SSA in Crisis: Can It Heal Itself? [LONG]

I was suggesting what Bill has said but I did so without
any knowledge of the availability of such a person.

Looking at your problem dispassionately as I can, I
see that you are faced with a paradox. Those best able
to fix your current problems may be those who have
taken you there in the first place if this is the case
it is purely a matter of trust and credibility. If
that trust and credibility can be sufficiently restored
in the short term by an independent outsider, an honest
broker, then this could be a way forward to solve your
short term problem.

One thing that all the members have to decide is what
action are they calling for, one the one hand punishment
and retribution or on the other a speedy resolution
to the problem. The first will take for ever and you
will still at the end have a problem to fix because
while you tear an organisation apart it becomes disfunctional.
My suggestion may keep in place a functioning organisation,
perhaps a flawed one, but that can be corrected when
the immediate problems are overcome. It really does
come down to trust and credibility and that decision
can only be made by the members of the organisation.
No organisation functions well when everyone is looking
over their shoulder trying to cover their own back.
Perhaps it is worth considering where you would be
if the entire management of the SSA resigned today.
I would suggest that this would not move you forward
in a practical sense so perhaps you should be careful
what you wish for.

Please do not think that I am in any way telling you
what to do, I am only too aware that I do not have
the right to do that, but it may be helpful if everyone
searches within themselves and decides what is best
for the organisation because at the end of the day
this is what will be best for the many glider pilot
members. As I have said previously anything has to
be better than having glider pilots at each others
throats with all the negativity that such actions bring.


I hope that what I have said is taken in the spirit
in which it was intended, to help fellow glider pilots,
there is no intention of critisising any individual
or point of view.

Don
ASW17401 in a wet Scotland waiting for wave, but at
least the malt whisky is good :-)

At 23:06 26 September 2006, Bill Daniels wrote:
Well, no. I think Don is politely suggesting that
other national
soaring clubs like the BGA and perhaps the DAeC could
offer useful
outside views in the spirit of a concerned friend and
neighbor.


If this is the case, I would take it as a good idea.
An outsider can
sometimes offer new perspectives and, having no ultimate
stake in the
matter at hand, may even be heard over the noise.


It would be nice if there were a forum less public
than this one where
internal matters of the SSA could be discussed by the
membership. That
there isn't such a forum is perhaps a small part of
the problem.

Bill Daniels
'5-BG' wrote in message
...
don.. you wrote 'It seems
to me as an outsider that every few years the SSA
tries
to tear itself to bits on a public forum and this
is
not very attractive.

it is the only forum we have.


I believe that a court appointed master is along
the lines of what
you are suggesting.

'Don Johnstone' wrote in
message ...

I apologise for responding to this at the top but
if
I put it where I should it's a long scoll. As a
complete
outsider I have to say that the biggest problem
the
management of SSA face is one of credibility. It
seems
to me as an outsider that every few years the SSA
tries
to tear itself to bits on a public forum and this
is
not very attractive. I can only hazard a guess
as to
the feelings of the ordinary members.
Whichever way you look at this the only way to
restore
credibility is to have the problem looked at by
an
independent body who's credibility is unimpeachable.
This may prove to be a difficult task as those
who
are most qualified could also be thought to be
too
close to the organisation. Perhaps it might be
considered
appropriate to second into the independent body
a complete
outsider, a senior executive from a foreign gliding
or similar USA based GA organisation, not to judge
the detail or make pronouncements on USA law, but
to
provide a completely independent person with no
conflict
of interest or indeed interest in the outcome.
You may feel that as an outsider it is none of
my damm
business and of course you would be right, it isn't,
but anything is better that seeing glider pilots
at
each others throats. Right now perception is more
important
than truth to many.
Of course there will be those who will never be
satisfied
and that has to be accepted, you can only do the
best
you can.

At 20:18 26 September 2006, wrote:
(with apologies to non-U.S. readers)

Most of the postings on this subject follow a predictable
pattern:
'what a bunch of stupid/unethical/indifferent (pick
one) idiots we have
at SSA; why don't they just [fill in the blank
with
your favorite
brilliant solution]' A few (including mine) urge
patience,
support, and
a chance to let the process work.

Reluctantly I'm now changing my position from 'be
patient'
to 'do
something.' For the specifics, skip to the ACTION
ITEM
at the end. The
rest of this is just a long-winded description
of a
discouraging
journey the past few weeks.

