About that Gardasil shipment and that wave to the CNN reporter

Robert Anglen has a report in the Arizona Republic on a Mesa charity tied to inquiry. He had an interview with the CEO of the Breast Cancer Society.

The CEO says that what appeared to be an effort to vote CNN the number 1 network was a failed attempt to wave goodbye to the reporters while simultaneously holding a cell phone.

Far more serious is the discussion of variance power.

There is one shipment of Gardasil medicine to Ghana that keeps surfacing in news reports. The shipment was initially reported as revenue by World Help but upon restatement, I think that was removed from their financial statements.

The original donor and ultimate recipient say that charity wasn’t involved. I’ve discussed the World Help financials here.

That shipment pops up in Mr. Anglen’s article:

In 2011, the Breast Cancer Society said it delivered $4,144,704 worth of Gardasil vaccine to an organization in Ghana for treatment of human papillomavirus, or HPV, a sexually transmitted disease.

At least three other charities took credit for supplying the same Gardasil shipment, valued at the same amount to the same organization in Ghana. Officials with Axios Healthcare Development in Paris, the administrator of Gardasil Access Program, said the Breast Cancer Society has nothing to do with the vaccine program.

[The organization’s CEO] said Friday that his charity was involved in the shipment of the vaccine.

Mr. Anglen is asserting that four charities have recorded that one shipment as revenue. Not sure if that count includes World Help or not.

If I’m reading between the lines correctly, I think this article at Chronicle of Philanthropy about 1/3 of the way into the article identifies the names of two charities that received that shipment. That implies there are one or two more. I saw this shipment mentioned at the Tampa
Bay Times report as having been recorded by one of the charities, but can’t find that mention again after a cursory search.

The accounting question here is variance power. If World Help is not known to the donor and recipient, it seems unlikely they have any variance power to give and thus no other downstream organizations could get variance power from them. That makes it difficult to understand how they could record the income.

The Breast Cancer Society has a Response to Tampa Bay Times and AC360 posted on their website.

‘Inside baseball’ hint to auditors of the organizations booking that shipment as contribution revenue: There is sufficient information in print for you to consider that as information obtained after release of report. If you assess the reports in newspapers I mentioned as credible, you may also have indication there may be some other contributions to reconsider for past audits.

Hint to all auditors:  If you consider as credible any of the reports in various media sources, you might want to revisit several of your risk assessments on your next audit.

What do you think?

Am I missing something? Misapplying the accounting rules?  Putting together too many assumptions and inferences?

4 Responses to About that Gardasil shipment and that wave to the CNN reporter

  1. Dr. Right On says:

    Quote from above:
    “At least three other charities took credit for supplying the same Gardasil shipment, valued at the same amount to the same organization in Ghana.”

    I have seen this kind of reporting before. A charity receives 1/2 of a large shipment as a gift and sends it to the same location as a second charity that received the other 1/2 of the shipment. Of course the numbers match and to the casual observer it looks like the same drugs.

    This looks like 2 charities taking credit for the same shipment as the amounts match. Another case of people seeing what they expect to see. Once this is explained to the auditors everything is fine.
    Oh except for the articles that jumped to wrong conclusions.
    (Like this quote)
    These articles stay on the internet as part of the public record.

    Quote from above:
    “In 2011, the Breast Cancer Society said it delivered $4,144,704 worth of Gardasil vaccine to an organization in Ghana for treatment of human papillomavirus, or HPV, a sexually transmitted disease.”

    The Breast Cancer Society was an end user of the Gardasil.
    Regardless of who may have erroneously took it as revenue earlier the end user is definitely allowed and required to book the non cash gift as revenue and expense. They were not a pass through.

    • Jim Ulvog says:

      Dr. Right On:

      Thanks for commenting.

      I’ve not seen any discussion that it was fractions of a full shipment that has been recorded as revenue.

      What I’ve seen is comments that are consistent with assertions of receiving variance power. That allows a charity to report the revenue and expense on their financial statements along with the charity who granted the variance power also reporting the revenue and expense. Key concept is having the ability to determine the ultimate recipient.

      It’s a bit difficult to track things in general on GIK but the Garadsil shipment to Ghana is different. It keeps popping up. Also, as a specific branded med, there is less of it than all the other GIK and therefore it is more visible.

      This article in Chronicle, http://philanthropy.com/article/Little-Money-of-Children-s/137439/, says the Children’s Cancer Recovery Foundation claimed revenue for that shipment which they received from World Help. CCRF says on their web site they will be reversing that revenue. The Chronicle article states Axios, which manages the Gardasil program, says the meds went directly to the clinic in Ghana. Axios says Catholic Medical Mission Board was involved in the project. CMMB says that World Help paid for shipping. There are probably lots of things I’m missing, but I’m not seeing the ability to alter the ultimate recipient visible in that discussion.

      That makes it difficult for me to see where there is variance power. What am I missing?

      The Chroncle article says the med’s manufacturer said there aren’t any other Garadsil programs in Ghana. In the Republic article, they are also cited as saying BCS had no involvement.

      The Arizona Republic article above says the Breast Cancer Society received ownership but not possession of the meds from World Help. The article says BCS says the goods were delivered to Ghana by them.

      The donation is not readily visible on the CMMB 990. I looked. However, the level of aggregation which is present means it likely wouldn’t be visible.

      So CMMB obviously booked the revenue (at least that’s my conclusion). It looks like WH, CCRF, and BCS also booked the income, each for $4.1M, based on published reports. Maybe that is the 4 charities that Mr. Anglen is referring to. I’m making a wild guess he wasn’t including CMMB in his count, so I’m wondering if there is another charity involved.

      I don’t see indication of this being a $12M or $16M shipment that was split up. What am I missing?

      The clinic in Ghana is the ultimate recipient, thus the end user. That is relevant for those NPOs following the Accord rules. BCS asserts they delivered the meds. The clinic said in the Chronicle article they aren’t familiar with the other charity, CCRF.

      It is all quite confusing. Sorting out the full picture would require looking inside each of the organizations or at least looking at the supporting documentation from a few of the charities. Might be that only someone with subpoena authority will be able to sort it all out.

      As you can probably tell, I’m confused by this shipment. What am I missing?

      Thanks again for your comment.

      Jim

  2. Dr. Right On says:

    Jim,
    Thanks for your comment.
    You wrote:
    “I don’t see indication of this being a $12M or $16M shipment that was split up. What am I missing?”

    You are missing access to the documentation. It is too bad the threat of subpoenas causes everyone to keep their documents private.

    You wrote:
    “The clinic in Ghana is the ultimate recipient, thus the end user.”

    What you said would be true if the clinic in Ghana took ownership of the drugs. If the clinic distributed them on behalf of the CCRF and BCS according to a signed contract then they would be acting as an agent not the end user according to ACCORD. This is what happened.

    Variance power can be exercised before the gift is made by proposing to the donor a grant to be used at a certain location chosen by the charity. The drug company insisted on doing the shipping on this to the program partner chosen by these charities. Thus they had variance power.

    The Doctor has more to say but no time.
    Dr. Right On.

    • Jim Ulvog says:

      Dr. Right On:

      Thanks for the comments.

      You are correct that we would need to see documents to put all the pieces together. I have a sinking feeling that we may get to see them soon. My wish all along has been for the wider NPO community to fix anything that needs fixing before the regulators start getting into a detailed document review. I hope there is time left.

      I certainly get the time constraints. Same here. So double thanks for taking many minutes to reply.

      Jim

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