U.S. Office of Personnel Management
Offices of CFC Operations and the Inspector General
March 2004

2004 CFC Audit Guide

($1 Million and Greater)

• Chapter I
• Chapter II
• Chapter III
• Contributors of this Guide
• Appendix A
• Appendix B
• Appendix C
• Appendix D
• Appendix E
• Appendix F

CHAPTER I

Reporting Requirements and Other Considerations

Purpose of the Guide

Objectives

Overall objectives of the Office of Personnel Management (OPM) in implementing these financial audit and agreed-upon procedure (AUP) attestation requirements are to gain the following assurances:

1. Principal Combined Fund Organizations' (PCFO) fiscal year financial statements are fairly stated in all material respects in accordance with generally accepted accounting principles (GAAP) and OPM's prescribed accounting practices.

2. PCFO's Combined Federal Campaign (CFC) operations are conducted in accordance with the CFC regulations and OPM guidance and that controls over compliance with CFC regulations and OPM guidance are effective.

Use of this Guide

This CFC Audit Guide (Guide) must be used by Local Federal Coordinating Committees (LFCC) and PCFOs participating in local CFCs. In addition, the Guide must be used by an independent public accountant (IPA) hired by the LFCC and PCFO.

This Guide is divided into three sections.

Chapter I provides general information about Guide requirements and addresses the purpose of the Guide, the scope of required engagements, management and IPA responsibilities, reporting, effective dates, examination periods and due dates.

Chapter II provides specific procedures for the LFCC to perform to determine the PCFO's compliance with 5 CFR Part 950 and OPM guidance, and evaluate the PCFO's internal controls over compliance.

Chapter III provides compliance-related agreed-upon procedures, related reporting requirements and other matters for IPAs to perform.

Authorization

OPM promulgated 5 CFR Part 950 pursuant to Executive Orders 12353 and 12404 and Public Law 100-202 to provide a system for administering the annual charitable solicitation drive among federal civilian and military employees. These regulations set forth ground rules under which charitable organizations receive federal employee donations.

CFC regulation 5 CFR § 950.105(d)(9) requires the PCFO to submit to the LFCC an audit for each campaign. The audit must be performed by an IPA in accordance with generally accepted auditing standards (GAAS) and OPM guidance.

CFC Memorandum 2004-4, in transmitting this Guide, clarifies 5 CFR § 950.105(d)(9) by stating that the audit must by in the form of an agreed-upon procedures (AUP) engagement to be performed by an IPA regarding PCFO's compliance with CFC regulations. The AUPs also provide procedures regarding the effectiveness of internal controls concerning PCFO program compliance.

Accounting Requirements - See Appendix A.

CFC Reporting Requirements

The Guide requires the following documents from campaigns with receipts $1 million and greater:

PCFO, LFCC and IPA Reporting Responsibilities

Campaigns with Receipts $1 Million and Greater

This Guide requires the PCFO to provide four items to the LFCC annually each August 1. The LFCC must forward copies of these items to OPM by September 15. In addition, the LFCC is required to provide one item to OPM annually no later than September 15. If either of these dates falls on a weekend or holiday, then provide the items on the next business day. The Guide requires:

1. The PCFO to provide its most recent organizational-wide financial statements, as of and for the fiscal year ended, that are prepared in accordance with GAAP and audited by an IPA in accordance with GAAS. The PCFO must provide the financial statements and the related audit report to the LFCC no later than August 1. The LFCC must forward a copy to OPM no later than September 15.
2. The PCFO to prepare, as of and for the campaign period ended, CFC activity only financial statements that are in accordance with GAAP and audited by an IPA in accordance with GAAS. See Appendix A for illustrative financial statements. The PCFO must provide the financial statements and all related audit reports to the LFCC no later than August 1. The LFCC must forward a copy to OPM no later than September 15.
3. The LFCC, with assistance from the PCFO, to conduct a compliance assessment by performing certain procedures over the PCFO's compliance with CFC regulations and OPM guidance, and the effectiveness of the PCFO's internal controls over its compliance for the Fall 2003 campaign. The LFCC must perform the procedures as described in Chapter II below and report on any instances of non-compliance. See Appendix B for a sample report. The LFCC must provide its report to OPM no later than September 15.
4. The IPA to perform specified agreed-upon procedures (AUP) over the PCFO's compliance with CFC regulations and OPM guidance, and the effectiveness of the PCFO's internal controls over its compliance as of the end of the Fall 2002 campaign period^[1] and prepares an AUP report on the results in accordance with Statements on Standards for Attestation Engagements (SSAE) Number 10 codified in the AICPA's Professional Standards - Attestation Standards (AT) Sections 101, 201 and 601. See Appendix B for pro forma reports. The PCFO must submit the IPA's report to the LFCC by August 1. The LFCC must provide a copy to OPM by September 15.
5. If the AUP report identified areas of non-compliance or control weaknesses, then the PCFO must submit to the LFCC with a copy to OPM a corrective action plan for addressing the issues no later than September 15.

Where applicable, we encourage the performance of any of the work described in the requirements above to be performed throughout the year or at interim periods.

Corrective Action Plan

Corrective Action Plan. To assist OPM and the LFCC to resolve deficiencies in financial statements, internal controls and regulation and guidance compliance, a PCFO must develop and submit a corrective action plan, reviewed and approved by the LFCC, directly to OPM within 45 days of report issuance. The corrective action plan, an essential part of the report requirement for OPM, is prepared by PCFO management, and is presented on the entity's letterhead and includes the name, title, and telephone number of the responsible PCFO official. In the plan, management:

1. Describes the corrective action taken or planned in response to findings identified in the IPA's report.

2. Comments on the status of corrective action taken on any unresolved findings included in prior IPA reports.

See Appendix B, Example 4, for a suggested corrective action plan format.