My new stance may seem like heresy given my past
support
of SSA. But
after more than three weeks of working with and
communicating
with SSA
directors, including the Executive Committee (ExComm),
I confess I no
longer have complete confidence that the current
organization
can deal
properly with this crisis.

Like most, I learned about SSA's tax filing/remittance
problems from
Dianne Black-Nixon's letter 3 1/2 weeks ago. While
publicly urging
patience, I also offered help to directors I know,
including ExComm
members. I agreed with most of their decisions
but
nevertheless had
concerns. Soon I found myself working behind the
scenes
with several
directors who shared these concerns, which were
centered
around
maintaining the confidence and trust of SSA members
during a time when
their faith in SSA would be tested.

Disclosures by ExComm implied that certain SSA
funds
were
misappropriated by SSA's Chief Financial & Administrative
Officer
(CFAO), who has since been fired. But even if the
CFAO
were guilty,
others may share responsibility for allowing this
to
happen. And as
ExComm continued their investigation, the primary
reason
for our
concern was conflict of interest.

In the corporate (and non-profit) world, a conflict
of interest exists
whenever there is an incentive for people in positions
of power and
trust to take actions contrary to the best interests
of those who have
placed their trust in these individuals. It does
not
matter whether
said individuals are trustworthy or competent or
even
whether they
yield to these temptations. If there's an incentive
for them to do the
wrong thing, they are said to be conflicted and
those
conflicts must be
properly addressed.

The conflicts of interest with SSA's crisis relate
to the fact that
those working to resolve it--i.e., ExComm, the
Budget
and Finance
Committee (FinComm), and SSA's accounting firm--potentially
share
responsibility for allowing it to occur. I would
include
SSA Executive
Director Dennis Wright (ED) in this group but ExComm
has been careful
to give the impression that they are managing this
situation, not the
ED.

Much outcry on this forum has focused on the decision
to forgo annual
audits. In my opinion, this misses the mark. To
the
best of my
recollection as a former director (for nine years
in
the mid 1990s
through early 2002, including service on ExComm),
previous
FinComms
elected to have annual reviews performed by Johnson,
Miller, SSA's
public accounting firm (CPA) because they were
much
less expensive than
a full audit (if I recall correctly, on the order
of
$20,000 less) yet
provided some assurance that material problems
would
be uncovered.

For those of you without financial backgrounds,
there
are three levels
of involvement by a CPA with a client. For a 'compilation,'
the CPA
simply cranks out standard-format statements using
the client's books
and records. If the numbers add up, the CPA doesn't
do much checking;
they just make it look pretty. For a 'review,'
(which
is what I believe
SSA had in prior years), the CPA goes a step further
and attempts to
uncover material problems. They offer no guarantees
but at least the
accountants look under the hood, so to speak. An
'audit'
(called for by
the By-Laws) involves many more tests and checks
based
on which the CPA
expresses an opinion as to whether the results
conform
to generally
accepted accounting principles. An audit provides
the
highest level of
assurance but, of course, costs the most, because
of
the extra work
involved and also the liability assumed when expressing
an opinion.

In the past, the annual review plus the close relationship
between the
CPA and FinComm--who played a very active role
in the
SSA's finances at
that time--plus performing an occasional full audit
made the question
one of economics as well as the By-Laws. In effect,
FinComm made the
decision to self insure, judging that an occasional
loss, though
unlikely, would still be less than the accumulated
added cost of doing
an audit every year. I suspect that may still turn
out to be true
despite the magnitude of the potential loss. I
recall
that the Board
was made aware of this policy (but not asked to
approve
it, per se) on
at least one occasion while I was a director but
I
cannot be certain.

In my opinion, then, the critical question is whether
FinComm retained
Johnson, Miller to continue preparing SSA's annual
financial
statements, and more specifically to do annual
reviews.
ExComm's
disclosures indicate they did not.

Here's where the potential conflicts arise. Good
governance
calls for
FinComm to retain the CPA, who would report directly
to them (not to
the CFAO or the ED or ExComm or Board), to prepare
the annual financial
statements (with a review or, under the By-Laws,
an
audit). ExComm
meeting minutes note that Johnson, Miller appears
not
to have been
retained to do any such work after 2002. If FinComm
did retain them, in
writing or orally, then Johnson, Miller may (and
I
emphasize the word
'may') have some culpability and there is an inherent
conflict with
their continuing to work on the SSA account. In
that
case, it gets
messier: ExComm meeting minutes indicate that Johnson,
Miller selected
the lawyer in Hobbs that SSA engaged. This attorney
quickly recommended
that SSA give Johnson, Miller 'carte blanche to
do
what they needed
with the SSA financial records.'

