6 FAM 530
OPERATING POLICIES
(CT:GS-181; 02-09-2015)
(Office of Origin: A/OPR/CR)
6 FAM 531 FINANCIAL MANAGEMENT
REQUIREMENTS
(CT:GS-181; 02-09-2015)
(Uniform State/USAID/Commerce/Agriculture)
a. Boards of directors must exercise great care and
discretion in the financial management and operation of employee association
activities to prevent embarrassment to the U.S. Government and the employee
association. The U.S. Government assumes no liability for the obligations of
employee associations.
b. When U.S. Government personnel act as authorized
representatives of an employee association, they may not use their official
title or position. They must act within their authority as association
representatives and should not personally assume responsibility for the
obligations of the association or imply that they are acting on behalf of the
U.S. Government.
c. Associations must maintain financial records in
accordance with U.S. generally accepted accounting principles (USGAAP) or International Accounting Standards (IAS). Financial
statements must be prepared using either U.S. not-for-profit standardized
formats or the Office of Commissary and Recreation Affairs (A/OPR/CR)
standardized formats.
d. Boards of directors must conduct monthly random
unannounced counts of cash and inventory. Counts must be documented for audit
purposes.
e. An annual budget,
approved by the employee association board of directors must be in place at the
start of each calendar year.
6 FAM 531.1 Post Financial
Management Assistance
(CT:GS-160; 09-24-2009)
(Uniform State/USAID/Commerce/Agriculture)
Financial management officers, upon authorization of the
principal officer or designee, may review the financial records of employee
associations for accuracy and propriety. Assistance may also be provided under
extraordinary circumstances in the preparation of financial statements.
6 FAM 531.2 Banking and Investment
Accounts
(CT:GS-181; 02-09-2015)
(Uniform State/USAID/Commerce/Agriculture)
Boards of directors must ensure that controls are in place
to ensure the adequate protection of association assets. Boards of directors
will authorize necessary bank accounts and oversee the monitoring of funds
through the review of monthly bank
reconciliations prepared by association staff. Local currency bank accounts
may be maintained for current expenditures. Under no circumstances should
excess money be deposited or invested in speculative enterprises or
institutions, offshore banks, or currency speculation. Excess funds must be maintained in U.S. financial
institutions that are federally insured.
6 FAM 531.3 Severance Pay and
Retirement
(CT:GS-181; 02-09-2015)
(Uniform State/USAID/Commerce/Agriculture)
If severance pay is required by local law, each employee
association must provide for severance pay, retirement, etc., for employees by
designating cash or liquid assets (i.e., assets that can be converted to cash
quickly) in a fund clearly designated as such for payment of the liability.
This fund should match this liability 100 percent, where required by local
law. In lieu of establishing such funds, the employee association may purchase
endowment policies, subscribe to a host-government provident fund, or provide
some other practical and safe means to provide for these liabilities. These alternative severance funds must be independently audited annually by
a firm of chartered, certified, or otherwise qualified accountants as part of
the annual audit required of employee associations (see 6 FAM 557).
6 FAM 531.4 Use of Profits and
Pricing
(CT:GS-160; 09-24-2009)
(Uniform State/USAID/Commerce/Agriculture)
Profits from employee associations are not limited but
must not be excessive. Employee association net profits should be reinvested
into the organization to maintain current operations, improve services,
establish new activities and provide for capital improvements. Employee
associations may not pay dividends or engage in other profit-sharing payments
to members. Employee associations must operate utilizing sound business
practices while providing goods and services to its members at a fair price.
Pricing must allow for a profit margin that enables the organization to
maintain solvency and ensure that its activities exist for future members.
Employee associations with excessive amounts of retained earnings may be
required to provide the Office of Commissary and Recreation Affairs (A/OPR/CR)
with a management plan for the use of such funds. A/OPR/CR will provide
financial policies based on industry standards and will review employee
association financial results to ensure adherence to use of profits and pricing
requirements as stated in this section.
6 FAM 531.5 Subsidization of Cost
Centers
(CT:GS-181; 02-09-2015)
(Uniform State/USAID/Commerce/Agriculture)
Employee associations operating more than one cost center
(e.g., commissary or equivalent, recreation center, child care, food service
operation, video club, etc.) must ensure that each revenue-generating cost
center is financially self-sustaining to ensure that the profits of one cost
center are not unduly subsidizing another cost center, as determined by the
Office of Commissary and Recreation Affairs (A/OPR/CR). Therefore, all
administrative overhead (including administrative salaries, audit expense,
utilities, depreciation, etc.) must be allocated across all cost centers using
a predetermined allocation method. Acceptable methods for the allocation of
overhead include percentage of gross revenue, square footage/meters of space
occupied, and percentage of salaries. Allocation methods must be applied
systematically and consistently from year to year. Alternative allocation
methods must be approved in advance of implementation by A/OPR/CR.