The requirements of this Guide should serve as the basis for establishing certain performance measures, which will be used to evaluate future PCFO compliance by campaign activity.

LFCC Responsibilities

The LFCC is responsible for providing oversight of the campaign's operations and its staff. This includes verification of the existence of accounting procedures sufficient to safeguard the finances of the CFC as defined in 5 CFR Part 950; monitoring of campaign overall performance as required by the CFC rules; review of evidence of disbursement controls through LFCC approval and monitoring of the budget; review of the fundraising practices; and, periodic review of financial reports.

The LFCC is also responsible for close review of the audit report. Therefore, IPAs should present findings directly to the Chair of the LFCC, as well as the PCFO.

The LFCC is responsible for ensuring that the expenses charged against CFC funds are valid and appropriate expenditures and that any discrepancies identified during the audit processes are rectified.

PCFO Responsibilities and Assertions

Among other PCFO responsibilities discussed in this Guide, the PCFO is responsible for:

1. Submitting to the LFCC an audit of collections and disbursements for each campaign managed [5 CFR § 950.105(d)(9)].

2. Complying with 5 CFR Part 950 and OPM guidance.

3. Establishing and maintaining effective internal controls.

4. Evaluating and monitoring the effectiveness of internal controls.

5. Providing the audit IPA with written representations, in a separate report, about all matters in paragraph 68 of SSAE Number 10, AT Section 601.

6. Maintaining accounting records for 3 years after the end of the campaign period. The end of a campaign period is determined by when the PCFO makes final disbursements to charitable organizations and when the PCFO finalizes (closes) its accounting records.

The PCFO must comply with the above requirements. Failure to comply with this Guide may result in the organization being barred from serving as the PCFO for one year in accordance with 5 CFR § 950.105(e) or subject to other sanctions cited in 5 CFR § 950.603.

IPA Qualifications and Responsibilities

This Guide requires a combination of an annual financial audit, review, or compilation and reports on AUPs to be conducted by a licensed IPA in accordance with GAAS. Therefore the requirements must be performed by a licensed IPA who meets the general standards of qualification, independence, due professional care and quality control. The IPA must follow the standards and requirements contained in GAAS, SAS Number 1, SAS Number 41, SAS Number 54, SAS Number 78, SAS Number 99, and SSAE Number 10 as they pertain to the following:

• Qualifications and General Standards;
• Field work and Reporting Standards;
• Engagement Scope;
• Engagement Letter. The letter must include, at a minimum, the following:
  1. A statement that the engagement is to be performed in accordance with GAAS and AICPA Attestation Standards as applicable.
  2. A statement that both parties understand that the OPM intends to use the IPA's report to help carry out its responsibilities for oversight of the CFC.
  3. A statement that the IPA is required to provide OPM's Director and Office of the Inspector General (OIG), as well as the U.S. General Accounting Office (GAO), or their representatives, access to working papers or related documents to review the engagement.
• Obtaining PCFO Representations;
• Fraud and/or Illegal Acts;
• Due Care and Professional Skepticism;
• Obtaining an Understanding of Internal Control Structure;
• Obtaining Sufficient Evidence; and
• Working Papers.

Engagement Quality. OPM and the OIG have implemented procedures for evaluating work performed by IPAs. As part of this evaluation, the IPA shall make working papers available upon request to OPM, the OIG or other representatives of OPM. To facilitate these requests, management's reporting package should include an information sheet identifying the name, address, and telephone number of the partner on the engagement. Working paper reviews normally will take place at the PCFO's office.

Whenever an OPM evaluation of a report or working papers discloses inadequacies by the IPA, the IPA may be asked to take corrective action. If OPM determines the report and working papers are substandard or contain inadequacies, referral to the AICPA and the cognizant State Board of Accountancy will be considered. When circumstances warrant, OPM will consider further action including notification to appropriate officials with authority to consider debarment from federal programs.

Future Revisions

It is the IPA's responsibility to ensure he/she is using the most current version of this Guide. OPM periodically revises CFC regulations and guidance and plans to issue revisions to this Guide to reflect these changes. Until the Guide is revised, inconsistencies may exist between the Guide and CFC regulations and OPM guidance. IPAs should follow the CFC regulations in effect for the period being examined and modify their procedures to test the CFC compliance requirements accordingly.

The IPA is also responsible for monitoring relevant changes in GAAS, including AICPA SASs and SSAEs, and for considering the implications of changes on the engagement.