On the other hand, if FinComm did not retain Johnson,
Miller, then
FinComm itself may (again, 'may') have some culpability,
perhaps shared
by ExComm and the Board (although directors could
argue
they acted in
reliance on FinComm) and there is an inherent conflict
with their
playing a key role in this investigation.

It's very important to reiterate that competence
and
trustworthiness
are irrelevant to this discussion. It doesn't matter
whether the CPA or
FinComm or ExComm did anything wrong, intentionally
or otherwise. And
I'm not suggesting they did. On the contrary, I've
been generally
impressed with the work done by ExComm so far.
What
matters is that
people who may have legal liability and therefore
a
vested interest in
the outcome are deeply involved in this investigation.
That's a classic
conflict of interest. And it's a recipe for losing
the confidence of
SSA members at a time when we need it most.

One remedy for conflict of interest is disclosure.
Depending on your
point of view, disclosure to date has been adequate
but sometimes
reluctant.

Another remedy is bringing in new people to do
the
investigative and
remediation work. This is risky. Those who know
the
most about SSA and
are in the best position to help are probably already
involved. It's
difficult enough to get competent volunteers, much
less to work for
free in Hobbs going through accounting records
and
meeting with
attorneys, bankers, the IRS, etc.

A third and, I believe, best remedy is an independent
group to monitor
the actions of ExComm, the accountants, the attorney(s),
staff, and
others involved. This is where the discussions
with
the concerned
directors quickly arrived. Ultimately this resulted
in a formal
proposal for an Oversight Task Force (OTF). Four
SSA
members were
prevailed upon by these directors to serve on the
OTF:
myself and three
other individuals--a highly experienced accountant,
an attorney, and a
successful businessman. Because of my prior Board
service,
I initially
declined to serve on the OTF but was persuaded
by the
two concerned
directors because of my knowledge of SSA, my business
background, and
the fact that my tenure ended in early 2002, prior
to the Larry
Sanderson affair.

The OTF proposal was made to the full Board by
one
of these concerned
directors approximately two weeks ago with, unfortunately,
a generally
negative reaction.

How could this happen? Well, some directors had
genuine
questions about
certain provisions in the OTF proposal but I believe
the negative
reaction was due in great part to misunderstanding
the OTF's purpose.
Instead of oversight (i.e., monitoring, not decision
making), some saw
this as an attempt to usurp power from the Board
or
ExComm. Some feared
it could interfere with and/or delay the investigation
or reveal
confidential information. Others viewed it as a
no-confidence
vote. In
frustration, I 'recused' myself from participation
on the OTF and made
a direct appeal to the Board explaining OTF's purpose
in more detail
and arguing that it was the Board's fiduciary duty
to take action to
oversee the activities of ExComm, FinComm, and
others
who were
conflicted.

With this clarification, responses to our proposal
were gratifyingly
more favorable. In fact, ExComm subsequently expressed
their support
for the OTF. To be fair, at least some ExComm members
(including Dianne
Black-Nixon) had voiced support all along.

That was nearly two weeks ago. Since then, nothing
much has happened.
ExComm continues to manage the investigation and
to
make decisions. My
sense is that there may be debate even within ExComm
on how to proceed.
More than a week ago, one ExComm member emailed
me
to say it would be
not be practical to hold a tele-conference special
Board meeting for
all 26 directors and suggested delaying action
on the
OTF until the
scheduled Board meeting at the end of this month.
My
response was that
with every passing day, decisions were being made
that
could be
criticized by SSA members and should be overseen
by
an independent
body. I often participate in conference calls with
at least that many
people dispersed over the U.S. and India and do
not
think a properly
managed special meeting--with one agenda item--would
be terribly
difficult. Rightly or wrongly, I interpreted this
as
foot dragging. If
ExComm had supported the OTF with the same admirable
alacrity with
which they jumped on the initial disclosure of
the
tax problems, the
OTF would already be at work and I would not be
writing
what some will
doubtless interpret as a disloyal or disruptive
public
posting.

