My compliments to World Help. They have revised their financial statements to disclose the 2011 numbers were revised again.
My hat is off to them for the courage to revise the report.
The newest report can be found at their website here.
Note 12 is new. It is titled Comparative Statements and addresses the second revision of 2011 information.
The note says management restated the 12-31-11 financial statements.
The reason is provided. Quoting, the report says:
The reductions were the result of problems with verifying values and/or ownership.
Impact on net assets in 2011 is zero. (The report doesn’t actually say the impact on 12-31-10 net assets was zero, but the comment is close enough for readers to understand).
One sentence in the middle of the first paragraph has an odd component:
The restated financial statements, dated April 8, 2013, reduced the value of noncash gifts received and noncash goods shipped.
The amount is not disclosed, which is required by GAAP. Although required, that is probably not a big deal since astute readers of the financials can look up the info on Guidestar or the North Carolina site. Point is that the second revision is actually mentioned, although not explicitly. All readers of the financial statements are on notice to look at whatever reports they have for the old 2011 data.
The date of 4/8/13 is odd since it does not correspond to the other reports I have seen.
Previous reports have a date on the audit report of 3/12/12, 11/29/12, and two with 4/10/13. This means there is a third report with date of 4/10/13 (which is now on the website) and another report dated 4/8/13 referred to by the 4/10/13(c) report. I have not seen the 4/8/13 report.
Financial information for 2011 can be found in audited financial statements with accountant’s report dates as listed:
- 3/12/12 – original report with total revenue of $239M.
- 11/29/12 – revised report showing total revenue of $104M.
- 4/8/13 – second revision of 2011 information; this report is referenced by the 4/10/13(c) report
- 4/10/13(a) – first release of 2012 information containing 2011 total revenue of $17.3M with accountant’s report using superseded text
- 4/10/13(b) – second release of 2012 information with correct accountant’s report
- 4/10/13(c) – third release of 2012 information which discloses revision of 2011 information.
My compliments to the organization for working to get the financial statements corrected as they realize corrections are needed.
Also, for the pace of the accounting world, these changes have been made at very high speed. Umm, ahh, let’s just say CPAs don’t usually move this fast.
Both the willingness to correct published information and speed for doing so are a good lesson for the rest of the NPO community.
I love your blog. But I have to question your repeated praise of World Help for quickly (and continually) revising its financial statements, especially since you note the latest revision doesn’t fully comply with GAAP. I would say underlying issues of incompetence–or worse–more than cancel out any rapidity in getting out the bad news. Do I hear footsteps from someone in New Mexico?
There are still major questions the organization needs to address. There are questions to be asked from what I’ve mentioned in this post. From public comments in Chronicle articles, there are open questions that haven’t been answered. Other questions haven’t even been raised (i.e. dosages of the meds involved, quantities, & valuation per pill). The huge unanswered question is why were these even recorded. Others will ask those questions.
Regardless, I believe it is commendable when World Help can turn around revised financials in a week or so. In contrast, CCRF has publicly said it will take them about 50 days to revise the 2011 numbers. A multitude of other R&D NPOs have not even acknowledged any issue in their reported numbers.
For comparison, it has been public knowledge since the revised World Help report dated 11-29-12 there is an issue in WH’s valuation. CCRF announced on May 7, 2013 that it will take until around June 30, 2013 to revise the CCRF financials. That’s around 6 or 7 months.
http://childrenscancerrecovery.org/about/report/
The sad truth is that many nonprofits–World Help, Children’s Cancer Recovery Foundation, Operation Compassion, Operation Blessing International, Islamic Relief USA, among others–say they will restate results or change their valuation metrics only after exposure by journalists. In most cases the journalists were working largely with public documents that by definition were available to the auditors of these charities. One would think these auditors also would have had access to nonpublic documents. The pattern is so persistent that one must question the independence and competence of some auditors. Do you have an opinion on whether the CPA licensing agencies in states where these CPAs are based should conduct a licensing review as a means of protecting the public?