Technical questions about applying the Guide and suggestions for improving future Guides should be sent to:

U.S. Office of Personnel Management
Director
Office of CFC Operations
1900 E Street NW, Room 5450
Washington, D.C. 20415-0001
Fax: (202) 606-5056
Email: cfc@opm.gov

CHAPTER II

LFCC Procedures for Monitoring PCFO Compliance

Procedures

Chapter II contains specific procedures for three requisite elements to be followed by the LFCC. The primary objective of these procedures is to determine PCFO compliance with 5 CFR Part 950 and OPM guidance. In addition, the LFCC will evaluate the effectiveness of PCFO controls over compliance with 5 CFR Part 950 and OPM guidance. If the PCFO's system of accounts and records make the use of these specific procedures inappropriate, the LFCC may request OPM to consider alternative procedures designed to produce similar results. These procedures should be performed on the Fall 2003 CFC. The Fall 2003 campaign is defined as the campaign that was solicited in the Fall 2003. The PCFO must assist the LFCC in completing these procedures by obtaining all necessary information described below and providing it or making it available to the LFCC. The LFCC must report on the results of its assessment, including any instances of non-compliance (see Appendix B, Sample Report #5, titled Illustrative LFCC Report on Findings on page B-4). The LFCC must attach a copy of the "Pledge Card Questionnaire" to its report. The three requisite elements include the following:

• PCFO General Compliance
• Campaign Brochure
• Pledge Card Processing Controls

PCFO General Compliance

Timeliness of PCFO Activity. The campaign period relies on a timeline determined by CFC regulation. Adherence to the timeline and compliance with critical activities such as selection of the PCFO, reporting of campaign results and timely disbursements of contributions and acknowledgement of donors is essential. Perform the following procedures:

1. Determine if the PCFO filed a timely application with the LFCC [5 CFR § 950.105(c)].

   1. Obtain the public notice (usually a legal notice in the newspaper) that contains the due date for PCFO applications from the PCFO or LFCC.

   2. Obtain a copy of the PCFO application that includes the submission date from the PCFO or LFCC.

   3. Compare the submission date on the PCFO application with the due date on the public notice.

Evaluation: Report as a finding all instances where the PCFO's application was submitted after the LFCC's due date.

2. Determine if the PCFO provided adequate opportunities for local federations and organizations to offer suggestions relating to the operation of the campaign, campaign materials, and training [5 CFR § 950.105(b)].

a. Obtain evidence from the PCFO that it provided federations and organizations with opportunities to offer suggestions. Evidence can be letters to federations and organizations, minutes from meetings where federations and organizations were present, or some other form.

b. If the PCFO cannot provide physical evidence that local federations and organizations were provided with opportunities to offer suggestions, then select a representative sample of 3 local federations and organizations. Contact the federations and organizations to determine if they were afforded the opportunity to offer suggestions. Whenever possible, the federations or organizations selected by the LFCC should not be affiliated or related to the PCFO. For example, if the PCFO is a United Way, then the representative sample should not include (if possible) other local United Ways participating as federations or United Way affiliated member organizations.

Evaluation: Report as a finding where the PCFO did not provide local federations and organizations the opportunity to offer suggestions relating to the operation of the campaign, campaign materials, and training.

3. Determine if the PCFO filed OPM Form 1417, Campaign Results Code Sheet, by March 1, 2004 with OPM [CFC Memorandum 2003-2].

a. Obtain a printed OPM Form 1417 with a submission date from the PCFO.

b. Compare the submission date on the OPM Form 1417 with the March 1 due date.

Evaluation: Report as a finding all instances where the PCFO did not file the OPM Form 1417 with OPM by March 1st.

4. Determine if the PCFO notified federations and organizations of the amount designated, if any, and of the amount allocated from undesignated contributions by March 15, 2004 [5 CFR § 950.901(i)(1) and CFC Memorandum 1998-2].

a. Obtain from the PCFO copies of notification letters with dates sent to federations and organizations that informed them of designated and undesignated amounts received from donors.

b. Compare the date of the notification letters to the March 15 due date.

Evaluation: Report as a finding all instances where the PCFO did not notify federations and organizations of the amount designated, if any, and of the amount allocated from undesignated contributions by March 15.

5. Determine if the PCFO forwarded a list of donors that requested their name and address to be released to recipient organizations by March 15, 2004 [5 CFR § 950.601(c) and CFC Memorandum 1998-2].

a. Obtain a copy of the letters with dates sent to organizations that contained the list of donors who requested their name and address be released.

b. Review the list of contributors to determine that it omitted the amount designated and social security numbers.

c. Review the list to determine that it clearly identified the federation member organization (not just the federation) to receive the donor's name and address.

Evaluation: Report as a finding all instances where the PCFO did not forward a list of donors that requested their name and address be released to recipient organizations by March 15. Report all instances where the list did not omit the amounts designated and donor social security numbers. Report all instances where the list did not clearly identify the organization to receive the donor's name and address.

6. Determine if the PCFO made initial disbursements to federations and organizations by April 1, 2004 and monthly thereafter [5 CFR § 950.901(i)(2)].

a. Select 3 representative federations and 3 representative unaffiliated organizations from the local campaign.

b. Obtain canceled checks made payable to each of the selected organizations for each disbursement during the campaign period from the PCFO.

c. Compare the date of the first check to the April 1 due date.

d. Compare the dates of the remaining checks to ensure that there is one check for each subsequent month after April.

Evaluation: Report as a finding all instances where the PCFO did not make the initial disbursement by April 1 and monthly thereafter.

