Audit Report on the Financial and Operating Practices of the Social Service Employees Union Local 371 Legal Services Fund and Educational Fund

The Social Service Employees Union Local 371 Legal Services Fund (Legal Services Fund) and the Social Service Employees Union Local 371 Educational Fund (Educational Fund) receive their funding from the Social Service Employees Union Local 371 Administrative Fund (Administrative Fund). The Administrative Fund was created to receive the negotiated contributions from its members’ employers and to allocate and distribute the monies received to the Social Service Employees Union Local 371 Benefit Funds—Social Service Employees Union Local 371 Welfare Fund (Welfare Fund), the Legal Services Fund, and the Educational Fund. The Legal Services Fund and the Educational Fund receive an allocation of funds from the Administrative Fund that is equivalent to its net cost of operations. The Legal Services Fund and the Educational Fund are required to conform to Comptroller’s Directive #12, ‘Employee Benefit Funds—Uniform Reporting and Auditing Requirements,’ which sets forth accounting, auditing, and financial guidelines for funds and their boards of trustees.
We performed an audit on the financial and operating practices of the Legal Services Fund and the Educational Fund for Fiscal Year 2008. The Legal Services Fund received $3,900,521 for legal benefits, and the Educational Fund received $332,269 for educational benefits for Fiscal Year 2008. Administrative expenses were paid through the Administrative Fund

Audit Findings and Conclusions

The Legal Services Fund and the Educational Fund complied with the procedures and reporting requirements of Directive #12; in addition, the Legal Services Fund and the Educational Fund complied with their accounting procedures, and those procedures were adequate and proper. However, we found some weaknesses in the financial and operating procedures of the Legal Services Fund and the Educational Fund. Of the $74,876 in claims and payments to class instructors reviewed, $5,318 (7 percent) in payments were made to individuals not listed on the City’s Payroll Management System (PMS), City’s Health and Hospitals Corporation (HHC) contribution reports, or Administrative Fund’s database system or were made without supporting documentation.

The Legal Services Fund also provided civil representation to 17 of the 100 (17 percent) randomly selected participants reviewed and criminal representation to three of the 100 (3 percent) randomly selected participants who were not eligible to receive this benefit. Lastly, the Legal Services Fund did not properly authorize checks issued from its checking account for Fiscal Year 2008.

Audit Recommendations

The audit makes four recommendations. The Legal Service Fund and the Educational Funds should:

• Pay for benefits for eligible individuals only and make payments in accordance with their guidelines.
• Ensure that benefits are provided only to eligible members and their dependents.
• Maintain all supporting documentation to substantiate City contributions, member eligibility, and benefit use.
• Ensure that only authorized personnel sign program checks for the Legal Service Fund.

Funds Response

In their response, Legal Service Fund and Educational Fund officials generally did not specifically address the audit’s findings or recommendations and did not indicate how they will implement the necessary corrective actions to remediate the findings discussed in this report.