This is the eleventh in a series of posts diving into the detail mentioned in the complaint by FTC and all Attorneys General against four named cancer charities.
This is the third post on comments in the complaint addressing valuation at an overall level.
The complaint can be found here. My posts in this series are visible using the FTC tag.
On the impact of the allegedly misstated information: (more…)
This is the tenth in a looooong series of posts diving deep into the detail mentioned in the complaint by FTC and all Attorneys General against four named cancer charities.
The complaint can be found here. My posts in this series are visible using the FTC tag.
This is the second post discussing allegations in the complaint asserting that the financial statements of the charities were misstated. Four paragraphs summarize the problems the FTC has with the accounting for donated medicines.
Corporate Defendants obtained the paperwork they used to claim these figures for just the cost of the payment to INTERMEDIATE (which included both INTERMEDIATE’s fees and shipping costs). For example, in connection with a 2011 shipment to Guatemala, CFA reported contributed revenue and corresponding program expense of over $8 million, but only paid INTERMEDIATE a fee of $50,550. For one 2010 shipment to Ghana for which CCFOA reported contributed revenue and program expense of over $3.8 million, CCFOA paid INTERMEDIATE just $39,960. In addition, for a 2011 shipment to Honduras for which BCS reported contributed revenue and program expense of at least $3.8 million, BCS paid INTERMEDIATE just $28,120. Although Corporate Defendants used such transactions to add hundreds of millions of dollars in program expenses to their financial reports, these “programs” existed entirely on paper. Corporate Defendants did not possess the goods and played no role in their overseas distribution. They hired no additional staff to manage these multimillion-dollar international GIK programs and in most instances spent virtually no staff time on them. In addition, the very high dollar values associated with these transactions largely resulted from overvalued pharmaceuticals.
Here are two opportunities to get an introduction to the massive rewrite of financial reporting rules for NPOs. No travel. No cost beyond your time.
CliftonLarsonAllen is offering a free one-hour webinar about the exposure draft on Thursday, May 21 at 2:00 p.m. Central Time.
You can register for the CLA webinar here.
As I mentioned earlier, FASB is offering a free webinar on May 12 at 1:30 p.m. Eastern Daylight Time. Their session will run for two hours and is good for two hours of CPE.
You can register for the FASB webinar here.
Both free. FASB session offers 2 hours CPE.
I’ve dropped the prices for the print copies of my books available at Amazon, Barnes & Noble, and iTunes store.
Here is what you can find on-line:
Tragedy of Fraud – Insider Trading Edition
Story of Scott London’s fall from regional audit partner at KPMG to prison inmate because of his insider trading.
It is scary to see the power of rationalization. We humans can exert great effort to persuade ourself that wrong is right. With enough effort, we can persuasively argue that wrong is a positive good, the noble alternative.
It is unsettling to me when I see a client deeply believe that tax or accounting fraud is perfectly legitimate and I am the one who is in the wrong to suggest otherwise. Worrisome is a watching a friend who believes that hurtful or destructive or nasty or evil behavior is Godly. Even more upsetting is when I catch my brain in full rationalization mode.
No, I’m not about to give any examples from clients, friends, or my life.
Unfortunately, we have a sad public example of rationalization racing at full power (sad pun intended).
(Cross-post from my other blog, Attestation Update.)
Some background on Lance Armstrong’s massive doping schemes
Many public sources report that Lance Armstrong has been found to use performance enhancing drugs for a very long time. He won seven consecutive Tour de France races.
According to Wikipedia, in 2012 he received a life-time world ban on all competitive events in all sports. His seven wins were revoked. He was found to have engaged in sophisticated doping schemes for many years.
In 2013, he admitted massive doping in an interview with Oprah Winfrey. He admitted using a long and specific list of banned substances and did so in each of the 7 Tour de France races.
Rationalization on display
Having set the background, let’s look at an article in The Guardian: Lance Armstrong: I would probably cheat again in similar circumstances. Thanks to Professor Mike Shaub (twitter @mikeshaub) for pointing out the article.
In a few days, printed copies of the two books in my Tragedy of Fraud series will be available in print at Amazon.
They are currently available in e-book format at Amazon, Barnes & Noble, and the iTunes store. (more…)
You think you have a rough boss….
Jacob Soll explains in his book, The Reckoning: Financial Accountability and the Rise and Fall of Nations, that in ancient Athens, around 500 years B.C. accounting and auditing was an integral part of the business and political world.
