This time of the year, the part of our company which deals with LM-2 preparations goes into overdrive as most unions end their fiscal year in December, resulting in an LM-2 filing date in late March.
Ever since the information requirements in this area became more onerous a few years back, this part of our business has steadily grown and in the process we have refined the service and software we use to address this area. Whether a union decides to use our preparation services or not, here are some areas of general advice that we give to any union faced with filing this report.
Firstly, don’t look upon this requirement as an “end of year” exercise, but rather treat it as a year round process which will greatly ease the panic factor at year end and curb the stress of “rushing to meet the deadline.”
To achieve a smoother process, start by regarding your LM-2 preparation as three distinct areas.
- Data recording
- Data extraction and consolidation
Here are some tips we can pass along in each area
- Data recording – This is mostly done in your accounting system. Try to work with a system which enables you to record the LM-2 information for each transaction AS YOU RECORD IT and WHICH IS IN ADDITION to the “regular” coding required for general ledger coding. The Department of Labor’s original recommendations, which advise basically increasing your general ledger accounts is NOT the most efficient way of doing this. Systems like QuickBooks® and Microsoft Dynamics GP® have “class” or “analysis” codes which work much better in this area.*By capturing the LM-2 information as you record each transaction you will avoid a mass re-coding effort at the end of the year.
- Data extraction and consolidation – Once the data is captured as part of your regular accounting process, you need to extract it and group according to LM-2 schedule requirements. If you are using an accounting system like the ones I mention above, you should be able to extract your transactional data by creating customized reports and then exporting the results to Excel®. In Excel you then have the ability to sort and group the data in accordance with DOL schedule requirements.
- Filing – The DOL software provides import routines to enable you to import your data into the web form without having to key every item. Getting your extracted data into one of the formats required may require some technical expertise, but since some LM-2’s can run into hundreds of pages, the time spent here will be well worth it.
Obviously there are many considerations and details to consider in the above steps. Experts like our business or your CPA can advise you on each step of the LM-2 process and do so in accordance with the Office of Labor-Management Standards (OLMS). For instance, our company uses specialized software for steps 1) and 2) above. This greatly reduces manual effort and is far superior in terms of analysis, balancing, and audit trail provision.
We have also created specialized “Toolkits” for step 1) above, for some of the more popular accounting systems. If you would like a free copy of one of these, or for more information, please contact us at firstname.lastname@example.org or 203-831-8655 and we will be happy to assist you.