As the world moves further away from paper systems and toward fully digital processes, unions are joining in the shift. From electronic recordkeeping and digital communications to E-dues and remote voting systems for union officer elections, many unions are embracing the efficiency offered by digitalization. As methods of recordkeeping and communication transition to an online format, it’s critical that unions adjust their internal control systems accordingly. This article will discuss the importance of establishing “audit trails” and how unions can maintain these essential internal controls in a paperless environment.

What Are Audit Trails and Why Are They Important?

An “audit trail” is a critical type of internal control that provides a detailed record of activities and transactions within an organization. Audit trails provide a step-by-step history of organizational and employee activity, helping to prevent and/or detect fraud and abuse. Auditors rely on audit trails to verify financial transactions and approval processes, assess for compliance, and identify potential issues. Before electronic systems became the norm, organizations established audit trails through careful manual documentation of all transactions via handwritten journals and ledgers. The intention was essentially to create a “paper trail” for the purpose of tracking the organization’s financial activity, promoting accountability, and maintaining transparency. Now, in the digital age, the concept of audit trails remains the same, but the process of establishing them has shifted. Whereas the goal was once to create a “paper trail,” you could say the aim is now to establish a “paperless” digital trail.

Verifying Support Documentation and Approval Processes in the Digital World

During an audit, we as auditors look for (1) support and (2) approval. What does this mean? Audits examine both the supporting documentation for financial transactions as well as the internal approval process to confirm that all of an organization’s transactions have been properly authorized and recorded. An organization must be able to provide proof that its financial transactions have gone through the proper approval process. Audit trails can provide this proof by logging actions such as purchase order approvals, invoice signoffs, and approval signatures.

So, how can unions establish audit trails in the digital world? Here are the two most common methods.

1. Specialized Software

One way unions can maintain an audit trail is by purchasing specialized software for document management. These platforms help organizations digitize, store, access, and manage documents. They also record user interactions with documents in real-time, providing a timestamped history of user actions and making it easier to track approvals and spot fraudulent activity. These programs automate the process of tracking and logging changes, so users don’t have to worry about recording every transaction. Document management software also comes with built-in protections such as access controls and secure storage to prevent unauthorized access to confidential information. Software solutions are an excellent way to manage your union’s records and record approval processes, but they can be expensive. As an alternative to these automated programs, unions can establish audit trails using emails.

2. Using Email Records to Create an Electronic Trail

 Another method of recording union activity and transactions for the purpose of creating an audit trail is via email. For example, internal purchase approvals granted over email can be used as evidence that a transaction was authorized. Other email records that can be included as part of an audit trail are purchase orders, invoices, and receipts. However, it’s important to note that email audit trails are subject to human error and may be less secure than specialized document management software.

Staying Audit-Ready

Accurate recordkeeping, document management, and proper approval processes are critical components of audit-preparedness. For additional guidance on keeping your union audit-ready, reach out to our union accounting experts at RBT CPAs. Our team is here for all of your union’s accounting, audit, tax, and advisory needs. Give us a call today to find out how we can be Remarkably Better Together.

In an increasingly technology-centric world, data security is unsurprisingly among the top concerns for many organizations in 2025—and unions are no exception. Unions are responsible for storing and protecting sensitive digital data, including members’ personal details, union financial information, and collective bargaining strategies. Unfortunately, this data can attract cyber criminals seeking to profit from stolen confidential information.

Recent cyberattack incidents involving unions have demonstrated the serious level of damage these attacks can inflict. In July 2024, the Pennsylvania State Education Association (PSEA) experienced a data breach that exposed the personal information of more than 500,000 education professionals. The exposed data included member names, contact information, social security numbers, driver’s license and passport information, banking information (account/routing numbers, PINs, card numbers, etc.), usernames and passwords, health insurance information, and medical records. The PSEA now faces a class action lawsuit by current and former members whose personal data was breached. UNITE HERE, a New York-based union representing workers in the hospitality and food service industries, recently faced a similar class action suit as a result of a 2023 data breach. The union has agreed to pay $6 million to resolve the lawsuit. Unfortunately, these are just two of many examples.

All it takes is one security breach to damage a union both financially and reputationally. Cybersecurity plans are crucial for unions to protect their members, assets, and operational integrity. A strong cybersecurity plan consists of clearly established protocols put in place to minimize the risk of cyber-attacks, as well as a plan for responding to security incidents.

Below are some of the essential components of a comprehensive cybersecurity plan.

• Training and Awareness

Raising awareness is one of the most important preventative measures you can take to safeguard your union against threats. Regular cybersecurity training helps employees to recognize cyber threats, implement safe cyber practices, and prevent potential attacks.

• Password Policies

Just like you wouldn’t leave your house unlocked at night, you should never leave your devices and accounts unsecured. In fact, you should double-lock them…and change the locks out frequently. Strong passwords, multi-factor authentication, and regular password changes help to secure devices and accounts containing important data.

