Audit?

[xrvr]

Treasurers report in the BBeret. No audit or review by CPA in ten years? jim

[wkerfoot]

That's right.

Bill

Originally Posted by zigzagguzzi

Treasurers report in the BBeret. No audit or review by CPA in ten years? jim

[xrvr]

Really? with so many concerned as to club finances, I would think an audit would be called for. jim

[pmclemore]

From what I have seen, the protesting members' issues with finances is not so much whether funds were not reported correctly (whether or not the financial statements are accurate) but with whether the funds were expended for the right things. Examples are whether too much was spent on travel given the amount of funds available or how much is spent in marketing.

An audit would not help you there; I suspect that all expenditures were properly authorized and booked.

As for the how the decisions are made, that is why officer elections matter.

Pat

[Gene]

There is more theft by employees and officers in nonprofits than you might realize. Sloppy accounting and poor decisions are common.

Ten years without an audit is amazing for an organization as large as the WBCCI. I have no idea what Ohio law says about periodic audits, and for that matter, one should check Sarbanes-Oxley too. After the Enron scandal, S-O was adopted by the feds to prevent fraud and theft and some provisions apply to non-profits too. It looks like an audit is not required, but directors could be in trouble if theft or malfeasance of some sort is discovered and the board never or rarely has an audit.

Here are some links on S-O (one copied a lot from the other) http://www.boardsource.org/clientfil...anes-oxley.pdf

The Sarbanes-Oxley Act and Implications for Nonprofit Organizations

Gene

[Nuvite-F]

You may have noticed that one of the bylaw changes at the 2009 (I think) midwinter IBT required the books to be kept in accordance with Generally Accepted Accounting Principles (GAAP). Prior to that time that was not a requirement.

Under Ohio law (Ohio Revised Code 1702.15) any member or an attorney or accountant designated by them can examine the books of the corporation, but it's on the member's dime. I asked my own accountant, who has as clients a number of medium sized nonprofits, how much a decent audit of WBCCI would cost and she guessed somewhere between five and ten thousand dollars.

So if anyone wants to pony up the cash for an audit, feel free, but I personally doubt you will find any smoking guns. The club loses money because many of its costs are essentially fixed and fewer members are renewing and coming to the international rally. Pretty simple, really.
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[xrvr]

Why are you so sure? jim

[Nuvite-F]

Why not?
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[LI Pets]

I think you will see an audit review soon, it costs about $4,000.
From an independent firm.

[Gene]

Originally Posted by LI Pets

I think you will see an audit review soon, it costs about $4,000.
From an independent firm.

Audits vary a lot in price and it pays to shop around. I think $4,000 is about right.

Gene

[Jack46]

As a chief executive for a non-profit with a $5M annual budget, I do have to take exception with Gene's comments about "theft by employees and officers". However, a lack of expertise, poor decisions, etc. is another matter. The vast majority of non-profit staffs and volunteers are hard working and dedicated trying to do their job in their communities with a lot less in the way of resources than they had five years ago. That being said I too am surprised that WBCCI's bylaws do not require a regular audit or at least a review, by an outside firm. But I would be very surprised if an audit for an organization as large as WBCCI could be done for anything like $4,000. Our costs about $15K and staff does a great deal of the preliminary work. Jack

[Gene]

I am sure the "vast majority of non-profit staffs and volunteers are hard working and dedicated". I have been involved in a number of nonprofits and know this to be true.

However, nonprofits are not immune to employee or officer theft. One problem with noticing it is the feeling that people involved with nonprofits are honorable wouldn't do such things. As a result, no one keeps an eye on things. This is the same "reasoning" that causes some nonprofits not to do audits. The most likely problems are with men who have had a change in status—children arrive or medical problems are two stressful financial issues for them. They have a sudden need for money and the low pay in many nonprofits makes it difficult for them. They often tell themselves they will repay the money later, but can't.

I don't have statistics, but lawyers who specialize in nonprofit law have told me there are more problems than people think. Most such cases are kept quiet because they reflect badly on the organization and scare off donors.

Costs of audits vary considerably depending where you are. Costs on the East Coast are higher than most of the country. A $700,000/year nonprofit I used to be involved in paid about $2,500 for an audit several years ago—incomes are much lower in western Colorado than Virginia or other metro areas.

[Aage]

Originally Posted by Jack46

But I would be very surprised if an audit for an organization as large as WBCCI could be done for anything like $4,000. Our costs about $15K and staff does a great deal of the preliminary work. Jack

Another common thing I have seen with medium to large companies is that some outside suppliers that the company may have done businee with for many years are never "shopped" to ensure that the fees they charge for the services they render are competitive.

"Oh no, we've always done business with <name>. He is as honest as the day is long..."

Reminds me of one of the joke definitions of a consultant: it's a person from out of town with a briefcase that knows the President.

[wkerfoot]

I believe that the quote of $4,000 is for a review not an audit. The quote for an audit was $16,000 as I recall.

Bill

Originally Posted by Jack46

As a chief executive for a non-profit with a $5M annual budget, I do have to take exception with Gene's comments about "theft by employees and officers". However, a lack of expertise, poor decisions, etc. is another matter. The vast majority of non-profit staffs and volunteers are hard working and dedicated trying to do their job in their communities with a lot less in the way of resources than they had five years ago. That being said I too am surprised that WBCCI's bylaws do not require a regular audit or at least a review, by an outside firm. But I would be very surprised if an audit for an organization as large as WBCCI could be done for anything like $4,000. Our costs about $15K and staff does a great deal of the preliminary work. Jack

[Ed Emerick]

Originally Posted by Aage

Reminds me of one of the joke definitions of a consultant: it's a person from out of town with a briefcase that knows the President.

I don't carry a briefcase, but I do know what the President wants. That's my job as a Consultant. Its the people who work for the President that have to sweat out what I will find...............

[Nuvite-F]

Why do you suppose the leadership would want to pay for an audit?

The only reason I can think of is to lend credibility to another dues increase.
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[pmclemore]

Audits don't find frauds; at least they rarely do. Audits are tests of the representations of management, and test of internal controls. S-O not withstanding (what a waste of resources, by the way). Now - if an audit is in response to a request for an investigation then they can be quite effective.

As long as expenditures are approved appropriately, and are reported accurately, there will be no issues in the audit.

Most of the complaints I have seen on this Forum have been with how money is spent - not whether management has approved of it or not. Two completely different issues.

I suspect it is highly unlikely that funds have been spent without proper approval. Whether the funds are spent the way the general membership would choose is another matter. But then, it may be that the general membership just doesn't care. At the end of the day (sorry for the cliche') it is management that is responsible. And if they are elected again and again, then that is the ball game.

Pat