6 FAM 532 INSURANCE
(CT:GS-181; 02-09-2015)
(Uniform State/USAID/Commerce/Agriculture)
a. Boards of directors must obtain sufficient general
liability insurance from a licensed insurance carrier. The minimum level of
required coverage is one million U.S. dollars. Employee associations operating
high-risk activities to include, but not limited to transportation services,
child care services, commissaries, fitness centers, swimming pools and
recreation clubs, are recommended to obtain coverage in excess of the minimum
coverage (generally in increments of one million U.S. dollars). The U.S.
Government will not indemnify associations, their boards, or officers if a law
suit is filed.
b. Boards of directors must obtain sufficient property
insurance from a licensed insurance carrier. Property coverage must be based
on the replacement value of the associations insurable
assets.
c. Boards of directors must review insurance policies
on an annual basis to ensure their adequacy in protecting the association.
d. Under extraordinary circumstances, boards may
request a waiver of coverage from the Office of Commissary and Recreation
Affairs (A/OPR/CR). The waiver of coverage must be signed by all members of
the elected board of directors and renewed annually by the deadline established
by A/OPR/CR. The association, its board and members are accountable for all
losses that would have been covered by adequate liability and property
insurance. Insurance waivers will not be granted to employee associations
chartered for child care activities, distribution of alcoholic beverages, or
recreational activities.
6 FAM 533 BONDING
(CT:GS-160; 09-24-2009)
(Uniform State/USAID/Commerce/Agriculture)
Boards of directors must obtain blanket or individual bond
(crime) coverage from a licensed insurance carrier. Bonding coverage must be
adequate to cover all potential losses resulting from actions by employee
association employees and other individuals who handle cash or readily
convertible assets of the association, or who have authority to bind the
association contractually. If the association has determined that the cost for
bond coverage is prohibitively expensive relative to the activities and
services provided to its members, the association may request a waiver of
coverage from the Office of Commissary and Recreation Affairs (A/OPR/CR). The
waiver of coverage must be signed by all members of the elected board of
directors and renewed annually by the deadline established by the A/OPR/CR.
The association, its board and members are accountable for all losses that
would have been covered by adequate liability and property insurance.
6 FAM 534 PRIVATE CLUBS
(CT:GS-154; 03-09-2007)
(Uniform State/USAID/Commerce/Agriculture)
Support given to private American clubs or other private
clubs by posts and/or associations is not authorized by statute or regulation
and is therefore improper. Support of such private clubs may result in claims
and other liabilities asserted against the post and/or association for the
debts or other obligations of such private clubs, and, accordingly, such
support is prohibited.
6 FAM 535 EQUITABLE PRICE
(CT:GS-181; 02-09-2015)
(Uniform State/USAID/Commerce/Agriculture)
a. Section 31(d) of the State Department Basic Authorities
Act of 1956, as amended and codified at 22 U.S.C. 2703 (d), precludes
surcharges by providing:
(d) Charges at any post abroad for a service or
facility provided, authorized, or assisted under this section shall be at the
same rate for all civilian personnel of the government serviced thereby...
b. Therefore, charges will be at the same rates for all
U.S. personnel (including TDY employees at post) and their eligible family
members serviced by the employee associations facilities. In the case of TDY
employees, instead of surcharges, a flat fee may be imposed for temporary
membership or commissary enrollment, which substitutes for regular members
dues. Any such fee should be reasonable in amount and applied uniformly to all
TDY employees.
c. This section applies to all U.S. personnel
including direct-hire government employees, personal services contractors
(PSCs), and all military personnel. It does not apply to local employee (LE)
staff, institutional contractors, or non-U.S. citizens.
6 FAM 536 PERSONNEL BENEFITS
(CT:GS-181; 02-09-2015)
(Uniform State/USAID/Commerce/Agriculture)
a. Employee associations are required to adhere to
local labor law requirements for all employees to include, but not be limited
to salary, benefit, termination and severance requirements, where applicable by
law. Association employees, while not U.S. Government employees, may be
extended comparable personnel benefits but associations are prohibited from
utilizing U.S. Government pay scales, standard forms or otherwise giving the
appearance that association employees are employees of the U.S. Government or U.S. mission.
b. If not an otherwise eligible family member (EFM),
the associations general manager or commissary manager may be extended access
to the purchase of packaged duty-free goods in the associations facilities
where authorized by the principal officer and the board of directors, provided
there are no objections from the host government. The board of directors may
limit such access by instituting rations or purchase restrictions as deemed
appropriate.
