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Transparency is Purpose of Required Local Audits

As local leaders, you share AFT’s desire to protect members by operating in an open and transparent manner. Engrained in that transparency is for members to know how its local is spending their dues, which helps establish trust and confidence in the local and its officers.  To that end, annual audits of each local’s financial records are required in order for locals to remain in compliance with AFT. Below are the basic rules for what kind of audit a local needs, which is dependent upon how many members it has: fewer than 1,000 or more than 1,000 members.  There are also guidelines for locals with more than 2,500 members.
 
Locals with fewer than 1,000 members
 
Locals with fewer than 1,000 members, excluding retirees, are required to submit to the AFT annually, and within six months of the close of the affiliate’s fiscal year, an audit of its financial statements by an independent CPA in accordance with generally accepted auditing standards, or a financial review of the affiliate’s financial statements conducted by an internal audit committee in accordance with AFT guidelines for audit committees.  Appended to the audit or financial review must be a signed certification by the local’s principal officer that the current audit or financial review has been presented at a specified regular or special meeting of the affiliate’s governing body and published and made available to the members.
 
Locals with 1,000 but fewer than 2,500 members
 
Locals with 1,000 but fewer than 2,500 members, excluding retirees, are required to submit to the AFT annually, and within six months of the close of the local’s fiscal year, an audit or a review of its financial statements—in accordance with generally accepted auditing standards—by an independent CPA whose firm does not have responsibility for the local’s regular bookkeeping or for preparation of its routine financial statements. The audit or the review must be prepared in accordance with generally accepted accounting principles. Appended to the audit or the review submission must be a letter signed by the local’s principal officer and the CPA certifying that the audit or the review has been presented at a specified regular or special meeting of the affiliate’s governing body and published and made available to the members. If financial irregularity or financial misfeasance is indicated, the three full-time AFT officers may require an affiliate to submit an audit, rather than a review. If a local is notified that it must submit an audit, the requirement to do so shall remain in place until the three full-time AFT officers inform the local that it is no longer required. 
 
Where a required audit, independent CPA review or financial review has not been performed and received by the AFT within six months of the close of a local’s fiscal year, the AFT president is authorized to have the applicable audit, independent CPA review or financial review, pursuant to Section 1, 2, or 3 of this Article, conducted at the local’s expense.  Such an analysis will include an examination of the financial records and a reporting of the results to the membership of the local and to the AFT executive council.
 
To assist locals meet the requirements of a financial review, the AFT Financial Services Department has prepared Guidelines for Financial Review Committees, which is available on the AFT LeaderNet website. To have a copy sent to your local or for more information, contact Elizabeth Ferrell at AFT Washington at eferrell@aftwa.org or 206.432.8088.
 
Please send your local’s current audit to:
 
American Federation of Teachers
Financial Services Department
555 New Jersey Avenue, NW
Washington, DC  20001