As was promised, this morning World Help released restated financial statements for their 2011 and 2010 fiscal years. A clean audit opinion is attached.
You can see it available on this page of their website. You can click directly to the report here.
The financial statements contain an emphasis of matter paragraph in the opinion, revised income and expense amounts on the statement of activity, and a new note 11 describing the revision to the financial statements.
As was promised to several reporters this week, World Help has made their amended 990 available on their website this evening. You can see the link on the website here and click directly to the 990 here.
As they have said publicly, the revised revenue for 2011 is $104M. The 2010 revenue has been restated downward from $125.1M to $64.1M.
Here is a summary of the changes.
That’s the very short version of the report from Doug Donovan and Caroline Preston at The Chronicle of Philanthropy: Charity Lowers Revenue Figure by $135-Million.
World Help will reduce 2011 revenue from $239.3M to $104.1M, a drop of $135.2M. They will also be revising their 2010 and 2009 tax filings according to the article.
Most of that drop is due to one transaction, a donation from Direct Relief International. It looks to me like revenue from that contribution will drop from $100.1M to $3.3M, a decline of $96.8M.
Two donors say they didn’t donate
More big news in the article is that two donors say they didn’t send large volumes of GIK to World Help. From the article: (more…)
That is according to an article by William Barrett in Forbes – Big Charity Admits Wildly Overstating Donated Goods
World Help disclosed to Mr. Barrett that revenue for 2011 was overstated by about $135M of the reported $239M.
The core issue is that for one transaction, a donation of medical goods from a California-based NPO, World Help alleges that the amounts on the paperwork were altered when provided to World Help. Check out the full article for more details.
Our perceptions of what’s taking place in Africa fluctuate between wild optimism and hopeless despair, cycling back and forth depending on this year’s headlines. Things are actually far more complicated, showing lots of reasons for some optimism simultaneous with indications of hard days now and in the future.
That’s what I learned from Walter Russell Mead’s post, Agony in The Congo.
(Why this post on that essay? We need to understand the complexities of the world around us if we want to actually change the world.)
The IRS has announced the following standard mileage rates for 2013:
- 56.5 cents per mile for business miles driven
- 24 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
Last week I published my 1,000th unique post.
I suppose that’s not a big deal in the vast blogosphere, but still seems like a cool accomplishment.
Thanks to everyone who has stopped by to check out my blogs.
Why mention unique posts?
The question – Can you teach ethics?
Jared Monger, writing at Numbermonger.com, talks about the ethics class he recently attended which changed his mind from no to yes.
A participant in the class explained why the answer could be ‘yes’:
Those are two extremely serious questions that everyone who is storing data in the cloud should start asking.
What would happen to your business or ministry or hobby if the feds seized the server of your cloud provider and you had to fight in court to get your data back?
How would you cope with this situation:
Megaupload is a cloud provider who stands accused of essentially being a storehouse of pirated videos. Their servers were seized by the federal government. That means the data of every user was also seized.
If you want to get the bargain prices on software that are offered to nonprofit organizations by two outfits that specialize in doing so, try asking your computer vendor for the same deals.
My church recently ordered several computers from Dell. I told our tech guy doing the ordering about Consistent Computer Bargains, who has great prices for NPOs on lots of software.
He did more research and found that those same prices are offered on specific SKUs for Microsoft software.
We asked the Dell representative about those prices. Said representative hadn’t heard of that, and after checking with a supervisor to learn it was available, included those special prices in the bid.
Dear colleagues:
If you would like some background on the GIK issues, please read my open letter to your clients.
The accounting is problematic for donated pharmaceuticals that you have been auditing for the last few years.
If you have a budget of 100 or 300 hours, it might be wise to allocate a few hours to read beyond AICPA risk alerts and Accord position papers. You can browse my blog for discussions, which contain links to other resources that also discuss the accounting and valuation issues.
It is my considered opinion that many of the valuations are not supportable under GAAP. The timing of SFAS 157 isn’t the issue.
The amount of scrutiny on your client’s valuation methodologies is high and increasing.
Dear brothers and sisters in Christ:
The accounting for donated pharmaceuticals has been poor for a number of years.
The valuations are not supportable by accounting rules either before or after SFAS 157 went into effect.
Paying a handling fee roughly comparable to available open market price lists sure makes the donations look like purchases. Fair value does not involve using a valuation in the U.S. for meds that can’t be legally sold here. A reference book that is known to not reflect actual market prices is not a reasonable basis for determining fair value.
People outside the evangelical NPO community are starting to notice.
There is a big issue in the NPO community now about how to value donated pharmaceuticals. To help the discussion along, I have three questions to help charities and their auditors process through what is the appropriate methodology.
I will pose three questions and ponder them for a moment. Each of the questions is really worth a long, extended conversation.
Should the medicine be valued at what was paid in the course of acquiring it or is there a bargain purchase?
That is an old phrase you may hear in movies. If you have a small window above a door, the horizontal bar separating the door from the window is the transom.
Here is a picture of a door with transom and an open window.
Wikipedia provides this description of the phrase “over the transom”, which is the explanation I’ve heard for years. (more…)
