Great piece in Saturday's JG

There are two writers that I especially like at the JG: Dan Stockman and Ben Lanka. Dan Stockman has had some great investigative pieces in the JG in recent years.

Check this one out:

<http://www.journalgazette.net/apps/pbcs.dll/article?AID=/20071014/LOCAL10/710140318>

I have not reviewed the tax returns or "books" of "Up the Stairs" and I am relying on the JG for all of my information.

The story details accounting"discrepancies" at a local not-for-profit. The below items need to be fixed; but, are not as big of a deal as the items that follow...

1. The group has done a poor job of "bookkeeping" over the last several years.
2. The group has filed inaccurate tax returns for the last few years.

These items are more normal then you might think. We often take on new clients who are "in trouble" with either the IRS or the Indiana Department of Revenue. We end up going back 3 years in most cases and "fixing" their books.

There are also several items in the story that are extremely disturbing:

1. They are controlled by a five person Board. Their current President has been President since 2006 and has been a Board member for more then ten years. He said that he has never seen the group's tax returns. If true, this is a major problem!
2. Another man has been on the Board since the 1980's and was the previous Treasurer. According to the piece he:
Was not aware the group had reported an $18,000 discrepancy THEN
Said he had forgotten about the $18,000 discrepancy THEN
Said he had read last years tax return THEN
Said he could not remember is he had read any tax returns since 2002.
Heck, maybe Karen Richard will appoint a Special Prosecutor to investigate this...
3. Their previous President (2005 and part of 2006) proposed an audit in July of 2006 and contacted the Indiana AG and the Allen County Prosecutor. Both organizations told her there would have to be an audit PRIOR to an investigation... (This is a major problem as well, if the President of a Board reports a problems and asks for an investigation then there most likely should be an investigation) The previous President then properly resigned.
4. Another Board member was on the Board for two months in 2006 and was then kicked off, according to him he asked too many questions...

Here is my take on this:

1. Board members should take their jobs seriously. Board members should be qualified to hold the posts they hold.
2. It sure sounds like this not-for-profit has large problems. I think that the Allen County Prosecutor should investigate them. Not-for-profit status has to be awarded and there are requirements that must be met to retain not-for-profit status.
3. Board's of Publicly held companies now have to have a financial professional on their Board; it is a legal requirement. This Board should immediately find one and preferably two financial professionals to join their Board and help them implement proper accounting and reporting procedures.
4. The group should be FORCED to get an audit.

What do you think?

Mike Sylvester

P.S. I did cancel my subscription to the JG per an earlier post and I will miss reading some of their pieces...