ExComm believes it would be inappropriate for them
to charter the OTF
without full Board approval. They have a point,
but
this reasoning
leads inexorably to the conclusion that, absent
oversight,
ExComm
should not be making major decisions about the
investigation
or
corrective action, either.

Ironically, with one troubling exception (see below),
I'm less
concerned with what ExComm is actually doing in
Hobbs
than with how SSA
members may come to perceive or question their
actions.
To date, ExComm
has moved decisively to manage a tough problem
and
it's difficult to
quarrel with their actions.

But many members still have a sense that a previous
ExComm attempted to
cover up the Larry Sanderson expense account scandal
three years ago.
We cannot afford the same cynicism, or worse, now.
While most members
understand that some things must remain confidential
for legal reasons,
they are uncomfortable or angry if they suspect
they
are not getting
the real story. And on that score, ExComm's inaction
is troubling.

I mentioned an exception, and it's a big one: how
responsibility
for
this problem is being assigned. ExComm's communications
have emphasized
the ED's failure to inform the Board of the non-filing
of tax
information returns. At the same time, however,
ExComm
has minimized
the 'errors of omission' of the ExComm/FinComm/Board
in not retaining
the CPA to examine the SSA's annual financial statements.

In fact, both lapses are errors of omission. Yet
my
impression is that
the ED is being positioned as the one most responsible
for allowing
this crisis while FinComm's failure to act is being
dismissed. For that
matter, ExComm admits that the CFAO reported directly
to the Board, not
the ED, until mid 2005 so there is ample reason
to
share responsibility
for this. While I do not have the facts available
to
ExComm, the
questions raised are precisely the reason that
independent
oversight is
needed over those who find themselves in conflicted
positions, for
their sake as well as the members'. And it is needed
immediately, not
next week or the week after that or after the next
major staff or
organizational decision is made.

If this were a public corporation, plaintiffs'
attorneys
would already
be circling like vultures with the prospect that
directors
could be
sued and found guilty of breach of their fiduciary
duty, in particular
those on FinComm and, likely, ExComm. But there's
not
enough money here
to interest them. Nor do I believe we should necessarily
seek to punish
whomever may have contributed to this debacle.
This
was a failure,
albeit a predictable one, of a flawed system. Yet
I
don't think we
ought to sweep anything under the rug, either.
I believe
most SSA
members would readily forgive the unwitting errors
of volunteer
directors so long as they believe they are being
dealt
with
forthrightly.

I apologize to those I know and respect on the
Board
and ExComm who are
dedicated, well intentioned, and working hard in
thankless
positions.
But I fear that some of them do not fully understand
the danger that
their inaction will increase the cynicism and apathy
already evident in
many SSA members. The lack of urgency and reluctance
to initiate
oversight by ExComm and the directors alike suggest
that some of them
still don't 'get it.'

Despite protestations to the contrary, there is
a tendency
in times
like this for ExComm and the Board to 'circle the
wagons.'
It's a
natural human response to threats, both from the
original
problem and
from outraged SSA members who want someone, anyone,
to pay in blood. It
is a tendency against which we must fight hard
if we
are to maintain
the trust of our members.

Sadly, at this point individuals who generously
agreed
to serve on the
OTF weeks ago are growing cynical about the willingness
of SSA to
address its problems. Clearly I am, too.

On a positive note, I see this unfortunate crisis
as
a wonderful
opportunity to make major changes to SSA to improve
its financial
position and increase its effectiveness. The current
Board structure is
indeed cumbersome and ineffective. It also makes
sense
to examine which
functions the SSA should perform and whether some
of
these should be
outsourced. And I agree with those who believe
we should
explore
locations other than Hobbs. We have a chance to
'start
over' with a
clean sheet of paper...without losing those elements
of SSA that are
critical. Yet what I have seen in the past 3+ weeks
leaves me worried
that we will squander this opportunity.

ACTION ITEM: Please contact your directors and,
while
offering your
continuing support and trust, urge them to demand
the
Oversight Task
Force or something like it be put in place immediately.
All of
us--members, directors, ExComm, and staff alike--need
the clarity and
assurance that only an independent observer can
provide.

In the meantime, please maintain the degree of
civility
on this forum
that I hope you would if the discussion were taking
place in person.
Ironically, the offensive and irresponsible behavior
of some
participants on rec.aviation.soaring alienates
most
SSA members and
encourages our leadership, with some justification,
to dismiss these
critics as just a bunch of loudmouth idiots. Those
who insist on
popping off indiscriminately with wild allegations,
accusations, and
statements of opinion-as-fact serve no one but
their
own egos. Their
actions--presuming they actually care about the
future
of SSA and the
great things it has and can still do for soaring
pilots
in this
country--are counterproductive.

