6 FAM 530
OPERATING POLICIES
(CT:GS-231; 06-10-2021)
(Office of Origin: A/OPR/CR)
6 FAM 531 FINANCIAL MANAGEMENT REQUIREMENTS
(CT:GS-231; 06-10-2021)
(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 state 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). Associations must prepare financial statements in English and U.S. dollar denominations, using Office of Commissary and Recreation Affairs standardized formats.
d. Boards of directors must conduct monthly random, unannounced counts of cash and inventory and document them for audit purposes.
e. Associations 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-231; 06-10-2021)
(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. These officers may also provide assistance, under extraordinary circumstances, to associations in preparing financial statements.
6 FAM 531.2 Banking and Investment Accounts
(CT:GS-231; 06-10-2021)
(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 that association staff prepare. Associations may maintain local currency bank accounts for current expenditures. Under no circumstances should associations deposit or invest excess money in speculative enterprises or institutions, offshore banks, or currency speculation. Associations must maintain excess funds in U.S. financial institutions that are federally insured.
6 FAM 531.3 Severance Pay and Retirement
(CT:GS-231; 06-10-2021)
(Uniform State/USAID/Commerce/Agriculture)
If severance pay is required by local law or by prevailing practice, 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 for payment of the liability. This fund must match the liability 100 percent. 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 cover these liabilities. A firm of chartered, certified, or otherwise qualified accountants must independently audit these alternative severance funds annually 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-231; 06-10-2021)
(Uniform State/USAID/Commerce/Agriculture)
Profits from employee associations are not limited but must not be excessive. Employee associations should reinvest their net profits into the organization to maintain current operations, improve services, establish new activities and provide for capital improvements. Employee associations must never directly fund construction or structural alterations to U.S. Government facilities. When construction or structural alterations are desired, association funds should be transferred to OBO using the gift fund process to ensure the work is appropriately approved and executed as an OBO project. Employee associations may not pay dividends or engage in other profit-sharing payments to members. Employee associations 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. Employee associations that the Office of Commissary and Recreation Affairs (A/OPR/CR) categorizes as a regular association must establish an operating reserve and capital improvement plan. Employee associations that CR categorizes as a medium association or below should establish these reserves where appropriate. CR may require employee associations 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-231; 06-10-2021)
(Uniform State/USAID/Commerce/Agriculture)
Employee associations 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/OPR/CR) determines. Associations 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. Associations must apply allocation methods consistently from year to year. A/OPR/CR must approve alternative allocation methods in advance of implementation.
6 FAM 532 INSURANCE
(CT:GS-231; 06-10-2021)
(Uniform State/USAID/Commerce/Agriculture)
a. Employee association 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. The Office of Commissary and Recreation Affairs (A/OPR/CR) recommends that associations operating high-risk activities including, but not limited to, transportation services, child care 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.
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 association’s insurable assets which typically include the average value of inventory of stock and the replacement value of fixed 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 A/OPR/CR. All members of the elected board of directors must sign the waiver of coverage and renew it annually by A/OPR/CR’s deadline. The association, its board and members, are accountable for all losses that adequate liability and property insurance would have covered. A/OPR/CR will not grant insurance waivers to employee associations chartered for childcare activities, distribution of alcoholic beverages, or recreational activities.
6 FAM 533 BONDING
(CT:GS-231; 06-10-2021)
(Uniform State/USAID/Commerce/Agriculture)
Employee association 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 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 of bond coverage is prohibitively expensive relative to the activities and services provided to its members, the association may request a waiver from the Office of Commissary and Recreation Affairs (A/OPR/CR). All elected members of the board of directors must sign the waiver of coverage and renew it annually by the A/OPR/CR deadline. The association, its board of directors, 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-231; 06-10-2021)
(Uniform State/USAID/Commerce/Agriculture)
Neither statutes nor regulations authorize support that posts and/or employee associations 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 535 EQUITABLE PRICE
(CT:GS-231; 06-10-2021)
(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, employee associations will charge the same rates for all U.S. personnel (including TDY employees at post) and their eligible family members that use the association’s facilities. In the case of TDY employees, instead of surcharges, associations may impose a flat fee for temporary membership, which substitutes for regular members’ dues. Associations 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 536 PERSONNEL BENEFITS
(CT:GS-231; 06-10-2021)
(Uniform State/USAID/Commerce/Agriculture)
a. Where local labor law applies, employee associations must adhere to its requirements for all employees including, but not limited to salary, benefit, termination, and severance requirements. Although association employees are not U.S. Government employees, associations may extend comparable personnel benefits to them but may not use U.S. Government pay scales, standard forms, or otherwise give the appearance that association employees are employees of the U.S. Government or U.S. mission.
b. Associations may extend access to purchase packaged duty-free goods in the association’s facilities to the association’s general manager or retail store manager if they are not an otherwise eligible family member (EFM), provided the principal officer and the board of directors authorizes such access and the host government does not object. The board of directors may limit such access by establishing rations or purchase restrictions as deemed appropriate.
6 FAM 537 SUITABILITY INVESTIGATIONS
(CT:GS-231; 06-10-2021)
(Uniform State/USAID/Commerce/Agriculture)
Association 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 538 VIDEO CLUBS AND USE OF COPYRIGHT protected MATERIALS
(CT:GS-231; 06-10-2021)
(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 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. U.S. Copyright law prohibits video clubs or association members 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. Cable casting or closed-circuit presentation of videotaped movies that an employee association has purchased from an authorized distributor may, depending upon the movie title, constitute a violation of U.S. copyright law. Associations 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, 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.
d. U.S. Copyright law prohibits employee associations 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 539 VOTING RIGHTS AND CONTROL OF EMPLOYEE ASSOCIATIONS
(CT:GS-231; 06-10-2021)
(Uniform State/USAID/Commerce/Agriculture)
a. Voting rights in employee associations 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 associations must be limited to this group, provided that a majority of the board must be direct-hire, U.S. citizen, U.S. Government employees. Association 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 association staff serving in a management role, or an individual whose duties carry significant financial reporting except under extraordinary circumstances as determined by A/OPR/CR. This regulation extends to members of voting board members’ households. 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.