5-BG
September 8th 06, 09:44 PM
The most recent note to members from the board answers some questions but raises many more.
there seem to be two operative theories being investigated:
1. incompetence then panic resulted in the cfo and the ED knowingly conspiring to withhold information and to actually present false reports. Non payment of obligations was due to a shortfall in available cash and they incompetently choose to hide the situation rather than to cut costs.
2. The money was misappropriated (stolen) and disappeared into someones pocket. This was covered up for years by falsifying financials.
the note states "
Your first letter reported that the CFAO claimed his reason for making a unilateral decision not to pay withholding taxes was because of "...a lack of available cash on hand..." Does the Executive Committee believe this?
No. This is why a thorough investigation is underway. "
I guess the board feels #2 is the way things are headed.
We have yet to hear about the status of funds that are sequestered in restricted and unrestricted special accounts for the purpose of furthering special programs. These accounts are not consolidated in the general financial reporting. The first note suggested that these accounts could be a source of emergency funding to pay back taxes.
the note goes on"
SSA Bylaws require a yearly audit. When was this last accomplished?
Our accountants accomplished the last audit on October 31, 2002.
Why has an audit (or outside financial review) not been done since 2002?
The SSA hired its first CFAO during 2002. In retrospect, this may have led to a false sense of security on the part of the Board. Over the ensuing years, the Board decided not to spend funds on audits, instead allocating money on other tasks felt necessary to grow the Society. In retrospect, this was obviously "penny wise, and pound foolish." A full audit by an outside party is planned. "
The board has now public stated that it acted in direct violation of the formal bylaws of the organization. To the extent that the board willfully and knowingly took an action that was outside the bounds of its authority, it is probably liable for damages on a personal level.
Organizations often have insurance policies to protect shareholders/members from illegal acts by officers/boards. I wonder if SSA has such coverage? Of course, the insurance company would, after paying, go after the deep pockets of any involved.
Likewise, the accountants probably have E&O insurance.
OK here is the point... The SSA needs to file for bankruptcy and to be reorganized. A master needs to be appointed by the court to investigate and to vigorously pursue any and all avenues to recapture the lost funds if in fact they were stolen and if in fact that theft was facilitated by an illegal action by the board. To have the board oversee the investigation is a basic conflict of interest and may result in one avenue of recourse being ignored. I simply cannot see the board voting to sue itself individually or as a group.
it is a shame that the decision, taken in 2003, not to have an audit as required by the bylaws, is going to come back to haunt those who made the decision.
we have already seen what happens when the fox is left to guard the henhouse..
there seem to be two operative theories being investigated:
1. incompetence then panic resulted in the cfo and the ED knowingly conspiring to withhold information and to actually present false reports. Non payment of obligations was due to a shortfall in available cash and they incompetently choose to hide the situation rather than to cut costs.
2. The money was misappropriated (stolen) and disappeared into someones pocket. This was covered up for years by falsifying financials.
the note states "
Your first letter reported that the CFAO claimed his reason for making a unilateral decision not to pay withholding taxes was because of "...a lack of available cash on hand..." Does the Executive Committee believe this?
No. This is why a thorough investigation is underway. "
I guess the board feels #2 is the way things are headed.
We have yet to hear about the status of funds that are sequestered in restricted and unrestricted special accounts for the purpose of furthering special programs. These accounts are not consolidated in the general financial reporting. The first note suggested that these accounts could be a source of emergency funding to pay back taxes.
the note goes on"
SSA Bylaws require a yearly audit. When was this last accomplished?
Our accountants accomplished the last audit on October 31, 2002.
Why has an audit (or outside financial review) not been done since 2002?
The SSA hired its first CFAO during 2002. In retrospect, this may have led to a false sense of security on the part of the Board. Over the ensuing years, the Board decided not to spend funds on audits, instead allocating money on other tasks felt necessary to grow the Society. In retrospect, this was obviously "penny wise, and pound foolish." A full audit by an outside party is planned. "
The board has now public stated that it acted in direct violation of the formal bylaws of the organization. To the extent that the board willfully and knowingly took an action that was outside the bounds of its authority, it is probably liable for damages on a personal level.
Organizations often have insurance policies to protect shareholders/members from illegal acts by officers/boards. I wonder if SSA has such coverage? Of course, the insurance company would, after paying, go after the deep pockets of any involved.
Likewise, the accountants probably have E&O insurance.
OK here is the point... The SSA needs to file for bankruptcy and to be reorganized. A master needs to be appointed by the court to investigate and to vigorously pursue any and all avenues to recapture the lost funds if in fact they were stolen and if in fact that theft was facilitated by an illegal action by the board. To have the board oversee the investigation is a basic conflict of interest and may result in one avenue of recourse being ignored. I simply cannot see the board voting to sue itself individually or as a group.
it is a shame that the decision, taken in 2003, not to have an audit as required by the bylaws, is going to come back to haunt those who made the decision.
we have already seen what happens when the fox is left to guard the henhouse..