Chip Bearden
SSA Member since 1965

Wow some really long winded and good comments on this subject.
Simple answer: The CEO, Excom and the CPA were all either sleeping at
the switch or are all incompitent (that may be one and the same). It's
obvious that the CFO was not being honest and possibly criminal. But
the deligator (CEO & EXCOM), the overseers (CEO & EXCOM) and the tax
prepairers (CPA) were difinetally not doing there jobs.

About 25 days after every quarter my in house book-keeper (she's my CFO
although that's actually my title along with CEO) prepairs our
quartely payroll tax reports. I look at them sign them and she sends
them off. At the end of our tax year she does an annual pay roll
report and the same happens.

Once a year my CPA who costs us about 5k-6k a year to prep my corprate
tax returns comes to our (trucking) terminal and spends about 8-12 hrs
( @ $200 per hour) going over our figures (and he buys us lunch, we
feel special). He's intimant with my company's numbers and operation.
He recognises and asks questions about our payroll & workmans comp and
all other aspects of our operations.

CHECKS & BALANCES

I've been doing this for 16 yrs now. I've survived an IRS audit with
the help of my CPA but that's his job also ( @ $200 an hour).

Don't let the SSA die because of mis-management disease.

Chip,

You make many valid points but the idea of going to the courts or doing
a BK is not a good solution. I have 25 years of experience in the
finalcial world and have seen many BK events. The primary action of
any court appointed Boss or BK Trustee is to get the thing done not
take the care or time that an owner would hope for. A big issue is
that the time it takes for one of these to do anything would be
messured in months not days and weeks. If we go BK that would be the
end- at a minimum - of the group insurance, relationship with all the
various alphabet organizations not only in the USA but internationally
( a court appointed Master would have no influence with any of these
organizations ). Further, if the Foundation is not a separate 501-3c
organization those funds become controlled by the BK trustee. All
members would fall into the class of unsecured creditors and would have
no influence in the actions of the contolling entity and would get
nothing!! Trying to restart the SSA or some new organization would be
a mess. ( Even if we did a Re-organization BK we would be ineffective
for a long time going through the legal process and outsiders would be
making decisions for us in the interim.) Just look at the various
opinions of the individuals that have commented on this subject and
imagine how many splinter groups would like be the BOSS.
Yes, this is a mess but lets keep working on overcoming it nd creating
a better SSA from the organization we have. I stronly agree with the
formation of an independent oversight taskforce. To give this group
credibility it should be completely "independent" of any relationship
with present and past Boards. It should be comprised of individuals
with backgrounds in business, finacial, legal, acounting and management
practices.

Tom Dixon
Idaho

Tom,

There have been many misrepresentations in this discussion over the
past few weeks that I have let go by but because this one has my name
on it, I must respond! Owing to the length of my original posting
and its inclusion in subsequent responses, it can be difficult to
determine who said what. For the record, please note that I am NOT
advocating recourse to the courts, much less bankruptcy!! (that was
another poster's suggestion)

On the contrary, I believe there is ample opportunity not only to
resolve the current problems without these actions but to move forward
with an even more effective SSA, perhaps in a modified form. But a
critical pre-requisite is having the trust of our members. For that, as
you reiterate, independent oversight is required.

There are actually two steps: 1) resolve the current crisis, and 2)
explore future alternatives for SSA. These are two distinct, albeit
related activities most probably calling for separate efforts. The
Oversight Task Force (or something like it) is necessary, I believe,
for the first. A Restructuring Task Force (or something of this sort)
is necessary for the second. Both groups must be staffed by respected
people who are competent, independent-minded [though I wouldn't exclude
members from either group simply because of past or current association
with SSA], conceptual, organized, and able to think creatively. Don
Johnstone's suggestion to seek membership from outside the SSA, even
from outside the U.S., is a worthy idea that we should pursue.

