More disclosure, but still no explanation of union’s financial reporting

My column about lack of disclosure in the NZ Meat Workers Union accounts two weeks ago has provoked some interesting results, but so far no formal explanation of the union’s statutory financial reporting practice.

 

On the one hand I have been taken to task by Graham Cooke, Aotearoa Branch Secretary, for my failure to recognise accurately the nature of the ongoing dispute at CMP’s Marton plant – it’s not a strike, but a lockout – but no reference to the questions I raised. But on the other, I have received a copy of the Aotearoa Branch’s September management accounts which effectively cover the 12 month period 2010/11. The accounts were posted on AFFCO’s Feilding plant notice board or circulated to union members under the headline ‘Where are your union fees going?’ with a suggestion the union has some questions to answer.

 

These accounts absolutely confirm the point of my previous column – the branch figures are not consolidated into the national union’s accounts as legally required.

 

This will also be the case with the other branches of the national NZMWU. Therefore in practice there are substantial organisations, some or all with revenues well in excess of $1 million annually, which are not reporting their financial details to the Companies Office. For example Aotearoa branch received member contributions of $1.299 million and other income of $78.7k in its recent financial year, posting an end of year surplus of $111k. The capitation fee paid to the national union, in other words the fee per union member, appears as a one line expense item of $239.7k. Operating expenses for the branch totalled $1.267 million.

 

None of this is intended to suggest there is anything untoward in the Aotearoa branch management accounts which are prepared by reputable chartered accountants. The problem is solely with the lack of disclosure of its financial affairs by the NZMWU national union including all its branches. It’s certain the branches report separately to their individual membership bases which would give union members the opportunity to query how their union fees are being used.

 

This should mean the management reports made available to the union members at AFFCO Manawatu contain no surprises and it’s quite possible their union doesn’t have any questions to answer. After all the Aotearoa branch represents workers at 50 separate sites throughout the North Island requiring a significant overhead structure to service. However members may wish to query annual salaries of $374k, vehicle expenses of $62k and various other significant executive related expense items.

 

The other item of interest is the net asset figure of $1 million, although this is not much different from the net asset position reported in the 2005 annual report before the Aotearoa union became a branch of the national union. In that year, assets mostly consisted of a term deposit which earned nearly $60k of interest on which tax was payable. In last year’s NZMWU accounts, the national union as a whole reported a similar level of current assets with only $24k of interest received and $6.5k tax. Clearly interest rates are now much lower than six years ago, but the obvious question is whether the failure to consolidate branch assets and interest income is leading to non-reporting and consequently income tax avoidance.

 

Graham Cooke’s reply accuses me and my 1980s AFFCO colleagues (I joined AFFCO in 1992) of “continuing to strategise and develop the demise of this union” within AFFCO and South Pacific Meats, calling my previous column “a load of hogs..t.” I would like to assure Graham I personally have never tried to bring about his union’s demise, because I am fully supportive of employees’ rights to union representation if they desire it. But I am also strongly of the opinion a union, like any other incorporated society which charges fees to its members in return for provision of services or facilities, has an obligation to comply with all its legal obligations.

 

The simplest way to clear up this particular situation would be for the NZMWU and its auditors to review their financial reporting practice and advise how they believe it meets the stipulations of the Incorporated Societies Act (1908) and Generally Accepted Accounting Practice.

 

Footnote

As referred to earlier, I mistakenly referred to the lockout at CMP Marton as a strike, for which I apologise unreservedly to the affected workforce and union representatives.

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One Response to “More disclosure, but still no explanation of union’s financial reporting”

  1. Linda Cochrane Says:

    I really appreciate your post and you explain each and every point very well.Thanks for sharing this information.And I’ll love to read your next post too.
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