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change in bylaws..audit requirement



 
 
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  #1  
Old October 7th 06, 07:32 AM posted to rec.aviation.soaring
5-BG
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Posts: 36
Default change in bylaws..audit requirement

the sept 24 minutes of the excom meeting state"
Changes to SSA Bylaws and Foundation Bylaws


The need to make changes to requirements for financial audits and financial reviews were discussed, and it was noted that the Foundation Bylaws specifically provided for review as an alternative to full audit, while the SSA Bylaws did not. It was agreed that the SSA Bylaws should be amended appropriately, and Carswell was instructed to prepare a draft amendment to be considered at the next Excomm meeting and, if approved, presented to the Board for adoption at its September 30 meeting"

The Oct 2 report to members of the full board meeting were totally silent on this matter.

THIS IS AN IMPORTANT TOPIC.

For those of you who might not understand what an audit is following is a summary of the important points. For those of you who understand, please bear with me.

1. An audit by a CPA , as required by the current bylaws, is a formal review of the financial records and statements of an organization. The CPA REVIEWS and does not necessarily prepare, the financial statements. He is professionally obligated to do whatever standard and appropriate audit test he feels are required for him to issue a FORMAL OPINION to the board of directors of the organization as to the adequacy and accuracy of the financial statements and records.
2. Along the way, an auditor is required to follow any threads in any records that he inspects that might lead to inaccuracy or fraud. .
3. The auditor is supposed to verify that currnt standard accounting practices are being followed in accounting for revenue and expenses.
4. An auditor also usually takes a peek at internal controls and comments on them.

At the conclusion of an annual audit , the cpa signs an OPINION STATEMENT which is normally addressed to the Board of directors ( chairman). A clean audit will be two paragraphs and essentially say that standard auditing procedures were followed and the financials fairly and accurately represent the condition of the entity being audited.

When there are problems, such as missing funds, or NO reports being filed with government, or worse yet no checks being made out to govt. STANDARD AUDIT PROCEDURES WILL CATCH THIS. These problems result in a QUALIFIED OPINION in which the auditor flags the problems, But in the case of SSA, I cannot imagine an auditor giving even a qualified opinion.

Another thing an auditor does is to give an opinion as to the ability of an organization to meet its cash flow needs for the near future. In a for profit company this is an important part of the annual report. Sometimes the company and the auditor differ, but the auditor makes sure that his opinion is printed in the annual report.

I do not know current rules, but it used to be that a would be CPA had to intern as an auditor under the supervision of a cpa for 2 years prior to sitting for his cpa exam. The ACCOUNTING profession takes audits very seriously. Those who wrote the bylaws for the SSA took advice from someone and took the annual audit seriously.

on Sept 7 the chair wrote "
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. "



These are HER WORDS, NOT MINE!!!

THE BOARD DECIDED... PENNY WISE AND POUND FOOLISH!!!

regardless of how hard working and selfless the excom, the chair and the rest of the board is, by their own admission, they DECIDED to pinch a penny.

NOW THEY PROPOSE TO CHANGE THE BYLAWS.

Further.. if they acted on the issue as the excom minutes indicate that they would at the sept 30 board meeting, they didn't even tell us about it.



OK.. The above are basically facts.



Now opinion:

1. I believe that this goes to the HEART of the big issue.. or several of the big issues.

The SSA cannot rebuild itself unless it lets the members know what is going on and WHY. Did the board vote on sept 30 to change the bylaws to remove the requirement to have an annual audit?? if so why? If so why did they NOT MENTION IT in the report post the meeting to the members.. Is thins not an important topic???

The SSA membership has been asked to TRUST THE JUDGMENT of the excom and the board to act in the members best interests.

This issue goes to the heart of their JUDGMENT and further to the question of the interplay between the excom and the rest of the board. We are not being given benefit of any knowledge of the discussion or the competing points of view on the board. We simply do not know who voted how.



But I question the basic JUDGMENT of the group, be it the excom who suggested the idea or the board as a whole if they approve changing the bylaws. It is beyond my understanding how a body that has ADMITTED that it was penny wise and pound foolish in DECIDING repeat DECIDING, to forgo the annual audit which would have nipped this problem in the bud years ago COULD SERIOUSLY EVEN CONSIDER CHANGING THE BYLAWS IN THIS MANNER.