6 FAM 537 SUITABILITY INVESTIGATIONS
(CT:GS-154; 03-09-2007)
(Uniform State/USAID/Commerce/Agriculture)
Association employees are subject to pre-employment
suitability investigations. The extent of the pre-employment investigation of
U.S. citizens will be determined by the posts management officer after
consultation with the regional security officer. U.S. citizen eligible family
members of security-cleared U.S. citizen employees will not normally require any
type of suitability or security investigation. Host- or third-country
applicants for these positions are subject to the same pre-employment inquiries
as those required for Foreign Service national employees who are directly
employed by a diplomatic or consular post.
6 FAM 538 VIDEO CLUBS AND USE OF
COPYRIGHT protected MATERIALS
(CT:GS-160; 09-24-2009)
(Uniform State/USAID/Commerce/Agriculture)
a. Video clubs, operated as a service to members of the
employee association, may make videotaped movies, which the club has purchased
through an authorized distributor, available on a rental or gratuitous basis
for private home viewing only. This practice is permitted under the first
sale doctrine codified in the U.S. copyright laws (17 U.S.C. 109). The first
sale doctrine does not, however, permit the video club of the association or
members to conduct public performances of copyright protected material
without prior permission of the copyright owner.
b. Video clubs or association members are prohibited
from copying or duplicating any copyright protected material for the purpose of
resale, rental, or providing public performances to association members, or to
other personnel at a constituent post or other missions in a different
country. Anyone violating copyright law is subject to civil fines and criminal
prosecution.
c. Television programs in the United States, whether
aired on commercial, public, or cable television, are generally
copyright-protected. Associations are prohibited from renting, reselling, or
authorizing public performances of, or providing on a gratuitous basis, any
videotapes of such programs unless obtained through authorized, licensed
sources.
d. Cable casting or closed-circuit presentation of
videotaped movies that have been purchased from an authorized distributor may,
depending upon the particular movie title, constitute a violation of U.S.
copyright laws. Associations which have established closed circuit cable
broadcasting facilities or capabilities for the official U.S. Government
community (i.e., services to apartments, residences, community centers,
transient quarters, American club, etc.) and which own the copy of the
videotaped movies to be broadcast, do not normally have the right to engage in
public performances of copyright-protected material. To lawfully cable-cast
videotaped movies, associations must usually obtain a license to commence or
continue this service. For assistance in obtaining appropriate licenses,
contact the Office of Commissary and Recreation Affairs (A/OPR/CR).
e. Employee associations are prohibited from
duplicating other copyright-protected material (e.g., computer software,
programs, and games) without authorization from the copyright owner or
licensee.
6 FAM 539 VOTING RIGHTS AND CONTROL OF
EMPLOYEE ASSOCIATIONS
(CT:GS-181; 02-09-2015)
(Uniform State/USAID/Commerce/Agriculture)
a. Voting rights in employee organizations are limited
to U.S. Government employees (including personal services contractors recruited
from outside the host country) who are U.S. citizens resident at post and their
eligible family members over the age of 16, but a majority of the voting
membership must be U.S. Government employees. The board of directors of any
employee association must be limited to this same group with the further
proviso that a majority of the board of directors must be direct-hire, U.S.
citizen, U.S. Government employees. Board meetings will be conducted in
accordance with Roberts Rules of Order on Parliamentary Procedures.
b. Boards of directors must expeditiously report
instances of fraud, suspicion of fraud, malfeasance or misfeasance to the
Office of the Inspector General, Office of Investigations (OIG/INV) and the
Office of Commissary and Recreation Affairs (A/OPR/CR).
c. In order to preclude potential conflicts of
interest in its board capacity, voting board members must not be related to ex-officio board members (e.g., P.O. designee,
Community Liaison Office coordinator), any member of the association
staff serving in a management role, or an individual whose duties carry
significant financial reporting (except under extraordinary circumstances as
determined by the Office of Commissary and Recreation Affairs. This regulation
extends to members of household. All Community Liaison Office coordinators are
also prohibited from serving in elected, voting position on the board as this
situation would conflict with their roles as ex-officio board members.