Campaign Brochure

1. Obtain the campaign brochure from the Fall 2003 campaign from the PCFO. Review the campaign brochure and determine if the campaign brochure contained required information for the following areas:

a. Required OPM information (OPM National List with instructions) [5 CFR § 950.401(g)(1) and CFC Memorandum 2003-8].

b. A list of eligible voluntary organizations (divided into national, international and local sections) and in the order prescribed by CFC Memorandum 2003-8 [5 CFR § 950.401(g)(2)];

c. A statement informing employees of their right to make a choice to contribute or not to contribute [5 CFR § 950.401(e)];

d. A statement informing employees of their right to designate or not to designate [5 CFR § 950.401(e)];

e. A statement informing employees of their right to give a confidential gift in a sealed envelope [5 CFR § 950.401(e)];

f. No organization symbols or other distractions were in use that could compete for the donor's attention [5 CFR § 950.401(f)].

g. A description of the CFC program [5 CFR § 950.401(g)(1)(i)];

h. An explanation of the payroll deduction privilege [5 CFR § 950.401(g)(1)(i)];

i. An explanation of the distribution procedures for undesignated funds [5 CFR § 950.401(g)(1) and CFC Memorandum 2003-8];

j. A clear statement urging federal donors to direct their gifts to specific agencies, groups, or options of their choice by designating in the boxes provided up to five organizations

[5 CFR § 950.401(g)(1) and CFC Memorandum 2003-8];

k. A statement that designations may only be made to listed organizations and that write-in designations are prohibited [5 CFR § 950.401(g)(1)(ii)];

l. Instructions on how to obtain information about the programs and finances of the participating organizations [5 CFR § 950.401(g)(1)(iii)]; and

m. A statement informing employees of their rights to pursue complaints of undue pressure or coercion in federal fund-raising activities [5 CFR § 950.401(g)(1)(iv)].

2. Determine whether the agency listing in the brochure included an "Introduction" with the following definitions as required by CFC Memorandum 2003-8:

a. Federation;

b. Unaffiliated Organizations;

c. International General Designation Option; and

d. Undesignated Funds.

3. Determine whether the agency listing in the brochure included a section titled, "National/International Organizations" which contained:

a. An accurate reproduction of the OPM Director's list (unless there were waivers) [5 CFR § 950.401(g)(2) and CFC Memorandum 2003-8];

b. The title "National Unaffiliated Organizations" preceded the listing of unaffiliated agencies [5 CFR § 950.401(g)(2) and CFC Memorandum 2003-8]; and

c. A list of National federations with their member organizations and identified them as federations [5 CFR § 950.401(g)(3)].

4. Determine whether the agency listing in the brochure included a section titled, "Local Organizations" and contained:

a. A 25-word description, including the Employer Identification Number (EIN), and if applicable, the legal name of the organization; the percentage of their administrative and fundraising expenses for the preceding calendar year and, a telephone number for each organization listed [ 5 CFR § 950.401(g)(2)];

b. A code number for each organization listed [5 CFR § 950.401(g)(3)];

c. A title "Local Unaffiliated Organizations" preceding the listing of local unaffiliated agencies [5 CFR § 950.401(g)(2) and (3)]; and

d. Local federations listed with their member organizations and identified as federations[5 CFR § 950.401(g)(3)].

Evaluation: Report as a finding all instances where the PCFO did not include the required information in the local campaign brochure or included items not allowed by the regulations (item 1.f).

Pledge Card Processing Controls

The PCFO is required to follow certain regulations and OPM guidance in preparing and processing pledge cards [ CFC Memorandum 2003-6, 5 CFR § 950.105(d)(5), 5 CFR § 950.402(a), 5 CFR § 950.402(b)] and should have effective internal controls in place to ensure compliance [5 CFR § 950.105(d)(1), 5 CFR § 950.105(d)(4), 5 CFR § 950.402(c), and 5 CFR § 950.402(d)].

1. Obtain a pledge card used in the Fall 2003 campaign from the PCFO. Compare this pledge card to the model pledge card provided by OPM (CFC Memorandum 2003-6). Determine if the pledge card used in the local campaign was:

a. Consistent with these regulations and instructions by the Director [5 CFR § 950.105(d)(5)];

b. Reproduced based on the model pledge card provided by the Director each year at the local level [5 CFR § 950.402(a)];

c. Not modified from the model pledge card unless approved by the Director in advance, except for incorporating additional giving levels and including their award recognition program [5 CFR § 950.402(b)];

Evaluation: Report as a finding all instances where the PCFO's prepared local pledge card is not in accordance with 1a-c.

2. Obtain from the PCFO a completed "Pledge Card Questionnaire" (See Appendix C, page C-1) and a walkthrough of the process. The walkthrough should include the PCFO physically demonstrating to the LFCC how pledge cards are received, validated, processed, and accurately entered into pledge systems. The LFCC should also note any findings identified by the Independent Public Accountant in its test of pledge cards (page III-1, step 2) from the previous Agreed-Upon Procedures audit and consider these findings for areas of improvement in the PCFO's pledge processing.

a. Using the "Pledge Card Questionnaire", determine whether or not the PCFO described controls for all questions.

Evaluation: Report as a finding all instances where the PCFO did not describe controls for all questions on the "Pledge card Questionnaire".

CHAPTER III

IPA Agreed -Upon Procedures (SSAE 10)

Procedures

Chapter III contains specific procedures for four requisite elements to be followed during the examination by the IPA. The primary objective of these procedures is to determine PCFO compliance with 5 CFR Part 950 and OPM guidance. In addition, the IPA will evaluate the effectiveness of PCFO controls over compliance with 5 CFR Part 950 and OPM guidance. Should the PCFO's system of accounts and records make the use of these specific procedures inappropriate, the IPA may request OPM to consider alternative procedures designed to produce similar results. These procedures should be performed on the CFC activity from the Fall 2002 campaign. The Fall 2002 campaign is defined as the campaign that was solicited in the Fall 2002 with receipts and distributions through the early months of 2004. The IPA must prepare an AUP report on the results in accordance with SSAE Number 10 and Attestation Standards (AT) Sections 101, 201 and 601. The IPA must attach the "Schedule of Campaign Receipts and Disbursements" and "Distribution Schedule" used below to the AUP report or provide them electronically to the LFCC and OPM. The four requisite elements include the following:

• Pledge Card Tracking System
• PCFO Budget and Administrative Expenses
• Receipt and Disbursement of Funds
• Status of Prior Year's Findings

Pledge Card Tracking System

In order for the PCFO to properly follow the regulations cited in Chapter II under the "Pledge Card Processing Controls" section, they must enter the information accurately in their pledge card tracking system and have sufficient quality controls to ensure accurate payments to charitable organizations. Test the PCFO's pledge card tracking system by performing the following steps.

