Charity restates GIK revenue in 2012. Increases valuation to AWP.

You read that correctly. Audited financials and 990 were restated for value of donated meds. Not a reduction from AWP, but an increase to AWP.

Cancer Fund of America has filed an amended 990 and audited financial statements with the New York regulators. The valuation of GIK medicines was increased to AWP.

I was clued in to the change by a comment from William Barrett, who writes at Forbes and New to Seattle. He has been covering the GIK valuation issues for a loooong time. I’ve mentioned his articles several times. In fact, it was his article at Forbes that first made me aware of the issues with mebendazole.

You can find the filings with the New York AG here.

The specific links are labeled Annual Filing for Charitable Organizations. For the 2011 report, click the highlighted item next to the date of 12/31/2011. For the initial 2012 filing, click the item next to the date of 12/31/2012. For the amended report, click the highlighted item with no date.

Each of those links contains a large package of information provided for the renewal. You will need to browse through it to find the 990 and financial statements.

The Cancer Fund of America website has a page for the audited financials and for the 990s. As of the time I published this post, the 2012 documents were the first copies, not the restated versions. Kudos to the organization for having 6 years of documents on their website.

Amounts

I will give some amounts and a few comments in this post. Will try to come back to the issue later this week with some more analysis.

  • GIK                 total revenue   year                             opinion date
  • $19.2M            $35.1M            2011                            3-12-12
  • $  6.7M            $20.6M            2012 first report          7-25-13
  • $22.6M            $36.5M            2012 restated report    10-10-13

The restated GIK is approximate 3.4 times larger than the initial amount.

I will refer to the financial statements using the date of the auditor’s report.

2011 valuation

After browsing the 2011 financials (7-25-13) the only comment I can quickly find addressing valuation of the GIK is a brief comment in note 1 saying

…. donated items are recorded at estimated wholesale value.

Schedule M of the 2011 990 says the medicines are valued at

FMV PROVIDED BY DONORS

2012 valuation

Note 1 to the 10-10-13 financials say the GIK is valued using Average Wholesale Price from the Thomson Reuters Red Book.

Note 11 to the 10-10-13 financials says the GIK was revalued

…to what they [management] estimate more accurately reflects fair value in accordance with generally accepted accounting principles and to report such values consistent with prior years.

I have not followed through what the “with prior years” comment means. Will get back to that later.

Note 11 continues by saying the GIK was previously valued at $6.76M and was restated to $22.64M.

Schedule M of the amended 990 for 2012 says the donated meds were valued at

FMV AND AWP

The initial filing of the 990 for 2012 describes the valuation on Schedule M as:

FMV AND WAC

I’ll try to get back to the amended reports later this week with some additional discussion.

What say you?

I’m quite interested in your thoughts. Did I misunderstand something? Leave something out? Not go into enough detail?

Any comments from readers?

I’ll publish all comments that maintain a minimal amount of professionalism. Any falling below the threshold I define will either be edited or deleted.

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