• Encrypted Data

Encrypting sensitive data and communications ensures that your information is unreadable to unauthorized parties.

• Firewalls, Anti-Malware, and Antivirus Software

Protections such as network firewalls, anti-malware, and antivirus software help to secure your online systems by detecting and blocking malicious activity, including viruses, malware, spyware, and ransomware. These defenses act like gatekeepers for your network, monitoring and controlling what goes in and out.

• Updated Software

Outdated software systems are more vulnerable to attack. Regularly updating your union’s software is essential for maintaining your network’s resilience to threats.

• Regular Risk Assessments

Regular risk assessments—conducted either internally or by a third-party cybersecurity service provider—are necessary for identifying system weaknesses and areas for improvement.

• Response Plan

All unions should create a response plan outlining the steps to be followed in the case of a cybersecurity threat or incident. CISA (Cybersecurity and Infrastructure Security Agency) provides this guide for creating an Incident Response Plan (IRP), identifying actions that should be taken by an organization before, during, and after a cyber incident.

Protect Your Union’s Financial Health

Creating and implementing a comprehensive cybersecurity plan is a critical step you can take to safeguard your union’s sensitive information. When it comes to protecting your union’s financial health and integrity, partnering with RBT CPAs is another measure you can take. RBT CPAs has been serving organizations in the Hudson Valley and beyond for over 55 years. Our experts are here to support all of your union’s accounting, advisory, audit, and tax needs. Contact RBT CPAs today to find out how we can be Remarkably Better Together.

Unions, like any other organization, are subject to financial recordkeeping requirements. The Labor-Management Reporting and Disclosure Act (LMRDA) provides specific guidelines for unions in regard to financial records and retention requirements, with the purpose of ensuring transparency and promoting democratic practices within labor organizations. According to the LMRDA, “unions must maintain financial records and other related records that clarify or verify any report filed with the Office of Labor-Management Standards (OLMS).” Your union’s treasurer and president—or the corresponding principal officers—are responsible for ensuring these recordkeeping requirements are met.

What records do you need to retain?

Per an OLMS Fact Sheet providing guidance on LMRDA recordkeeping requirements, examples of records that should be retained include, but are not limited to:

• Receipts and disbursement journals
• Cancelled checks and check stubs
• Bank statements
• Dues collection receipts
• Employer checkoff statements
• Per capita tax reports
• Vendor invoices
• Payroll records

In addition, unions should retain records that help explain or clarify financial transactions, including:

• Credit card statements and itemized receipts for each credit card charge
• Former members’ ledger cards
• Union copies of bank deposit slips
• Bank debit and credit memos
• Vouchers for union expenditures
• Internal union financial reports and statements
• Minutes of all membership and executive board meetings
• Accountants’ working papers used to prepare financial statements and reports filed with OLMS
• Fixed assets inventory

Electronic records and software needed to complete, read, or file reports for the Office of Labor-Management Standards (OLMS) must also be retained. If you are not sure about whether to keep a record, you can contact the nearest OLM field office for advice.

How long do you need to retain records?

You must retain financial records (and other related records) for 5 years after a report is filed with the Office of Labor-Management Standards, during which time those records must be available for examination.

2025 Compliance Audit Finding Examples

OLMS conducts compliance audits of local unions under the Compliance Audit Program (CAP), following which closing letters are sent to the unions detailing any reporting or recordkeeping violations or deficiencies identified during the audit process. The closing letters for various unions audited thus far in 2025 can be viewed here. These letters reveal that, when it comes to OLMS recordkeeping requirements, details matter. Below are some examples of violations listed in these letters:

• Missing receipts for meal expenses
• Receipts for meal expenses were not itemized
• Records of meal expenses did not include written explanations of union business conducted or the names and titles of people incurring the charges
• Missing invoices for disbursements to vendors
• Inadequate documentation for lost wage reimbursement payments to union officers and employees
• Lack of documentation for reimbursed expenses and debit card expenses incurred by union officers
• Inadequate documentation to support mileage reimbursements
• Interest earned on savings accounts was not recorded in monthly financial books

As you can see, unions must accurately report financial activity and provide proper supporting documentation in order to avoid violations.

Contact Us

As you work to keep your union in compliance with recordkeeping requirements, you can count on RBT CPAs for all of your accounting, advisory, audit, and tax needs. Contact us today to learn how we can be Remarkably Better Together.

Labor Unions operate within a unique regulatory environment, and as such, must constantly monitor compliance in their financial processes. Compliance within labor unions is essential for maintaining the union’s financial and reputational integrity, as well as protecting the rights of both workers and employers. Compliance must be monitored at all levels of union operations, including among the contractors who employ union workers. One critical way to monitor compliance among union contractors is through payroll audits. Payroll audits ensure that contractors are correctly submitting union benefit contributions in compliance with Collective Bargaining Agreements (CBAs). It is important for unions to conduct regular internal payroll audits throughout the year in order to uphold the terms of CBAs, protect worker rights, minimize fraud risk, and avoid potentially serious penalties.

