Something missing from the Journal of Accountancy article on GIK

William Barrett points out there was some missing disclosure in the JofA article on GIK in his post Seattle-area charity scores P.R. coup from lack of disclosure.

I discussed the JofA article here.

The missing information is that World Vision is one of the biggest players in the GIK valuation issue getting so much attention today.

The JofA article contains no mention that World Vision has been criticized heavily for their accounting of GIK.

Mr. Barrett starts with a great analogy. He then explains his concerns in detail with the missing disclosure by the author and the JofA’s missing that quite significant information.

For background World Vision was valuing 500 mg mebendazole at $10.64.

Proforma impact of SFAS 157

A proforma calculation by World Vision disclosed their GIK in 2008 and 2009 would have dropped by $143M in ’08 and $126M in ’09 if SFAS 157 had been applied in those years. That’s a $269M adjustment, just from SFAS 157. Even that amount doesn’t show the full impact of mebendazole.

As an aside, adjustments measured in fractions of a billion seem to be the norm as we look at revisions, restatements, and proformas across the NPO community announced over the last year or two.

I mentioned this proforma adjustment in my post, World Vision posts pro forma adjustment which drops combined total revenue for 2008 and 2009 by 11.5% and cuts combined GIK revenue by 34.6%

Donated t-shirts celebrating incorrect winner of Super Bowl valued at $20 fmv

If you weren’t aware of the PR fiasco World Vision went through as a part of valuing the Super Bowl t-shirts, or if you need a refresher, Mr. Barrett links to a superb summary at Good Intentions Are Not Enough, a now dormant blog. See Tracking the World Vision / NFL Shirt Donation Controversy from February 2011. It has 70 links to other discussion of the fiasco.

The t-shirt issue is tiny compared to mebendazole (100k shirts x $20k = $2M). Yet the issues visible in the t-shirt situation are quite similar to the discussion of donated meds.

Seems like a few comments in the JofA article might have been a good idea.

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