Chip Bearden

tom;
you make some good points re the court appointed master in normal bk events. I believe that it is possible to petition a court to appoint a master with a charter that is to reorganize the membership and the society and not to liquidate. It will take time.. If properly defined at the outset, the master could identify several possible strategies and possible structures. There are NOT that many. He could carefull lay out the options to the membership for discussion and a vote.
The point is that a 26 member decision making body is dysfunctional and has proven itself to be unable to carry out its responsibilities. several times.
A strict time line for presenting possible association models.. say 2 to 3 months, followed by a discussion period of a month then a vote and the ssa would be ready to hold general elections for new governing body, whatever that may be. This is possible and feasable. I do not believe that current board is going to do it any faster or better than a single competent master who works full time on the project. it will be expensive.
Re insurance.. what we have now is a very good group policy. As I have said before, it is the main reason that i belong to ssa and the primary benefit that i recieve from membership. Costello could easily set up a group that is SEPERATE from the SSA. Look at what credit unions have done recently. it used to be that you had to belong to a narrow group to belong.. now just having a pulse qualifies you for membership.. point is that a group of "donors to the foundation" could easily replace the ssa as the soaring group for insurance purposes. That could be done out of costello's office with a simple PC and perhaps one extra staff. basically a very narrow special interest group that does nothing but seek the best deal for the group on glider insurance.
hopefully, pat costello will read this and maybe consider it.. maybe some other insurance agent will jump on the idea..
take away the insurance aspect of ssa membership and the association will be back to real basics and need to focus on what the members really want. imho this would be positive.

5bg
wrote in message ups.com...
Chip,

You make many valid points but the idea of going to the courts or doing
a BK is not a good solution. I have 25 years of experience in the
finalcial world and have seen many BK events. The primary action of
any court appointed Boss or BK Trustee is to get the thing done not
take the care or time that an owner would hope for. A big issue is
that the time it takes for one of these to do anything would be
messured in months not days and weeks. If we go BK that would be the
end- at a minimum - of the group insurance, relationship with all the
various alphabet organizations not only in the USA but internationally
( a court appointed Master would have no influence with any of these
organizations ). Further, if the Foundation is not a separate 501-3c
organization those funds become controlled by the BK trustee. All
members would fall into the class of unsecured creditors and would have
no influence in the actions of the contolling entity and would get
nothing!! Trying to restart the SSA or some new organization would be
a mess. ( Even if we did a Re-organization BK we would be ineffective
for a long time going through the legal process and outsiders would be
making decisions for us in the interim.) Just look at the various
opinions of the individuals that have commented on this subject and
imagine how many splinter groups would like be the BOSS.
Yes, this is a mess but lets keep working on overcoming it nd creating
a better SSA from the organization we have. I stronly agree with the
formation of an independent oversight taskforce. To give this group
credibility it should be completely "independent" of any relationship
with present and past Boards. It should be comprised of individuals
with backgrounds in business, finacial, legal, acounting and management
practices.

Tom Dixon
Idaho

Brian Glick wrote:
Chip

I could not agree with you more. No stone should be left unturned in getting
to the bottom of this. Unfortunately, the only way to use a 'broad brush"
and clean this mess up would be to sweep out the "insiders" and replace them
with people that will eventually become insiders. We seem to elect our
directors now, so I am at a loss to tell you if we are all misinformed when
we vote, or we have been all lead astray. I repeat what I said in an earlier
post, and that is, the people that I know on the Excomm and the board are
above reproach. That being said, does that make every member that voted for
their directors culpable in this situation? If that is so, what is to stop
an insurance company from coming after all of us. The answer: NOTHING! I did
indeed vote for my current director, and have every confidence that the job
being done by this person is in the best interests of all of us in the
society. Hindsight is really 20\20 and we are all going blind trying to say
what should have been done differently. It is too late to cry over spilled
milk.

Brian,

You are not a director and DO NOT have the liability that the directors
have. PERIOD.

Directors DO have a LEGAL LIABILITY (except in the 3 states that have
laws providing immunity from STATE LAW, not FEDERAL). To say that "we
had good intentions, but screwed things up" IS NOT A DEFENSE. Directors
are OBLIGATED to follow the Bylaws of the organization; not doing so
opens them up to personal liability, as it should. This is directly out
of the SSA's Bylaws:

SECTION 2 - Annually, after the close of the fiscal year, the books and
accounts shall be audited by an independent accounting firm and the
findings and opinions of the firm published and distributed to the
Directors, and to others requesting same.

It says "shall", not "may be" or "if we feel like it". If the directors
feel that the by laws are antiquated or inappropriate they have to
change them, which requires a two thirds vote by all of the Directors.
There is nothing that is "hindsight" or "20/20" here (unless you are
blind and can't read the Bylaws).