1. Select a representative sample of 25 pledge cards from the campaign. Pledge cards selected should represent all types of donations, including cash, designated and undesignated funds.

2. Trace and determine that the following information from each pledge card agrees to the PCFO's automated system or pledge records:

a. Donor Name

b. Each Charity Code Number and Amount Donated

c. Total Amount Donated

d. Donor's Choice to Release or Not to Release Name and Address

e. Donor's Choice to Release Email Address.

Evaluation: Report as a finding all instances where the PCFO's pledge tracking system does not agree with the pledge card.

PCFO Budget and Administrative Expenses

During the annual PCFO application process, a federation, charitable organization, or combination of charitable organizations or federations(s) wishing to administer the local CFC, must submit a written campaign plan to the LFCC on or before the deadline set by the LFCC. The plan must be in sufficient detail to allow the LFCC to determine if the applicant could administer an efficient and effective CFC. The plan should also include a CFC budget that details all costs estimated to be required to operate the CFC. The costs in the budget should be based on estimated actual expenses, not on the percentage of the funds raised in the local campaign [5 CFR § 950.105(c)].

The PCFO may recover from the gross receipts of the campaign its actual costs of administering the local campaign. In no event should the amount recovered for expenses exceed by more than 10 percent the estimated budget submitted. The campaign expenses must be shared proportionately by all the recipients according to their percentage share of gross campaign contributions [5 CFR § 950.106].

1. Obtain the PCFO's 2002 application from the LFCC or PCFO. Review for a signed statement by an appropriate official of the PCFO that it will:

a. Administer the CFC fairly and equitably [5 CFR § 950.105(c)(2)(i)];

b. Conduct the applicant's non-CFC operations separately from the campaign operations [5 CFR § 950.105(c)(2)(ii)]; and

c. Be subject to the decisions and supervision of the LFCC [5 CFR § 950.105(c)(2)(iii)] and to the provisions of 5 CFR § 950.403 and 5 CFR § 950.603 [5 CFR § 950.105(c)(3)].

Evaluation: Report as a finding all instances where the PCFO did not include the signed statements in #1 above.

2. Obtain a dated copy of the LFCC minutes documenting their selection of the PCFO and their approval of the PCFO's campaign plan and budget. Compare the date of the LFCC minutes to the March 15 deadline set by 5 CFR § 950.801(a)(3).

Evaluation: Report as a finding all instances where the LFCC did not select the PCFO and approve the PCFO's campaign plan and budgeted expenses, on or before March 15.

3. Review the PCFO's budgeted expenses from the Fall 2002 campaign to determine that they are based on actual expenses and not a percentage of funds raised [5 CFR § 950.105(c)(1)].

a. Obtain a copy of the PCFO campaign plan from the Fall 2002 campaign, including budgeted expenses, and a detailed list of the prior year's actual expenses from the PCFO.

b. Compare the expense categories and amounts in the Fall 2002 campaign's budget to the prior year's actual expenses. The categories and amounts should be similar.

c. Review the PCFO budget description in the Fall 2002 campaign's plan. Make sure the description does not state that the budget is based on a percentage of funds raised.

d. Review LFCC minutes for discussions and justification of PCFO budgeted expenses. Make sure the discussion/justifications do not state that the budget is based on a percentage of funds raised.

Evaluation: Report as a finding all instances where the PCFO's budgeted expenses are not based on estimated actual expenses or where the budgeted expenses are based on a percentage of funds raised.

4. Obtain a detailed list of actual expenses incurred by and reimbursed to the PCFO for administering the Fall 2002 campaign. Trace and determine that actual expenses incurred agree with the PCFO's general ledger.

5. Compare the PCFO's actual expenses to their budgeted expenses and determine whether actual expenses exceeded budgeted expenses by more than 10 percent. If the actual expenses exceeded budgeted expenses by more than 10 percent, review accounting records to determine whether the PCFO absorbed (did not reimburse itself) the excess amount over 10 percent. Amounts recovered by the PCFO in excess of the 10 percent should be set out as not charged to the campaign, unless they were approved by OPM's Director [5 CFR § 950.106(a)].

Evaluation: Report as a finding all instances where the PCFO's actual expenses do not agree to the general ledger and where actual expenses reimbursed are more than 110 percent of the budgeted expenses and not approved by OPM's Director.

6. Obtain a copy of or document the PCFO's policy for campaign expense reimbursement. Compare the PCFO's policy to 5 CFR § 950.106(b), which states that the PCFO should cover all campaign expenses at the start of the campaign and then recover their costs from the gross receipts of the same campaign. The PCFO may obtain a commercial loan or line of credit. It may not, however, use receipts from a prior campaign to cover current campaign expenses.

Evaluation: Report as a finding all instances where the PCFO is not properly matching campaign receipts and expenses.