Did we not learn anything FROM THIS WHOLE SORRY AFFAIR???

This goes directly to the JUDGMENT of the excom and the board. I feel that it is fatally flawed .



  #2  
Old October 7th 06, 03:39 PM posted to rec.aviation.soaring
BB
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Posts: 140
Default change in bylaws..audit requirement


5-BG wrote:
....... This goes directly to the JUDGMENT of the excom and the board. I feel that it is fatally flawed .


So state your name and run for the board already.

Then face the fact that the SSA is a business about the size of a
medium taco bell, and needs to spend less than half of its cashflow on
financial officers, audits, accountants, bookeepers, oversight
committees and so forth.

The SSA will soon face another major problem: how to staff its
volunteer positions with knowledgeable and talented people, who have
the time and energy to devote to the society. The current board may
quit en masse, in large part because of complaints like this, demands
to "throw out the tainted people" "get rid of the insiders" and so
forth. Then what?

John Cochrane BB

  #3  
Old October 7th 06, 04:34 PM posted to rec.aviation.soaring
[email protected]
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Posts: 48
Default change in bylaws..audit requirement

I've discussed audits vs. reviews vs. compilations by a CPA firm in a
previous thread so I won't revisit it now. I've also stated that
previous SSA Budget & Finance Committees (before and when I was a
director) most often made the decision to have a review performed
rather than an audit, maintained close contact with both the CPA firm
and the SSA accounting person, and had an audit done much less
frequently to confirm there were no problems.

History confirms and I continue to believe that this policy is more
cost effective than a full audit every year [caveat: one poster raised
a valid point that audits shouldn't cost nearly as much as I recall SSA
having to pay and this is worth following up]. Unfortunately,
disclosures from ExComm seem to indicate that this enlightened policy
was not followed after 2002 (i.e., no review, no CPA involvement of any
kind, and limited contact with SSA's accounting person) and was the
primary reason why the current disaster was allowed to occur.

John Cochrane has stated things pretty well and I'll disagree slightly
with him on only one point. I don't believe that if a member doesn't
like what the SSA Board is doing he/she must campaign to become a
director (although it would be just punishment in many cases for the
irresponsible behavior displayed on this forum!). Most members have
neither the time nor inclination to do so. What they have a right to
expect is to be able to vote for and elect directors who will make the
tough decisions, exercising their business judgment to do so. In my
opinion, good business judgment in this case is to return to the
previous policy (i.e., allowing reviews with an occasional audit
depending on the relative costs thereof). The only thing wrong with
this policy was that it was in conflict with the letter of the ByLaws.
ExComm proposed to remedy that.

The minutes of the 30 Sep Board meeting will indicate whether the
ByLaws were changed to allow reviews. If they weren't changed then,
they should be at the winter board meeting. I'm sure we all expect a
full audit to be done for this year's financials anyway so the next
review vs. audit decision it won't come up until 2007.

Chip Bearden

  #4  
Old October 8th 06, 12:29 AM posted to rec.aviation.soaring
penn
external usenet poster
 
Posts: 3
Default change in bylaws..audit requirement


wrote:
I've discussed audits vs. reviews vs. compilations by a CPA firm in a
previous thread so I won't revisit it now. I've also stated that
previous SSA Budget & Finance Committees (before and when I was a
director) most often made the decision to have a review performed
rather than an audit, maintained close contact with both the CPA firm
and the SSA accounting person, and had an audit done much less
frequently to confirm there were no problems.

History confirms and I continue to believe that this policy is more
cost effective than a full audit every year [caveat: one poster raised
a valid point that audits shouldn't cost nearly as much as I recall SSA
having to pay and this is worth following up]. Unfortunately,
disclosures from ExComm seem to indicate that this enlightened policy
was not followed after 2002 (i.e., no review, no CPA involvement of any
kind, and limited contact with SSA's accounting person) and was the
primary reason why the current disaster was allowed to occur.

