Ann Mills-Griffiths: More Creative Accounting – Annual Report?

If you did not have the opportunity to attend the annual meetings this year, you may have missed out on the rather interesting piece of paper that was handed out with your packet, the “2010 Annual Report.”  We have had some accountant friends, all CPAs, take a look at this and there are several things that jumped out at them as mind-boggling.   First, based on the 990 forms that were discussed in a previous post (you can read that here) and this annual report, it is clear that the NLF is not being as transparent as it should be with regard to the organization’s finances.   We are wondering who put this annual financial report together – AMG? The  new League Treasurer, Mark Stephensen?  The former League Treasurer, Pam Cain? AMG’s Financial Advisor, Karen McManus? The NLF’s Certified Public Accountant, William Batdorff?

Here is what AMG is calling the 2010 Balance Sheet: Click NLF 2010 Balance Sheet 

We have taken the liberty of highlighting a few things in yellow to make them easier to find.

First, listed, under Liabilities, the large amount of $100,576.  Accrued Expenses are expenses that are outstanding – meaning they have been committed to but not yet paid.  One would think that going into a “bit” more details over what that large amount of cash covers would be important to share with the membership, two of the three CPAs we consulted mentioned this as well.

Additionally, they all concurred that no employee salary should be included in this amount (salary is a current liability, not an accrued expense).  So, in the name of fairness; what could be part of this amount?  Possibly, rent for office space (which seems insane with one employee – but that is another topic), down payments on space usage for the annual meeting and rental fees for the storage units – If anyone else would like to offer ideas on what could be under this category to absorb $100,000 (over 50% of our revenue), we’d love to hear from you.

The Statement of Revenue and Expenses section is where it gets very interesting.  Again, all of the CPAs we contacted agreed that this section needs to be broken down into much more detail to provide transparency to the membership. A Statement of Revenue and Expenses should, under Revenue, detail exactly where the money came from by category; donations, fundraising, membership dues, etc.

All of the CPAs again stated that in a Statement of Revenue and Expenses you cannot take volunteer hours and convert them into revenue/contributions, particularly when the volunteer is also a member of your organization.  In fact, the IRS says the same thing, click here.  It cannot be reported as a contribution but can be reported in another section of the form as an accomplishment -two very different things.

Furthermore, taking that $342,988 of volunteer time and then stating that that “money” was turned around and used for Public Awareness is also a no-no.  You need to show real dollars that were spent on Public Awareness, with receipts and etc.  Simply converting all of the non-revenue volunteer hours into Public Awareness and then calling it revenue would seem to be somewhat of a slight of hand.

In 2009 on the 990 tax return it states that some $5,000 was used for Public Awareness and $3,900 in 2010 yet you do not share with the membership what the results of those fundraising expenses were.  The reason this is important is quite simply due to the fact that we need to know if that money invested in fundraising is reaping substantial benefit and if it is not, as an organization, we need to explore better options for fundraising.   When specifics are hidden from the membership, it immediately begs the question why and to what end.

Just under Public Awareness are listed Other Expenses and Meetings/Conferences.  We don’t know about the rest of you, but we sure would like to know what $35,499 bought us.   Was it travel? Mileage? Meals?  Again, the reason for knowing what this money was spent on, considering it is about 18% of our revenue for the year, is to make sure that it is being used in the most effective manner.

There are several other topics on this document that warrant questions; for example, why $1607 is listed twice for conferences/meetings under both Fundraising and then again under Management and General?  It can’t be used twice – that is double dipping.   What were the Other Expenses totaling $6,235 under Management and General?  With only one employee and so much information being kept electronically, we can’t imagine how one person can spend some $500+ a month to run such a small office.

The staggering fact is that, according to these calculations, we are over $72,000 in the red.

Which leaves us with more questions:

1)   Why are we not being more transparent and opening the playing field to allow others in the organization to offer up suggestions, ideas and personal experiences that can improve our standing?

2)   Some of us have non-profit experience,  couldn’t we offer some ideas on how to improve our bottom line?

3)  Why are we not looking into grants?

4)  Reaching out to the active duty military?

5)  Partnering with other POW/MIA organizations?

6)  Making our website more appealing?

As Spiderman/Peter Parker’s Uncle Ben said, “With power comes great responsibility” and if those in power have been stricken with Potomac Fever, then it is up to the rest of us to give them the vaccine to cure this disease.   We not only owe it to the family members that came before us, but we most certainly owe it to the men we are fighting for who have no other recourse than to hope and pray that the rest of us do the right thing.

We need to start asking questions and then ask a few more because, in the end, this is about the men.

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