7. Either from the detailed list of actual expenses obtained in #4 above or from the PCFO's accounting records (journal or general ledger) that support the list of actual expenses obtained in #4 above, select a representative sample of 10 actual expenses incurred by and reimbursed to the PCFO for the Fall 2002 campaign. At least 2 of the actual expenses should be allocated expenses. For example, some employees do not work full time on CFC activities and their salaries may be allocated on a time equivalent ratio or rent/utilities may be allocated based on a percentage of square feet occupied by CFC staff [5 CFR § 950.106(a)].

a. For the 8 expenses that are not allocated, trace and determine that the expense agrees back to supporting documentation that contains a justification that the expense was CFC related. Supporting documentation should include a canceled check, invoice, billing, receipts, travel reports, or other supporting documentation.

b. For the 2 allocated expenses, review the allocation methodology to determine that the methodology is reasonable and that the CFC incurs a fair share of the costs. In addition, the allocations must be based on actual amounts that can be traced and agreed to the general ledger. For example, if the PCFO is allocating 10 percent of rent out of a total of $100,000, then the $100,000 total rent should be traced to the PCFO's non-CFC general ledger and the 10 percent should be based on the fact that the CFC occupies 10 percent of the square footage in the building.

c. For all 10 sample expenses, compare the title of the actual expense or its general ledger account to the budget categories from the PCFO's campaign plan. Determine that PCFO is not charging for expenses not listed in the budget.

Evaluation: Report as a finding all instances where the PCFO's actual expenses were not supported by source documentation, justified as CFC related, allocated in a fair or reasonable method, allocated based on actual expenses, or included as part of the budget in the PCFO's campaign plan.

8. From the detailed list of actual expenses obtained in #4 above, determine if the PCFO has charged the campaign for interest expenses.

a. If there is interest expenses listed in the actual expenses, then obtain supporting documentation from the PCFO to determine that the PCFO used a commercial loan to pay for campaign expenses. If the PCFO did not obtain a commercial loan but still charged the campaign for interest expense, then report this as a finding. 5 CFR § 950.106(b) only allows for interest expense if the PCFO obtained a commercial loan. The PCFO may not charge interest for using its own funds to pay for campaign expenses.

b. If there is no interest expense listed in the actual expenses, then no further work is required.

Evaluation: Report as a finding all instances where the PCFO charged the campaign for interest expenses, but did not obtain a commercial loan.

Receipt and Disbursement of Funds

Contributors may choose to direct their gifts to a specific voluntary agency(ies) or federation(s) of his or her choice by designating up to five organizations/options on their pledge cards.

Contributors may also select the international general designation option. If they do not wish to designate their contributions to a specific organization(s), federation(s), or use the international general designation option, contributions are considered undesignated.

The PCFO receives contributions through cash donations or payroll deductions. The PCFO is allowed to reimburse itself for actual campaign expenses approved by the LFCC from the current year's receipts. The PCFO is responsible for the accuracy of disbursements and must disburse receipts, less their expenses, in accordance with contributor designations. If the campaign has contributions in excess of $500,000, then the PCFO must make its initial disbursement by April 1 and monthly thereafter. For campaigns with contributions $500,000 or less, the PCFO must make its initial disbursement by June 1 and quarterly thereafter.

1. Obtain a completed "Schedule of Campaign Receipts and Disbursements", "Distribution Schedule" and, if applicable, an "International Distribution Schedule" (see Appendix C, pages C-2, C-3 and C-4) from the PCFO for the Fall 2002 campaign. Samples of these schedules will be available in MS Excel format on the CFC website at www.opm.gov/cfc [5 CFR § 950.105(d)(8)].

2. Trace and determine that the total campaign receipts, administrative expenses, and total campaign disbursements from the "Schedule of Campaign Receipts and Disbursements" agree with the PCFO's general ledger and the administrative expenses and total campaign disbursements to the totals on the "Distribution Schedule." If differences are noted between these totals on the schedules and the general ledger, request the PCFO to provide corrected schedules [5 CFR § 950.105(d)(8)].

Evaluation: Report as a finding all instances where the PCFO's cannot produce schedules that agree with its general ledgers.

3. Review the "Schedule of Campaign Receipts and Disbursements" for the following:

a. PCFO began the collection of cash receipts during the period September — December, depending on the start of their solicitation period [5 CFR § 950.102(a)].

b. Disbursements began in either April (campaigns with contributions greater than $500,000) and continued monthly thereafter or in June ($500,000 or less) and continued quarterly thereafter [5 CFR § 950.901(i)(2)].

c. Total campaign receipts (cash/checks, payroll deductions, and interest), less service charges and administrative expenses, were distributed by the PCFO. The ending balance should equal $0 [5 CFR § 950.901(i)(2)].

Evaluation: Report as a finding all instances where the PCFO did not begin collecting receipts between September and December based on their solicitation period, make initial disbursements by April 1 or June 1 (as applicable), and/or did not disburse all receipts, less administrative expenses by the end of the campaign.

4. From the "Schedule of Campaign Receipts and Disbursements", select 6 representative months of campaign receipts.

a. Trace amounts back to deposits and interest on bank statements for the selected months and determine that the amounts agree with the bank statements [5 CFR § 950.105(d)(8)];

b. Determine that all deposits on the bank statements are included on the "Schedule of Campaign Receipts and Disbursements" [5 CFR § 950.105(d)(8)].

c. Select 6 representative deposits from the bank statements. Request from the PCFO the statements provided by payroll offices for each deposit. Each payroll office is supposed to provide an accompanying statement with the payment check. The statement should identify the agency, the dates of the pay period, and total number of employee deductions [5 CFR § 950.901(f)(1)].

