The CSI reply is A Breakdown of the Tampa Bay Times Story.
If you are interested in this issue, you really will want to read the full rebuttal.
It is broken down into four sections:
What the reporting got right. What CSI believes the reporting got wrong. Assertions that are questionable. Finally, non-essential elements of the story.
Please read the full article.
Three thoughts after reading the strongly worded rebuttal:
Opinion shopping – The original article quotes a CPA as objecting to the value of an unspecified volume of GIKs at $120M for an unspecified client. Their audit work suggested a valuation of $2M or less. The CSI rebuttal cites this as appropriate oversight of the charity sector.
The initial report and the rebuttal makes me more curious which charity was involved, who the successor auditor was, and what valuation was used in the audited financial statements as issued.
This could have gone two ways. First, the charity could have found a more, umm, flexible firm and booked it at $120M. Second, the successor firm said the $2M value holds and persuaded the charity they really didn’t want to fire 2 firms in one year so the charity booked it at $2M.
Which way did it go? My inference from the CPA’s quote is another firm agreed with the $120M valuation.
Subpoenas are out there – Multiple published reports indicate one charity is under audit by the IRS. Rumors in print suggest there may be another charity under audit. I’ve not seen any public comments on the status of either audit.
Public claims indicate the South Carolina charity regulators are investigating some charities. The CIR/TBT article says CSI has received subpoenas.
The rebuttal says the subpoenas indicate the South Carolina officials are looking at multiple clients of CSI, not CSI directly.
My point? This is a public acknowledgement from someone who has been producing documents that there are an unspecified number of charities under official investigation by the South Carolina regulators. Boiling that down into one short, unaccountant-like sentence: Subpoenas are flying.
Materiality of restatement – A visible illustration of the valuation issues present throughout the R&D sector can be seen in the series of restatements from World Help. That has been discussed extensively in the media. My posts can be found in this tag.
If you are new to this issue, one of my posts will give you a quick introduction in just the title: World Help reduces 2011 revenue by 92.8%.
The CSI rebuttal puts this issue in the non-essential category. The restatement is equated with an error identified while you balance your checking account.
As an auditor, I would call a 92% downward restatement of revenue quite material.
Please read the full rebuttal. If you are interested enough to have read all the way through my meandering post, you will definitely want to see the full discussion.
What say you about my comments? I’m interested in any thoughts readers may have.