There were complex accounting systems that included public audits to create accountability. There were a number of staff working for the public treasurer to keep an eye on funds. Many people, including freemen and slaves were trained in accounting. However,
If you work in a local government, are in leadership there, or provide audits in that sector, you really ought to check out Charles Hall’s book, The Little Book of Local Government Fraud Prevention.
I bought & read a copy a while back and really, really want to write a review of the book, but haven’t been able to pull together my thoughts. (Sorry Charles!) It is a good read.
(cross-posted from my other blog, Attestation Update.)
Until I pull together my thoughts, just know that I believe you would benefit from reading the book.
Debut appearance of the cover, hot off the digital press:
My newest book is in the last stages of editing. Hope to move into conversion to e-book format soon. Will be released in the next couple of weeks.
As you may know, I’ve been following the story of Scott London closely on my other blog, Attestation Update. Mr. London was the partner at international accounting firm KPMG in charge of the audit practice for the southwest region of the U.S.
He was caught passing inside information to his golf buddy. When confronted, he quickly confessed and plead guilty. He received a fourteen month jail sentence and is now a prison inmate at the Taft Correctional Institution.
You can now read of his journey from the lofty world of senior leadership to prison inmate in this book. The dozens of blog posts covering the story have been combined in chronological order instead of being spread all over the blog in reverse chronology. The posts have been edited slightly and the sequence changed a bit.
Available soon
The story of Mr. London’s fall will soon be available on your phone, e-reader, tablet, or other reading platform of choice. Will be available at the Amazon, Barnes & Noble, and iTunes stores.
Print copy will be available at Amazon soon after the electronic version is published.
BBC reports on 3/6 that Oxfam ex-fraud chief admits defrauding charity.
Oxfam, a development charity in England, has revenue of £385.5M (~$645M) in 2012.
The charity’s head of the counter-fraud department pled guilty to embezzling about £62.6K (~US$105K) and will be sentenced May 16.
His scheme?
Print copy and Nook e-book are in addition to availability for the Kindle and another half-dozen formats.
The book is an intentionally short read at about 30 pages. The print copy has 20 pages of text. Focus is to quickly describe the differences between those levels of services using three illustrations:
It also explains the differences in plain language. Well, at least using less accountantese than you would usually get from an accountant.
This is a compilation of posts previously appearing on my blogs, with slight editing.
Where can you find the book?
Print book at Amazon here.
Nook e-book at Barnes and Noble here.
Kindle e-book at Amazon here.
Also available here in other formats:
The combined team of Center for Investigative Reporting, Tampa Bay Times, and CNN have another feature article on GIK, this time trying to substantiate shipments.
The article is No accounting for what charities ship overseas.
If you’ve been following the GIK issues, you’ll want to check out the article.
If you are a charity, might be worth figuring out how your organization and your GIK shipments would look if you received some really simple media inquiries, like ‘do your shipments really exist?’ or ‘what was in the container?’
If you are an auditor, you might want to read the article as an education about what might going on beyond the documents you vouched.
Audit. Review. Compilation. What’s the difference? – Illustrations using a football game, buying a used car, and filling a bucket.
What’s the difference between getting an audit, review, or compilation from your CPA firm? This short, 29 page book will help you understand.
Three illustrations help explain the differences:
This is a compilation of articles at my blog, Nonprofit Update.
The book is now available at Amazon.
Now available here in other formats:
Soon to be available at Barnes and Noble.
Since football season is in full swing, let’s go to the nearest stadium to compare an audit to a review, to a compilation, and to the newest level of service, a preparation report.
Audit
If you were performing an audit, you would be on the field and receive the kickoff at your 20-yard line. A series of passes and runs would slowly move the ball. With effort you would advance to your opponent’s 10-yard line. Good touchdown position.
Advancing the football would be the same as gathering evidence to provide you a reasonable level of assurance so you could issue an audit opinion on the financial statements.
Price reduced to only $0.99, now available here.
“Tragedy of Fraud – The Ripple Effects from Fraud and the Wages Earned” describes the tragic consequences from fraud.
There are ripple effects that spread out to harm innocent bystanders. The perpetrator draws a wide range of well-deserved wages that will be paid in full.
The book looks at two fraud incidents to learn what happens after a fraud is discovered. One took place in a local megachurch and the other in the mayor’s office of a small city.
This book is a compilation of blogs posts that have been previously published at Nonprofit Update and Attestation Update. The posts have been edited slightly and reorganized for easier reading.
Major sections of the book:
The other book I have available at Amazon is Once Upon Internal Control.