Evaluation: Report as a finding all instances where the PCFO's campaign receipts are not supported by deposits listed on the bank statements and where the bank statements include deposits not listed on the "Schedule of Campaign Receipts and Disbursements." Also, report when a PCFO does not maintain or has not received statements from payroll offices and if possible, identify which payroll offices did not submit statements. OPM will use this information to contact payroll offices which do not provide statements as required by the regulations.

5. From the "Distribution Schedule", determine that organizations were distributed funds in accordance with regulations [5 CFR § 950.106(c) and 950.501(a)]

a. From the Distribution Schedule, compare the Undesignated Percentage for all organizations (national, international and local) to the Designated Percentage.

b. From the Distribution Schedule, compare the Expense Percentage and Shrinkage (pledge loss/uncollectible amount) for all organizations (national, international and local) to the Gross Designation Percentage.

Evaluation:Report as a finding all instances where the UndesignatedPercentage on the Distribution Schedule does not agree to the Designated Percentages on the Distribution Schedule. Report as a finding all instances where the Expense and Shrinkage Percentages on the Distribution Schedule do not agree to the Gross Designated Percentage on the Distribution Schedule.

6. If donors selected the IIII General Designation Option, then perform these procedures. From the "International Distribution Schedule", determine that the IIII General Designation Option Funds were distributed in accordance with the regulations [5 CFR § 950.101]

a. From the International Distribution Schedule, compare the agencies listed to the agencies listed in the International Organizations section of the 2002 campaign brochure. Also, compare agencies listed on the International Distribution Schedule to the agencies listed on the Distribution Schedule.

b. From the International Distribution Schedule, compare the Designated dollar amounts to the Designated dollar amounts from the Distribution Schedule.

c. From the International Distribution Schedule, compare the IIII Designated dollar amounts to the IIII Designated dollar amounts from the Distribution Schedule.

d. From the International Distribution Schedule, compare the IIII Designated Percentage column to Designated Percentage column.

Note: The IIII General Designation Option means that the donor wishes that his or her gift be distributed to all of the international organizations listed in the International Section of the campaign brochure in the same proportion as all of the international organizations received designations in the local CFC. It does not affect the National or local federations or unaffiliated organizations.

Evaluation: Report as a finding all instances where the International agencies listed on the International Distribution Schedule do not agree to the agencies listed in the International Organization Section of the 2002 brochure and the International agencies listed on the Distribution Schedule. Report as a finding all instances where the IIII General Designations were shared with agencies other than the International agencies listed in the 2002 brochure. Report as a finding all instances where the Designated dollar amounts and IIII Designated dollar amounts on the International Distribution Schedule do not agree to the same amounts on the Distribution Schedule. Report as a finding all instances where the IIII Designated Percentage on the International Distribution Schedule do not agree with the Designated Percentage on the International Distribution Schedule.

7. From the "Distribution Schedule", select 3 representative federations (one national, one international and one local) and 3 representative unaffiliated (one national, one international and one local) organizations. Test the accuracy of disbursements by tracing the canceled checks to the "Distribution Schedule" and determining that the amounts on the canceled checks agree with the amounts on the "Distribution Schedule." [5 CFR § 950.901(i)(2)].

Evaluation: Report as a finding all instances where the PCFO's "Distribution Schedule" is not supported by canceled checks.

Status of Prior Year Findings

Update the status of prior year findings. Obtain the PCFO's corrective action plan from the prior year. Obtain an update on the status of each finding from the prior year. Verify that the actions indicated were completed by the PCFO by viewing evidence from the PCFO. See Appendix B, numbers 3 and 4, for an illustration of comments on resolution of prior year's examination findings and illustrative corrective action plan.

Contributors to this Guide

OPM wishes to express our appreciation for the contributions of time, effort and expertise so generously given by the members of the following government and private entities.

OPM Office of CFC Operations
OPM Office of the Inspector General
OPM Office of the General Counsel
United Way of America's Financial Issues Committee

OPM and the Office of the Inspector General also gratefully acknowledge the assistance provided by all local campaigns and their IPAs.

APPENDIX A

PCFO Financial Accounting Statement Format

PCFO organizational financial statements should be presented in conformity with Generally Accepted Accounting Principles (GAAP) for Not-for-Profit Organizations (Financial Accounting Standards Number 116 & 117).

The following statements presented are for information purposes only and provide a suggested format for those campaigns with CFC receipts of $1,000,000 or more that are required to provide CFC activity only financial statements. The financial statements should be comparative statements. The audit will be of the Fall 2002 campaign, which was solicited in the Fall of 2002, collected receipts through the last pay period of January 2004 and made disbursements from April 2003 until around March 31, 2004. We acknowledge changes may be necessary for each PCFO's individual situation and it is the PCFO's responsibility to prepare full disclosure financial statements. All supplemental schedules must be completed as detailed.

[CAMPAIGN NAME]

COMPARATIVE FINANCIAL STATEMENTS

FOR

THE FALL 2002 AND 2001 CAMPAIGNS

PCFO Name:______________________________ CFC Number_____

TABLE OF CONTENTS

Executive Summary

A. Financial statements and required supplementary schedules of the [campaign name] as of and for the campaign years ended March 31, 2004 and 2003 and independent auditors' report.