Without actually reading the D&O (directors and officers) liability
policy it is impossible to say what it covers, but it probably excludes
taxes, fines, penalties and interest. That is if the SSA even HAS a D&O
policy.

I contacted my regional director after the last fiasco, asking some
pointed questions about finances. After some prodding I got a copy of a
recent finance statement; it was PATHETIC! There was very little detail
(the whole thing was less than a page long). He said the Board's
intention was to post financials on-line, but that never happened.

Anyone who is even THINKING about becoming a director should start by
googling "non-profit director duties and responsibilities"; you will
get an eye full. I do speak with some experience; I have been on the
board of a $10M non-profit for over 10 years.

Tom Seim
2G
Richland, WA

I still think people are missing the point regarding SSA's financials.
When I was on the Board in the late 1990s, I raised the issue of the
annual audit. I learned that the difference in cost of an audit over
the review we had done most years was on the order of $20,000 to
$30,000 per year (it's probably more now). And the Budget and Finance
Committee (FinComm) at that time kept in close touch with the
bookkeeper and the CPA firm. FinComm's rationale for not ordering an
audit every year was that it didn't make economic sense, as I noted in
my posting. And they were right...economically. We long ago saved more
in audit fees than this debacle will cost us. The other side of that
coin is that SSA would be much worse off economically now if audits had
been done every year.

As Tom Seim notes, the proper way would have been to change the ByLaws.
I'm not sure why that wasn't attempted except that any change in the
ByLaws was a monumental undertaking and this one would have been
controversial. So FinComm exercised their business judgment.

People have popped off about it being illegal to ignore the ByLaws. I'm
no lawyer but I suspect that's not strictly true. There may well be
civil liability. But for that, one must prove damages. And now we're
back to SSA being better off having not paid for all those audits even
after losing a bunch of money this time.

The REAL issue is why the Budget & Finance Committee (FinComm) chose to
stop doing reviews and took a much more hands-off approach to SSA
finances. The second half of that question is answered by "SSA hired a
CFO who did that." But prudence should have required FinComm to
maintain a close watch on the finances while continuing to engage the
CPA every year for at least a review. As it was, there appears to have
been no CPA engaged and relatively less oversight by FinComm, leaving
SSA totally dependent on the CFO. We know where that led.

And to return to my posting again, either FinComm or the accountants
(or both) must bear responsibility for letting this happen. Perhaps
ExComm. Yet all those parties are still deeply involved in
investigating and remedying it. That's a conflict of interest. That's
why independent oversight is needed...immediately.

ExComm is meeting tomorrow (29 Sep). The Board meeting is this Saturday
(30 Sep). Let your directors know how you feel. They do react to
rationale pressure.

Chip Bearden

Chip;
I still don't think that you GET IT!!!

what the board did was to ignore the bylaws which govern the association and their actions. Illigal??? maybe, depending if any benefitted from these actions which i doubt. Civil liability.. YES there is plenty.
As i have said before, IF the society has insurance, and if the board collects on it, you can bet that each and every member will be in court defending himself at his own expense for the next several years against the insurance company which will almost surely look for a deep pocket or two to get its money back.. thats the way insurance companies work.

THIS IS WHY THE BOARD HAS A CONFLICT OF INTEREST!!!

The fin com DID NOT HAVE THE AUTHORITY TO EXERCISE JUDGEMENT in this case. it could have raised the issue and changed the bylaws. but it simply did not have the authority to unilaterially ignore its mandate.. no matter how good the reason.

We are now going to be treated to the results of a closed door meeting(s) during which these same people are going to be making judgements and decisions. I certainly hope that they have a copy of the bylaws and an attorney handy.

You say that "we saved more in audit fees than this will cost us".. I wonder.. how easy is it going to be to get new directors? will the membership simply leave?? will ssa survive???

Look, this matter has, by admission of excom, been referred to police and D.A. That implies money was stolen. that is illigal and grounds for collecting on officer insurance.

THIS BOARD IS BROKEN and anything that they do is subject to challange and controversy.. I certainly hope that their resignation en masse is the outcome of this weekend.

lessons have been put up on the board... i certainly hope that future directors will take them to heart.

