OPERATING POLICIES
(CT:GS-261; 06-11-2025)
(Office of Origin: A/GO/PST/CR)
6 FAM 531 FINANCIAL MANAGEMENT REQUIREMENTS
(CT:GS-261; 06-11-2025)
(Uniform State/DoD/Agriculture)
a. Boards of directors have a fiduciary responsibility and must exercise great care and discretion in the financial management and operation of employee association (EA) activities to prevent embarrassment to the U.S. Government or financial loss to the EA. The U.S. Government and the Central Commissary and Recreation Fund assume no liability for the obligations of EAs.
b. When U.S. Government personnel act as authorized representatives of an EA, they may not use their official title or position. They must act within their authority as EA representatives and should not personally assume responsibility for the obligations of the EA or state or imply that they are acting on behalf of the U.S. Government.
c. EAs must maintain financial records in accordance with U.S. Generally Accepted Accounting Principles or International Accounting Standards. EAs must prepare financial statements in English and U.S. dollar denominations, using Office of Commissary and Recreation Affairs standardized formats.
d. Boards of directors are integral to the EAs internal control system and must conduct monthly random, unannounced counts of cash and inventory and document them for audit purposes.
e. EAs must have an annual budget in place at the start of each calendar year that the board of directors has approved.
6 FAM 531.1 Post Financial Management Assistance
(CT:GS-261; 06-11-2025)
(Uniform State/DoD/Agriculture)
Financial management officers, upon authorization of the principal officer or designee, may review the financial records of EAs for accuracy and propriety. These officers may also provide assistance, under extraordinary circumstances, to EAs in preparing financial statements.
6 FAM 531.2 Banking and Investment Accounts
(CT:GS-261; 06-11-2025)
(Uniform State/DoD/Agriculture)
Boards of directors must ensure that controls are in place to ensure the adequate protection of EA assets. Boards of directors will authorize necessary bank accounts and oversee the monitoring of funds through the review of monthly bank reconciliations that EA staff prepare. EAs may maintain local currency bank accounts for current expenditures. Under no circumstances should EAs deposit or invest excess money in speculative enterprises or institutions, offshore banks, or currency speculation. EAs must maintain excess funds in U.S. financial institutions that are federally insured.
6 FAM 531.3 Severance Pay and Retirement
(CT:GS-261; 06-11-2025)
(Uniform State/DoD/Agriculture)
If severance pay is required by local law or by prevailing practice, each EA must provide for severance pay, end of service benefits, retirement, etc., for employees by designating cash or liquid assets (i.e., assets that can be converted to cash quickly) in a fund on its balance sheet clearly designated for payment of the liability. This fund must match the liability 100 percent.
6 FAM 531.4 Use of Profits and Pricing
(CT:GS-261; 06-11-2025)
(Uniform State/USAID/Agriculture)
a. Profits from EAs are not limited but must not be excessive. EAs must reinvest net profits into the organization to maintain current operations, improve services, establish new activities,provide for capital improvements ,and other required reserve funds. EAs must never directly fund construction or structural alterations to U.S. Government facilities. When construction or structural alterations are desired, EAs funds should be transferred to OBO using the gift fund process to ensure the work is appropriately approved and executed as an OBO project.
b. EAs may not pay dividends or engage in other profit-sharing payments to members. EAs must operate using sound business practices in providing goods and services to their members at a fair price. Pricing must allow for a profit margin that enables the organization to maintain solvency and to ensure that its activities exist for future members.
c. EAs that the Office of Commissary and Recreation Affairs (A/GO/PST/CR) categorizes as a regular EA must establish an operating reserve and capital improvement plan. EAs that A/GO/PST/CR categorizes as a medium EA or below should establish these reserves where appropriate. A/GO/PST/CR may require EAs with excessive amounts of retained earnings to provide a management plan for the use of such funds.
6 FAM 531.5 Subsidization of Cost Centers
(CT:GS-261; 06-11-2025)
(Uniform State/DoD/Agriculture)
EAs operating more than one cost center (e.g., retail store or equivalent, recreation center, child care, food service operation, 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 the Office of Commissary and Recreation Affairs (A/GO/PST/CR) determines. EAs must allocate all administrative overhead (including salaries, audit expense, utilities, depreciation, etc.) 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 based on time spent in each cost center. EAs must apply allocation methods consistently from year to year. A/GO/PST/CR must approve alternative allocation methods in advance of implementation.
6 FAM 532 INSURANCE
(CT:GS-261; 06-11-2025)
(Uniform State/DoD/Agriculture)
a. EA boards of directors must obtain commercial business insurance that includes general liability, property, and bonding coverage from a licensed insurance carrier. When procuring insurance from a local provider, all policies must be stated in English and stated in U.S. dollars.
b. Sufficient general liability coverage is one million U.S. dollars. The Office of Commissary and Recreation Affairs (A/GO/PST/CR) recommends that EAs operating high-risk activities including, but not limited to, transportation services, childcare services, sale of alcoholic beverages, fitness centers, swimming pools, and recreation clubs obtain coverage in excess of the minimum. The U.S. Government will not indemnify associations, their boards, or officers for the costs of a lawsuit or legal judgment against these entities or individuals.
c. Property coverage must be based on the replacement value of EA assets, which typically includes the average value of inventory/stock and the replacement value of fixed assets.
d. Bonding coverage must be adequate to cover all potential losses resulting from actions by the EA employees and other individuals who handle cash or readily convertible assets of the EA, or who have authority to bind the EA contractually.