Required financial statements and supplementary schedules include:

X Statement of Financial Position

X Statement of Activities

X Statement of Cash Flows

X Statement of Functional Expenses

XOther reports

X Report of Agreed-Upon Procedures

Not-for-Profit Organization

Statement of Financial Position

March 31, 2004 and 2003

Not-for-Profit Organization

Statement of Activities

Campaign Periods Ended March 31, 2004 and 2003

Not-for-Profit Organization

Statement of Cash Flows

Campaign Periods Ended March 31, 2004 and 2003

Not-for-Profit Organization

Statement of Functional Expenses

For the Campaign Periods Ended March 31, 2004 and 2003

APPENDIX B

Sample Reports

1. Illustrative Report on Agreed-Upon Procedures (Attestation Standards Section 601.25 through 601.29)

Independent Accountants' Report

We have performed the procedures included in the Combined Federal Campaign Audit Guide [or enumerated below], which were agreed to by the Office of Personnel Management, Local Federal Coordinating Committee, and [PCFO name], solely to assist the specified parties in evaluating the [PCFO name]'s compliance with 5 CFR Part 950 and OPM guidance during the 2002 Combined Federal Campaign ended March 31, 2004 [or applicable date] and the effectiveness of the [PCFO name]'s internal control over compliance with the aforementioned compliance requirements as of [date]. Management is responsible for the [PCFO name]'s compliance with those regulations and guidance. This agreed-upon procedure engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.

The procedures we performed are included in the Combined Federal Campaign Audit Guide [or enumerated in the listing of engagement procedures accompanying this report]. Findings obtained from performing these procedures are presented in the accompanying schedule of findings and questioned amounts.

or

The procedures we performed are included in the Combined Federal Campaign Audit Guide [or enumerated in the listing of engagement procedures accompanying this report]. No exceptions were found as a result of performing these procedures.

We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on compliance and on the effectiveness of internal control over compliance. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

This report is intended solely for the information and use of the Office of Personnel Management, Local Federal Coordination Committee and [PCFO name] and is not intended to be and should not be used by anyone other than these specified parties.

[Signature]

[Date]

2. Illustrative Schedule of Findings and Questioned Amounts

3. Illustrative Comments on Resolution of Prior Year's Examination Findings

Finding No 1: In an examination performed by the [name of audit entity] dated [mm/dd/yy] and titled [name of report], in tests of the PCFO General Compliance, the PCFO did not have controls in place to ensure that it filed OPM Form 1417 by the required due date. This was a procedural finding.

Status: As of [mm/dd/yy] the PCFO developed and implemented a schedule of key due dates. As a result, the PCFO indicated that it met all key due dates for the 2003 campaign.

4. Illustrative Corrective Action Plan for Findings

Corrective Action Plan

(Prepared by PCFO)

Campaign Name:

PCFO Name:

CFC code:

Official responsible for plan:

Phone number:

Audit Period:

IPA/Audit firm:

A. Comments on findings and recommendations

The PCFO should provide a statement of concurrence or nonconcurrence with each finding and recommendation. For instances of nonconcurrence, the PCFO should provide documentation to support their position.

B. Actions taken or planned

The PCFO should develop a detail action plan to correct or resolve all IPA findings. The plan should include expected correction date(s) and name of official responsible for corrective actions.

C. Status of corrective actions for prior year findings

The PCFO, should document status of all prior year findings and the related corrective actions including changes in corrective action, and expected dates of completion.

5. Illustrative LFCC Report on Findings

Office of Personnel Management
Director of CFC Operations
Office of CFC Operations
1900 E Street, NW., Room 5450
Washington, DC 20415-1000

Campaign Name: [Insert Name of the Campaign]

CFC Code: [Insert 4-digit CFC number]

The LFCC certifies that it has developed an understanding of the campaign regulations, is carrying out its responsibilities under the campaign regulations and has a current active membership, including a LFCC Chairperson. The LFCC has conducted a compliance assessment by performing the procedures included in Chapter II of the Combined Federal Campaign Audit Guide. The objective of these procedures was to assess the [PCFO name]'s compliance with CFC regulations and OPM guidance and the effectiveness of the PCFO's internal controls over its compliance for the 2003 campaign.

Based on our compliance assessment, we found the [PCFO name] was in compliance for each of the procedures we performed with 5 CFR Part 950 and OPM guidance.

or

Based on our compliance assessment, we found the [PCFO name] was in compliance for each of the procedures we performed with 5 CFR Part 950 and OPM guidance, except for the following:

1. The PCFO did not have controls in place to ensure that it filed OPM Form 1417 by March 1, 2004 as required by CFC Memorandum 2003-02.

2. The PCFO did not include a statement in the 2003 brochure informing employees of their right to make a choice to contribute or not to contribute as required by 5 CFR § 950.401(e).

We have discussed these issues with the PCFO. The PCFO agrees with all the issues above and is working to correct them.

or

We have discussed these issues with the PCFO. The PCFO agrees with all the issues above except for number 1. The PCFO believes the date was extended to March 15, 2004. We would appreciate your input on the correct date for submitting OPM Form 1417.

[Signature]

[Date]

APPENDIX C

Pledge Card Questionnaire

(A narrative description of this process may be substituted. Please address each of these questions.)

1. How are pledge cards collected, organized, and processed [5 CFR 950.105(d)(1)]?

a. What procedures are in place to ensure that pledge cards are processed properly (e.g., not misplaced or lost, etc.)?

b. What procedures are in place to ensure that designated and undesignated contributions are recorded properly?

c. What procedures are in place to verify the totals for designated and undesignated contributions?

2. What procedures are used when an employee makes a designation to an agency not listed in the brochure [5 CFR 950.402(c)]?

3. What procedures are used when a pledge card has mathematical errors or is illegible [5 CFR 950(d)(4) and 5 CFR 950.402(d)]?