The board note of the 25th did not mention the ED... what is that all about??? he is a hired hand who screwed up at best, or was in on the deal at worst.. why is he still on the payroll???




wrote in message oups.com...
I still think people are missing the point regarding SSA's financials.
When I was on the Board in the late 1990s, I raised the issue of the
annual audit. I learned that the difference in cost of an audit over
the review we had done most years was on the order of $20,000 to
$30,000 per year (it's probably more now). And the Budget and Finance
Committee (FinComm) at that time kept in close touch with the
bookkeeper and the CPA firm. FinComm's rationale for not ordering an
audit every year was that it didn't make economic sense, as I noted in
my posting. And they were right...economically. We long ago saved more
in audit fees than this debacle will cost us. The other side of that
coin is that SSA would be much worse off economically now if audits had
been done every year.

As Tom Seim notes, the proper way would have been to change the ByLaws.
I'm not sure why that wasn't attempted except that any change in the
ByLaws was a monumental undertaking and this one would have been
controversial. So FinComm exercised their business judgment.

People have popped off about it being illegal to ignore the ByLaws. I'm
no lawyer but I suspect that's not strictly true. There may well be
civil liability. But for that, one must prove damages. And now we're
back to SSA being better off having not paid for all those audits even
after losing a bunch of money this time.

The REAL issue is why the Budget & Finance Committee (FinComm) chose to
stop doing reviews and took a much more hands-off approach to SSA
finances. The second half of that question is answered by "SSA hired a
CFO who did that." But prudence should have required FinComm to
maintain a close watch on the finances while continuing to engage the
CPA every year for at least a review. As it was, there appears to have
been no CPA engaged and relatively less oversight by FinComm, leaving
SSA totally dependent on the CFO. We know where that led.

And to return to my posting again, either FinComm or the accountants
(or both) must bear responsibility for letting this happen. Perhaps
ExComm. Yet all those parties are still deeply involved in
investigating and remedying it. That's a conflict of interest. That's
why independent oversight is needed...immediately.

ExComm is meeting tomorrow (29 Sep). The Board meeting is this Saturday
(30 Sep). Let your directors know how you feel. They do react to
rationale pressure.

Chip Bearden

If the board felt that an audit was not cost effective, then the bylaws
should have been changed, not just ignored.

Mike Schumann

wrote in message
oups.com...
I still think people are missing the point regarding SSA's financials.
When I was on the Board in the late 1990s, I raised the issue of the
annual audit. I learned that the difference in cost of an audit over
the review we had done most years was on the order of $20,000 to
$30,000 per year (it's probably more now). And the Budget and Finance
Committee (FinComm) at that time kept in close touch with the
bookkeeper and the CPA firm. FinComm's rationale for not ordering an
audit every year was that it didn't make economic sense, as I noted in
my posting. And they were right...economically. We long ago saved more
in audit fees than this debacle will cost us. The other side of that
coin is that SSA would be much worse off economically now if audits had
been done every year.

As Tom Seim notes, the proper way would have been to change the ByLaws.
I'm not sure why that wasn't attempted except that any change in the
ByLaws was a monumental undertaking and this one would have been
controversial. So FinComm exercised their business judgment.

People have popped off about it being illegal to ignore the ByLaws. I'm
no lawyer but I suspect that's not strictly true. There may well be
civil liability. But for that, one must prove damages. And now we're
back to SSA being better off having not paid for all those audits even
after losing a bunch of money this time.

The REAL issue is why the Budget & Finance Committee (FinComm) chose to
stop doing reviews and took a much more hands-off approach to SSA
finances. The second half of that question is answered by "SSA hired a
CFO who did that." But prudence should have required FinComm to
maintain a close watch on the finances while continuing to engage the
CPA every year for at least a review. As it was, there appears to have
been no CPA engaged and relatively less oversight by FinComm, leaving
SSA totally dependent on the CFO. We know where that led.

And to return to my posting again, either FinComm or the accountants
(or both) must bear responsibility for letting this happen. Perhaps
ExComm. Yet all those parties are still deeply involved in
investigating and remedying it. That's a conflict of interest. That's
why independent oversight is needed...immediately.

ExComm is meeting tomorrow (29 Sep). The Board meeting is this Saturday
(30 Sep). Let your directors know how you feel. They do react to
rationale pressure.

Chip Bearden

5-BG wrote:


THIS BOARD IS BROKEN and anything that they do is subject to
challange and controversy.. I certainly hope that their resignation en
masse is the outcome of this weekend.

If they do, who will run the SSA? Is 5-BG volunteering to help out?