer use a previously recorded request.

The second pledge referenced indicated that a donor's address was provided, but no
information was released. The flag for this donor, which was also provided in a report
from EEX indicated that no information was to be released, therefore the PCFO followed
the protocol with regard to non-release of the information. While the EEX system will
not allow an employee to enter a home mailing or email address unless the donor
authorizes the release of their information during the EEX pledge process, the PCFO
database is used to determine whether to release information for a specific pledge based
on the indicator flag, and does not have the ability to base that decision on entry of data
into the address or email address field. While we agree this information should have
been released, the ability to modify the PCFO's system to recognize completed fields in
lieu of the indicator to release the information would be significant and costly. We
recommend that the government consortium that oversees the Employee Express system
be required to ensure that the information provided to campaigns be verified as accurate
prior to release.




                                     42                             Report No. 3A-CF-00-14-050
Fundraising Events                                                             Procedural

The PCFO and LFCC partially agree with this finding. The campaign's annual training
for coordinators, keyworkers and other CFC volunteers has included the requirement for
Ethics Office approval for all events for many years, and the campaign will continue that
practice for future campaigns. The LFCC provided this guidance to all Agency
Coordinators, and felt that the burden of the requirement (for ethics approval
documentation) was limited to ensuring the Federal Agency personnel involved in the
campaign were aware of this requirement, along with the requirement that all funds
collected at these events were made to undesignated funds, and that all attendees had the
opportunity to designate to the charity of their choice, ensuring that pledge cards were
available at all events. The LFCC did not feel that the burden of proof rested with the
campaign (requiring the CFC office to collect said approvals, as well as providing some
type of evidence that pledge cards were available at each event.) The LFCC felt that
burden of proof rested with the Federal Agency, and therefore disagrees that the
campaign was required to collect all the documents required as indicated in this finding.

As a direct result of the audit, the LFCC developed new written procedures with regard to
collection of Special Event funds that includes the requirement to include, in addition to
the collection ofthe funds, written ethics approval, and the certification of the Agency or
Event Coordinator (using a newly developed 'Special Event Checklist') that pledge cards
were available at these events. Donor pledge cards received at Special Events were
processed as an individual pledge, and would not be included specifically as a Special
Event pledge. This written procedure was provided to the OCFC and received approval
in September 2014.

                                     ELIGIBILITY

LFCC Meeting Attendance                                                        Procedural

The LFCC agrees with these findings. Effective 1 July 2014, (the annual date for voting
in the new LFCC Chair and Vice Chair), all LFCC members have been made aware of
their specific duties to regularly attend LFCC meetings. In addition, the by-laws have
been modified to provide a procedure to excuse LFCC members with prior approval, and
recording that approval in the meeting minutes, In addition, the by-laws have been
revised to remove the option for 'authorized representatives'. Monthly meeting
dates/times have been established, along with monthly meeting topics/approval
requirements to ensure consistency from year to year regarding regularly occurring
topics/ approvals.

                    Deleted by OIG- Not Relevant to Final Report




                                    43                              Report No. 3A-CF-00-14-050
Respectfully,




Chair


Local Federal Coordinating Committee

                  Deleted by OIG- Not Relevant to Final Report




                                 44                        Report No. JA-CF-00-14-050
                                        Report Fraud, Waste, and 

                                            Mismanagement 

                                                  Fraud, waste, and mismanagement in
                                               Government concerns everyone: Office of
                                                   the Inspector General staff, agency
                                                employees, and the general public. We
                                              actively solicit allegations of any inefficient
                                                    and wasteful practices, fraud, and
                                               mismanagement related to OPM programs
                                              and operations. You can report allegations
                                                          to us in several ways:


                     By Internet: 	                http://www.opm.gov/our-inspector-general/hotline-to­
                                                   report-fraud- waste-or-abuse


                         By Phone: 	               Toll Free Number:                              (877) 499-7295
                                                   Washington Metro Area:                         (202) 606-2423


                            By Mail:               Office of the Inspector General
                                                   U.S. Office of Personnel Management
                                                   1900 E Street, NW
                                                   Room 6400
                                                   Washington, DC 20415-11 00




                                                             -- 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 t:.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 (http:/lwww.opmgov/our-inspector-genera[), 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.

                                                                    45 	                                       Report No. 3A-CF-00-14-050