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The Department of Labor recently completed a round of audits of collectively bargained apprenticeship and other training programs and scholarship funds. The DOL focused on these particular plans due to abuses found in some routine audits, causing the department to expand its investigation. If you are involved in some capacity with a Joint Apprenticeship and Training Committee (JATC) or other types of industry training and scholarship programs, chances are that you experienced one of these audits.
All of our JATC and training program clients were audited during this DOL audit blitz.
So now that the dust has settled and the audits have concluded, we can use the results as a learning experience to avoid pitfalls in future DOL audits â which are more likely than not to occur.
Since plan fiduciaries, including boards of trustees and fund administrators, are responsible for ensuring that plan expenses are appropriate to carry out the planâs mission of training workers, they must make a reasonable determination that the expenditures are likely to promote legitimate plan objectives.
Here are some of the types of expenditures that the DOL considers NOT to be permissible by apprenticeship, training and scholarship programs:
- Graduation ceremonies for all attendees, rather than just the graduates, limited family members and instructors
- Valet parking
- Hotel accommodations
- Open bar
- Charitable contributions
- Tickets for sporting and entertainment events
- Golf outings and sponsorships
- Payment of union-related expenses
In addition, training funds should have written expense policies and a system of internal controls, along with written policies for conflict of interest, whistleblower, records retention, collections, disaster recovery, investments, expense reimbursements and cost sharing, to name a few.
Itâs no surprise, then, that the old proverb, âforewarned is forearmedâ dates back to sixteenth century Great Britain, and even much earlier from the Latin saying “praemonitus, praemunitus,” loosely translated as “forewarned is forearmed.”
REPRINTED FROM LABOR PRESS
Copyright Â© 2013 Labor Press. All Rights Reserved.
By Salvatore J. Armao, CPA/PFS, CFP, CFEÂ
Managing Partner, Armao LLP