Subject: [Discussion]<Dong Chen> reply to Liu Cheng (2/2)

From: [email-masked] (priv=-10 D.C.)
Date: Sun, 16 Jan 94 00:29:25 -0500

Mr. Chair,

	Yesterday, I could not finish my comment of Liu Cheng's article,
especially to the point for CPA bidding. Frankly, I didn't know what to
say. I would like only debate on the point he made, but there's other thing
that really bothers me. That is, I feel Mr. Liu and also Finance Committee
is highly bias against anything HQ do now, and based on such sentiment
an objective conclusion is hard to reach.

	The arguments in Mr. Liu's article, FC's open letter and FC's appeal
to SVC is so obviously weak if not totally wrong, that I feel embarrass to 
debate against. I will just point a few more in Mr. Liu's article here.

	In the four proposals of the CPAs', I feel Jeff Lin and Cohen,etc
are really stand out. 
	I do think that of Cohen,etc. is very impressive and their writing 
is certainly the best one here. But also, their charge is the highest one.
As they claimed, and I believe, Cohen,etc. has very good reputation and does
high quality jobs.
	On the other hand, Jeff Lin has solid excellent reputation. He was
hired by NED, which is famous and which manage hundreds millions dollars
each year. If IFCSS want to apply funds from foundations such as NED, Ford,
Rockefeller, etc., an evaluation by Jeff Lin will give us a lot of help.

	I have noticed that Jeff Lin will "conduct a study of the internal
control structure of IFCSS" and "draft up an accounting policy manual",
while Cohen,etc. states that they "will not be reviewing the internal
control structure of IFCSS". This might be a big difference for us, because
I think for the future, one of the most important point to professionalize
our finance system is the internal control.

	Also, Mr. Jeff Lin offer a flat rate that let us to have better idea
for what we will get for the price we pay. The hourly rate offered by Cohen,
etc. on the other hand, could go out of hand in the worst case and we have
no control of it. (I do mean it will, but for the worst case it can.)

	From the above point, I approve the HQ's recommendation of Mr. Jeff
Lin.

	In Mr. Liu's article, he said:
liu:  For our money, we can afford the best we can get! Cost is not a
liu:  issue in selecting who we want to work for us.

We are not that rich yet. We are still trying to do many things with limited
resource. And most importantly, we do not have the right to spend money more
than necessary.

liu:  We are paying hundred thousand
liu:  more for compromising the excellence of the work.

Again, we have not find the truth about this point yet.

liu:  And these is no deadlines that we need to rush either.
liu:  Council received the notification of CPA bidding in Jan 10, 1994.

As all of you know, we have Working Meeting in Feb. 5, in order to settle
down this finance problem as soon as possible, we need to start as soon as
possible. Or do we want drag all this mess to the 6th term ?
The first memo from HQ to council of the CPA's proposal was sent to us in
"Mon, 3 Jan 1994 14:48:36". You guys really should pay some attention to
your emails.

liu:  Lets look who our HQ recommended and why? Jeff Lin is a CPA that did
liu:  the tax for IFCSS two year ago. That is when there was no good financial
liu:  record keeping in IFCSS.  And  this good CPA helped us to file our tax.
liu:  We are rather grateful for that. But we should move on. The situations
liu:  that happened in the earlier years should not be happening again. Covering
liu:  will kil the organization after all. We must not doing that again.

Tell me the "why" and tell me what is the "covering". When you said
"The situations" "should not be happening again", what situation ?
The "no good financial record keeping" or hiring Jeff Lin ? Do you know that
file tax return is different with day to day bookkeeping ? The reason
Jeff Lin helped file our 1990's tax is because, as you said, we didn't have
good book keeping for the first 2 terms. For the last two term, HQ filed the
tax return themselves because the improved book keeping.

liu:  If we read his proposal careful enough there is sentence as
liu:  following: " If management has elected
liu:  to omit substantially all of the disclosure and statement of cash flows
liu:  required by general accepted accounting principle........,  Another
liu:  statement will be included....".  Aha! He offered that the management, 
liu:  which in our case is HQ, a electing to omit substantially the information
liu:  that are required by general accepted accounting principle. What kind
liu:  choice is that?

Remember, he is not police. He can not force others to disclose information
to him. If he can not get all the documents he want, he does not want to
accuse IFCSS directly, but instead he will tell us in his own way that he 
does no see some documents. You might not agree to the words he will use,
but he will tell you the truth and it's up to council to decide what we should
do for a case like this. One option for us, if things really happen this
way, is the Council force HQ to disclose the documents, or we try to find
out why those things are none disclosable and how much. I don't understand
what is wrong with the approach.

liu:  In this whole process, there are many questions that have been
liu:  perplexing me. Why some people in our organization so unwilling to do
liu:  things in a better and more efficient way?

In a word, what you want to say is, my way is the only efficient way, isn't
it ?

liu:  Why are the people work in this HQ
liu:  willing to risk being suspected by the students and scholar community
liu:  and do not avoid this situation of conflict of interest.

I do not see any "conflict of interest" here, and I don't know why selecting
Jeff Lin make HQ suspectable. (Do you suspect NED because they hire Lin ?)

To summarize, I can not understand Mr. Liu's point. I think Cohen,,etc. is
very qualified firm. And I think Jeff Lin is a better choice.

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