(a)(1) General considerations. For many labor organizations and
trusts special problems involving disbursements will be presented by
those who, as trustees or members of an executive board or similar
governing body, are, as a group, charged with general responsibility for
the conduct of the business and affairs of the organization or trust.
Often such bodies may approve contracts, authorize disbursements, audit
accounts and exercise similar responsibilities.
(2) It is difficult to formulate any general rule for such cases.
The mere fact that a board of trustees, executive board or similar
governing body has general supervision of the affairs of a trust or
labor organization, including investment policy and the establishment of
fiscal controls, would not necessarily mean that the members of this
body ``handle'' the funds or other property of the organization. On the
other hand, the facts may indicate that the board or other body
exercises such close, day-to-day supervision of those directly charged
with the handling of funds or other property that it might be
unreasonable to conclude that the members of such board were not, as a
group, also participating in the handling of such funds and property.
\8\ Also, whether or not the members of a particular board of trustees
or executive board handle funds or other property in their capacity as
such, certain of these members may hold other offices or have other
functions involving duties directly related to the receipt, safekeeping
or disbursement of the funds or other property of the organization so
that it would be necessary that they be bonded irrespective of their
board membership.
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\8\ As to group coverage, see Sec. 453.16.
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(b) Nature of responsibilities as affecting ``handling.'' With
respect to particular responsibilities of boards of trustees, executive
boards and similar bodies in disbursing funds or other property, much
would depend upon the system of fiscal controls provided in a particular
trust or labor organization.
The allocation of funds or authorization of disbursements for a
particular purpose is not necessarily handling of funds within the
meaning of the section. If the allocation or authorization merely
permits expenditures by a disbursing officer who has responsibility for
determining the validity or propriety of particular expenditures, then
the action of the disbursing officer and not that of the board would
constitute handling. But if pursuant to a direction of the board, the
disbursing officer performed only ministerial acts without
responsibility to determine whether the expenditures were valid or
appropriate, then the board's action would constitute handling. In such
a case, the absence of fraud or dishonesty in the acts of the disbursing
officer alone would not necessarily prevent fraudulent or dishonest
disbursements. The person or persons who are charged with or exercise
responsibility for determining whether specific disbursements are bona
fide, regular, and in accordance with the applicable constitution, trust
instrument, resolution or other laws or documents governing the
disbursement of funds or other property should be considered to handle
such funds and property and be bonded accordingly.
[28 FR 14394, Dec. 27, 1963, as amended at 30 FR 14926, Dec. 2, 1965]