e. Boards of directors must review insurance policies on an annual basis and ensure coverage meets minimum requirements.
f. Under extraordinary circumstances, boards may request a waiver of coverage from A/GO/PST/CR. All voting board members must sign the waiver of coverage and renew it annually or as board members turn over, whichever comes first. The EA, its board and members are accountable for losses that would have otherwise been covered by insurance. A/GO/PST/CR will not grant insurance waivers to EAs chartered for childcare activities, distribution of alcoholic beverages, recreation activities, or transportation services.
g. Boards of directors whose EAs have employees are also encouraged to maintain directors and officers (D&O) liability insurance coverage with employment practices. D&O insurance is highly recommended for EA boards due to legal liabilities board members may face. The professional liability policy provided by the USG typically does not cover EA board service as board service is voluntary. General liability policies do not protect board members if a legal action specifically names board members in a suit. As EAs are private organizations, voting board members may not claim immunity from legal proceedings. Since most of the legal actions filed against EAs and their boards involve employment related claims, it is critical that the D&O policy include employment practices liability.
6 FAM 533 PRIVATE CLUBS
(CT:GS-261; 06-11-2025)
(Uniform State/DoD/Agriculture)
Neither statutes nor regulations authorize support that posts and/or EAs give to private American clubs or other private clubs and is therefore illegal and 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 534 EQUITABLE PRICE
(CT:GS-261; 06-11-2025)
(Uniform State/DoD/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, EAs will charge the same rates for all U.S. personnel (including TDY employees at post) and their eligible family members that use the EA’s facilities. In the case of TDY employees, instead of surcharges, EAs may impose a flat fee for temporary membership, which substitutes for regular members’ dues. EAs should develop reasonable fees and apply them uniformly to all TDY employees.
c. This section applies to all U.S. personnel including direct-hire USG employees, personal services contractors (PSCs), and all military personnel. It does not apply to locally employed (LE) staff, institutional contractors, or non-U.S. citizens.
6 FAM 535 PERSONNEL BENEFITS
(CT:GS-261; 06-11-2025)
(Uniform State/DoD/Agriculture)
a. Where local labor law applies, EAs must adhere to its requirements for all employees including, but not limited to salary, benefit, termination, and severance requirements. Although EAs are not U.S. Government employees, EAs may extend comparable personnel benefits. EAs are prohibited from utilizing U.S. Government pay scales, standard forms, or otherwise give the appearance that EA are employees of the U.S. Government or U.S. mission.
b. EAs may extend access to purchase packaged duty-free goods in the EA’s facilities to the EA’s general manager or retail store manager if they are not an otherwise eligible family member, provided the principal officer and the board of directors authorizes such access and the government of the receiving state does not object. The board of directors may limit such access by establishing rations or purchase restrictions as deemed appropriate.
6 FAM 536 SUITABILITY INVESTIGATIONS
(CT:GS-261; 06-11-2025)
(Uniform State/DoD/Agriculture)
EA employees are subject to pre-employment suitability investigations. The regional security officer will determine the extent of the pre-employment investigation of U.S. citizens.
6 FAM 537 VIDEO CLUBS AND USE OF COPYRIGHT protected MATERIALS
(CT:GS-261; 06-11-2025)
(Uniform State/DoD/Agriculture)
a. Video clubs, operated as a service to members of the EA, 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 U.S. copyright laws (17 U.S.C. 109). The “first sale doctrine” does not, however, permit the video club of the EA or members to conduct “public performances” of copyright protected material without prior permission of the copyright owner.
b. U.S. Copyright law prohibits video clubs or EA members from copying or duplicating any copyright protected material for the purpose of resale, rental, or providing public performances to EA 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. Cable casting or closed-circuit presentation of videotaped movies that an EA has purchased from an authorized distributor may, depending upon the movie title, constitute a violation of U.S. copyright law. EAs that 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 that own the copy of the videotaped movies to be broadcast, do not normally have the right to offer public performances of copyright-protected material. To lawfully cable-cast videotaped movies, EAs 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/GO/PST/CR).
d. U.S. Copyright law prohibits EAs from duplicating other copyright-protected material (e.g., television programming, computer software, programs and games) without authorization from the copyright owner or licensee.
6 FAM 538 VOTING RIGHTS AND CONTROL OF EMPLOYEE ASSOCIATIONS
(CT:GS-261; 06-11-2025)
(Uniform State/DoD/Agriculture)
a. Voting rights in EAs are limited to U.S. Government employees (including personal services contractors recruited from outside the receiving state) who are U.S. citizens resident at post and their eligible family members at least 17 years of age, but a majority of the voting membership must be U.S. Government employees. The EA board of directors must be limited to this group, provided that a majority of the board must be direct-hire, U.S. citizen, U.S. Government employees. EA boards must conduct their meetings pursuant to Robert’s 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 and the Office of Commissary and Recreation Affairs.
c. To preclude potential conflicts of interest, voting board members must not be related to ex-officio board members (e.g., principal officer’s designee, Community Liaison Office staff), any member of the EA staff serving in a management role, or an individual whose duties carry significant financial reporting except under extraordinary circumstances as determined by A/GO/PST/CR. This regulation precludes two members of any household from serving concurrently in board officer positions. The regulation also prohibits Community Liaison Office coordinators and CLO staff from serving in elected, voting positions on the board as this situation would conflict with their roles as ex-officio board members.