Report of Independent Auditors Report of the Audit Committee - IUPAT

NOTE 4. UNINSURED CASH BALANCES AND INVESTMENTCONCENTRATIONSThe International Union maintains its cash accounts primarilywith banks located in Washington, D.C. The total cash balancesare insured by the Federal Deposit Insurance Corporation up to$100,000 per bank. The International Union has cash balanceson deposit at December 31, 2006 that exceed the balance ofFDIC insurance coverage by approximately $3,630,000.The International Union also maintains cash at a Canadianfinancial institution, which is insured up to $60,000. As ofDecember 31, 2006, the International Union’s cash in theCanadian financial institution in excess of insurance coveragetotaled approximately $1,775,000 in Canadian dollars($1,550,000 U.S. equivalent).NOTE 5. U.S. GOVERNMENT AGENCY CONTRACTSThe International Union is a party to various cost reimbursementcontracts from U.S. government agencies.The 2006 activity and unexpended contract funds atDecember 31, 2006 were as follows:UnexpendedContract FundsUnexpendedat beginning of Contract Transfers/ Contract Fundsyear Receipts Expenditures at end of yearU.S. Department of LaborJob Corps Program 457,053 7,670,495 7,994,275 133,273Discretionary Fund 91,946 105,802 95,757 101,991$548,999 $7,776,297 $8,090,032 $235,264The contract with the Department of Labor expires onJuly 31, 2007.NOTE 6. INVESTMENTSThe cost and fair value of investments held by theInternational Union at December 31, 2006 is summarizedbelow:CostFair ValueUnited States Government andGovernment Agency obligations $18,817,529 $18,840,687Common stock 6,292,938 6,739,518United Unions, Inc. 5,397,139 5,397,139ULLICO stock 39,826 39,826Mortgage 70 70Short-term investments 3,913,380 3,913,380$34,460,882 $34,930,620Investment income for the year ended December 31,2006 consisted of the following:Interest and dividends $1,247,428Net realized and unrealized gain on investments 246,059$1,493,487NOTE 7. PROPERTY AND EQUIPMENTOn December 31, 2006, property and equipmentconsisted of the following:Furniture and equipment $ 964,805Leasehold improvements 2,359,122National Training Facility 11,203,759Automobiles 122,317Computer hardware and software systems 368,62315,018,626Less accumulated depreciationand amortization (2,199,395)Net property and equipment $ 12,819,231NOTE 8. THE IUPAT GENERAL OFFICERS, STAFF ANDEMPLOYEES RETIREMENT AND PENSION TRUST FUNDThe IUPAT General Officers, Staff and Employees Retirementand Pension Trust Fund (the Plan) provides defined benefits tosubstantially all of its employees. The Plan provides pension benefitsbased on employee compensation and years of service. TheInternational Union reports in accordance with Statement ofFinancial Accounting Standards No. 87, (SFAS No. 87)“Employer’s Accounting for Pensions.” Contributions to the Planare made by the International Union based on the advice of consultingactuaries.The periodic costs of the Plan are recognized over employees’service periods, based on computations made by the Plan’sactuary, rather than recognizing periodic costs when contributionsare actually paid to the Plan.In computing net periodic pension costs as of October 1,2006 to be recognized for the year ended September 30, 2006the consulting actuary used the following assumptions:Projected benefit obligationat September 30 $ 46,986,337Fair value of plan assets at September 30 36,612,527Funded status $(10,373,810)Accumulated benefit obligationat September 30 $ 46,714,632Continued on next pagewww.IUPAT.orgAPRIL-JUNE 2007 • JOURNAL25