What happens during a union payroll audit?

During a union payroll audit, the auditor reviews a contractor’s payroll records for compliance with the terms of the union’s Collective Bargaining Agreement. Specifically, union payroll audits look to verify that contractors are reporting and remitting employee benefit contributions accurately. Payroll audits typically involve reviewing payroll records, verifying hours worked, checking for variable payments, and analyzing data for accuracy and compliance with the CBA. The goal is to protect the plan, trustees, and participants by verifying contributions are complete and accurate, and to prevent delinquencies and collections issues.

Who conducts union payroll audits and how often?

Payroll audits can be conducted by the union or benefit office. The union or benefit office can also obtain assistance from an outside vendor with experience in payroll audits, such as an accounting firm. Payroll audits can be conducted at various intervals, including annually, quarterly, and/or monthly. We recommend selecting a group of contractors each cycle to ensure that all are reviewed over a four-year period.

What are some common findings on union payroll audits?

Common findings include misreporting of hours and not properly submitting benefit contributions.

Why is it important for unions to carry out regular internal payroll audits?

Regular audits can lead to improved reporting accuracy, reduce delinquencies, prevent fraud, and help trustees identify problematic employers. They also provide feedback to plan administrators to ensure agreements are in place and contributions are made correctly. In addition, payroll audits help ensure compliance with ERISA (Employee Retirement Income Security Act) and other relevant regulations. They are required for ERISA audits. Frequent internal audits help the union avoid serious fines and penalties for noncompliance with Department of Labor regulations.

Looking for guidance?

One of the best ways to ensure compliance is by partnering with a reputable accounting firm like RBT CPAs. RBT CPAs’ experts are available to conduct payroll audits for your union and/or provide audit guidance. You can count on RBT CPAs’ accounting professionals to help maintain your union’s reputation for transparency and accountability. Our firm has been operating in the Hudson Valley and beyond for over 55 years, and we believe we succeed when our clients succeed. To learn more about our accounting, tax, audit, and advisory services, give us a call today.

Internal controls are mechanisms that help to ensure an organization’s financial integrity. Unions rely on these internal controls to minimize financial risk, prevent fraud, and maintain the accuracy of financial records. It is crucial that these processes are regularly assessed in order to maintain their effectiveness.

What are Internal Controls?

Internal financial controls are processes designed to help prevent fraud, enhance reliability of financial statements, reduce the risk of unexpected financial losses, and ensure compliance with laws and regulations. Internal controls include procedures for authorization, record keeping, reconciliations, and auditing.

Why Do Unions Need Internal Controls?

Strong internal controls serve the following purposes for unions: they protect union funds, safeguard the union’s reputation, promote transparency, provide data for decision-making, and instill member trust.

Union officials are responsible for ensuring that union funds are used solely for the benefit of the union and its members. To ensure the proper use of funds, union leadership must maintain well-monitored systems for the following financial processes:

• Collecting member dues
• Managing union funds
• Forming budgets
• Keeping financial records
• Providing financial reports to members
• Conducting internal audits
• Managing union bank accounts and credit cards

Preventing fraud, corruption, and financial risk is key to maintaining the reputation and integrity of any organization. The U.S. Department of Labor discusses several safeguards for preventing abuse in unions including:

• Division of financial duties amongst multiple individuals
• Issuing of records and receipts to members for dues paid
• Maintenance of records and receipts for all union income and expenses
• Transparency regarding union officer salaries and allowances
• Cosigning of all checks from the union’s bank account
• Full reports of union finances given by the financial officer at each membership or executive board meeting
• Prior authorization for large or unusual transactions
• Internal audit committees (or trustees)
• Regular audits of the union’s financial records

Assessing Your Union’s Internal Controls

Regularly evaluating your union’s internal controls is a critical step for minimizing financial risk. Weaknesses in internal controls can develop if union officials misunderstand the guidelines or if the guidelines are not updated to match changing regulatory requirements.  All of the mechanisms discussed above must be periodically reviewed to ensure that they are achieving their objectives in preventing risk to the union.

Reviewing internal controls may involve the use of risk assessments, which identify potential threats and weaknesses in the operations of the organization. Audits of financial records can also help to identify gaps in compliance. If weaknesses are found, then operating procedures can be amended accordingly.

It is critical to stay on top of your union’s financial health to reduce the risk of reputational and operational damage.

Looking to test your union’s internal control processes? RBT CPAs’ experts are happy to provide internal control assessments for your union. At RBT CPAs, we understand the unique compliance and regulatory environment that you operate within. Our firm has been serving organizations in the Hudson Valley and beyond for over 50 years. You can count on RBT CPAs’ professionals to help maintain your union’s reputation for transparency, accountability, and trustworthiness by providing exceptional accounting, advisory, audit, and tax services.

For more information about how our firm can help to maintain the financial health of your union, visit our website or give us a call.