Details on FTC enforcement action against four cancer charities – 5

This is the fifth in a series of posts diving deep into the detail mentioned in the complaint by FTC and all Attorneys General against four named cancer charities.

This is the first of two posts on specific comments in the complaint addressing variance authority.

I will quote and comment upon the complaint which can be found here. My posts in this series are visible using the FTC tag.

Defendants Improperly Reported Receipt and Distribution of GIK They Did Not Own   (more…)

Strong rebuttal to reporting by CIR and Tampa Bay Times

Charity Services International has posted a strong reply to the combined reporting by CNN, CIR and the Tampa Bay Times. I’ve mentioned their report here and here.

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: (more…)

About that Gardasil shipment and that wave to the CNN reporter

Robert Anglen has a report in the Arizona Republic on a Mesa charity tied to inquiry. He had an interview with the CEO of the Breast Cancer Society.

The CEO says that what appeared to be an effort to vote CNN the number 1 network was a failed attempt to wave goodbye to the reporters while simultaneously holding a cell phone.

Far more serious is the discussion of variance power.


World Help revises 2012 report again to say the 2011 numbers were restated again

My compliments to World Help. They have revised their financial statements to disclose the 2011 numbers were revised again.

My hat is off to them for the courage to revise the report.

The newest report can be found at their website here.

Note 12 is new. It is titled Comparative Statements and addresses the second revision of 2011 information.

The note says management restated the 12-31-11 financial statements.

The reason is provided. Quoting, the report says: (more…)

Accounting ideas in World Help’s revised financial statements

There are some accounting concepts in the most recent financial statements released by World Help that warrant discussion. This post will walk through those items I noticed.

This will be a long post. You might want to get a fresh cup of coffee and settle in.

Efforts to reach out to World Help

I have been asking World Help for their comment for a week and a half. The only reply I have received was when the president’s assistant gave me the e-mail contact for the organization’s outside media consultant. I have sent e-mails to the president’s assistant and the contract media consultant several times and received no replies.

Proper accounting is a broader issue in the R&D community than has been discussed

The focus of conversation on accounting in the relief & development community has been variance power and the valuation of medicine, particularly 500 mg mebendazole.

I perceive there are issues involved in disclosures that haven’t yet been discussed.

In accounting shorthand, the matters I see that have not yet been addressed are disclosures of concentration of contributions, concentration of donors, and estimates with a reasonable possibility of change in the near-term.


GIK valuation – Things going on behind the scene

Previous posts have discussed an article at Chronicle of Philanthropy: Charity’s Exaggerated Revenue Could Affect Other Groups.

I saw two interesting background comments in the Chronicle’s article that tell me there is more going on than is visible.

The AG task force

The first is a quote from the office of the New Mexico Attorney General: (more…)

Impact on downstream charities from World Help revising their financials

As discussed in an earlier post, World Help has revised the amount of 2011 gift-in-kind contribution from $223.7M to $1.6M. That is a 99.3% reduction.

What is the impact on charities who received GIK from World Help? This question is touched on by Aronson Nonprofit Report blog in their post I discussed here. That issue was discussed at more detail in a long article at Chronicle of Philanthropy: Charity’s Exaggerated Revenue Could Affect Other Groups.

The Chronicle article identifies two specific charities which received donations from World Help: (more…)

Comments from others on World Help’s restatement

Aronson Nonprofit Report has a comment out today on the World Help restatement: Charity Overstate Revenue by $222 Million and You Thought Your Restatement Was Bad.

Middle paragraph:

Once again, we have an issue of claiming value for donated medicine which is an ongoing blight in the nonprofit community, but in this case, the donors say they never gave any donation. The finger-pointing is heated and people are no longer cooperating with the press.

Carol Barnard points out this creates an issue for other NPOs who have received donations from World Help.

If World Help’s GIK has been overstated by 99.3%, it seems like that could have an impact on the valuation used for those who received GIK from them.

World Help reduces 2011 revenue by 92.8%

World Help has released their 2012 audited financial statements which you can find on their website at this link.

The total revenue initially reported in the audited financial statements for the 2011 fiscal year was $239.3M (audit opinion dated 3/12/12). In the most recent financial statements, the total revenue for 2011 is $17.3M (audit opinion dated 4/10/13).

That is a reduction of $222.0M, or 92.8% of the amount initially reported.

Contributions of GIK were initially reported at $223.66M for 2011 (3/12/12) and currently reported at $1.62M (audit report date 4/10/13). That is a decline of $222.04M, or 99.3% of the initial amount.


For a deeper education, try sketching out the relationships mentioned in the article about World Help’s GIK

One technique used by auditors when trying to understand a complex situation is to get a piece of paper and draw all the components, cash flows, and relationships. Sometimes there is just too much going on to understand the words and you need a picture.

Try doing that with the Chronicle of Philanthropy’s article, A Consultant’s Revenue-Generating Tactics Draw Scrutiny.  I think you’ll get a superb education on the GIK issues in the NPO community.


Revised 2009 revenue for World Help and graph of revenue for last 4 years

Shortly after World Help posted revised financial statements for 2011 and 2010, it posted revised revenue numbers for 2009. After going over the revised numbers, I’ll show a graph tracing their total revenue over the last four years.

The revised 2009 information is visible in the audited financial statements for 2010/2009. You can find the page with World Help’s financial reports here. You can click directly to the 2010/2009 audited financial statements here.


Major article on World Help and their GIK fundraiser

I just saw the article.

If you’ve been following the challenges World Help has been going through regarding their GIK revenue, you will definitively want to check out a major article from The Chronicle of PhilanthropyA Consultant’s Revenue-Generating Tactics Draw Scrutiny.

You might want to get a fresh cup of coffee before you start.  Don’t know the word count, but on my computer the article is 13 screens long.

I’ll need to read this a few more times to absorb the details. In the meantime, a few initial observations:


Restated financial statements available on World Help website

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.