John Cochrane has stated things pretty well and I'll disagree slightly
with him on only one point. I don't believe that if a member doesn't
like what the SSA Board is doing he/she must campaign to become a
director (although it would be just punishment in many cases for the
irresponsible behavior displayed on this forum!). Most members have
neither the time nor inclination to do so. What they have a right to
expect is to be able to vote for and elect directors who will make the
tough decisions, exercising their business judgment to do so. In my
opinion, good business judgment in this case is to return to the
previous policy (i.e., allowing reviews with an occasional audit
depending on the relative costs thereof). The only thing wrong with
this policy was that it was in conflict with the letter of the ByLaws.
ExComm proposed to remedy that.

The minutes of the 30 Sep Board meeting will indicate whether the
ByLaws were changed to allow reviews. If they weren't changed then,
they should be at the winter board meeting. I'm sure we all expect a
full audit to be done for this year's financials anyway so the next
review vs. audit decision it won't come up until 2007.

Chip Bearden


  #5  
Old October 8th 06, 12:50 AM posted to rec.aviation.soaring
penn
external usenet poster
 
Posts: 3
Default change in bylaws..audit requirement

Chip, just a reminder. When and if the Board amends or changes the
by-laws; any amendments or changes must be filed with the Internal
Revenue Service along with the SSA tax return for and in the tax year
said change { amendment} is made. The purpose is so the IRS can
determine thet no by-law changes have been made that could question or
revoke the entities tax exempt status.

Therefore,you might wish to defer any by-law amendments until all
current outstanding issues, ( delinquent tax returns, payroll taxes,
and etc. ), with the IRS have been resolved.

In my professional dealings with the IRS, I have found it wiser to
resolve old outstanding issues before raising new or current questions
or issues.

Penn Smith


wrote:
I've discussed audits vs. reviews vs. compilations by a CPA firm in a
previous thread so I won't revisit it now. I've also stated that
previous SSA Budget & Finance Committees (before and when I was a
director) most often made the decision to have a review performed
rather than an audit, maintained close contact with both the CPA firm
and the SSA accounting person, and had an audit done much less
frequently to confirm there were no problems.

History confirms and I continue to believe that this policy is more
cost effective than a full audit every year [caveat: one poster raised
a valid point that audits shouldn't cost nearly as much as I recall SSA
having to pay and this is worth following up]. Unfortunately,
disclosures from ExComm seem to indicate that this enlightened policy
was not followed after 2002 (i.e., no review, no CPA involvement of any
kind, and limited contact with SSA's accounting person) and was the
primary reason why the current disaster was allowed to occur.

John Cochrane has stated things pretty well and I'll disagree slightly
with him on only one point. I don't believe that if a member doesn't
like what the SSA Board is doing he/she must campaign to become a
director (although it would be just punishment in many cases for the
irresponsible behavior displayed on this forum!). Most members have
neither the time nor inclination to do so. What they have a right to
expect is to be able to vote for and elect directors who will make the
tough decisions, exercising their business judgment to do so. In my
opinion, good business judgment in this case is to return to the
previous policy (i.e., allowing reviews with an occasional audit
depending on the relative costs thereof). The only thing wrong with
this policy was that it was in conflict with the letter of the ByLaws.
ExComm proposed to remedy that.

The minutes of the 30 Sep Board meeting will indicate whether the
ByLaws were changed to allow reviews. If they weren't changed then,
they should be at the winter board meeting. I'm sure we all expect a
full audit to be done for this year's financials anyway so the next
review vs. audit decision it won't come up until 2007.

Chip Bearden


  #6  
Old October 8th 06, 01:35 AM posted to rec.aviation.soaring
[email protected]
external usenet poster
 
Posts: 48
Default change in bylaws..audit requirement

Penn, your point about not complicating things with the IRS by amending
the ByLaws until all the tax matters are cleaned up sounds like
excellent advice, especially since, based on ExComm's disclosures,
there's hope that the tax situation can be resolved relatively quickly.
I supposed it also raises the question of what Delaware law might say
about such an amendment.

I trust that ExComm is getting good advice on this and other subjects
as they continue to wade through the mess created in Hobbs. Even if
not, I believe at least some of them are reading their "reviews" on RAS
regularly so they should take note of your posting.

Chip Bearden

 




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