Subject: FWD (from Liu Chen) : on selection of CPA for re-compilation

From: [email-masked]
Date: 14 Jan 1994 21:46:43 -0500 (CDT)

Date: 14 Jan 1994 19:43:51 -0500 (EST)
From: [email-masked] (Cheng Liu)
Subject: On selecting CPA for re-compilation
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Dear council members, HQ officials:
	
	As a council member and a participant in the site inspection term,
I extremely glad to see that our hard works are starting to payoff now.
In the second teleconference we discussed the results of the site
inspection. The financial committee, based on the works of inspection term, 
on the site and off the site, concluded that the accounting situation is
extremely chaotic in HQ for the last year. 

	There is no financial statement to explain a large proportion of 
IFCSS' expenditure, estimated up to 0.23 million us dollar which is over
half of IFCSS' revenue last fiscal year.

	Since there is no record for such big portion of total expenditure, No
further conclusion can be made about any thing at this point of time.
However other financial misconducts are also uncovered during this day
and half inspection, such as, treasurer misusing IFCSS check to pay her own
rental, two pay days are observed in some months, several missing checks
are without proof of cancellation and so on so forth.  

	Please note, we have been paying 20.000 us dollar every year hired a
professional accountant. Sloppiness and inefficiency are evident in her
work that had reseached  a level of extreme! When we were in D.C. to conduct
the site inspection in November, She has not done bookkeeping for two months.
there is no journal for September and October. The only daily work that
she is paid for to do is typing the checks to a Lotus 123 accounting
program in computer. The check number almost never exceeds 10, and for most
the days there is none ( the only exceptions that we observed are the days
right after 5th congress which have more than 10 checks/day ). 	Bin Qi and
I went through all the checks and journal for three months in one 
afternoon, which means three months of her work can be done by two layperson 
in 4 hours, if you really work hard. And she has not even get these job done! 
	Another part of her job that she is paid for is to give a financial
statement every three months, that will COMPILE all the checks that she
entered in the program. So we can make sense out of it. What she has done
for that? As we already said, if we add the numbers in her financial
statement of last year, we can not come up with the number of total revenue
which is about 400 thousand.  Record of 230 thousand is missing. We do not
know what the hell happen to this sum of money. There are piles of receipts that
she claims are of all the records. There is simply no way we can go
through that. With such a big portion missing, the rests of the financial 
statements are more likely to be meaningless. that is why we still have not 
file the tax for last year which is long, long due.
	So, what left for us? Since she is obviously not doing her job.( At
this point I am not sure whether she is still receiving salary.) We now have
to hire a CPA to RE-COMPILE the record, to redo the job our treasurer has not
done. If we are lucky, if the the checks and journals she entered are
faithful and complete, then we hopefully can get the financial
statements from the CPA and file the taxes at an extra cost. 

	 Lets look how much a reputed  accounting firm will charge to do the
job for us, A LITTLE OVER TWO THOUSAND A YEAR! Folks,  Are we fools or not?
The best accounting firm that has bidded this job, the Myint & Butua and
Cohen Rutherford Blum & Scott, PC, Certified Public Accountants gave us an
offer as following:

               1993   $ 2325
               1994   $ 2225
               1995   $ 2450
           ---------------------
               total  $ 6675

For $ 6675 in total, we are set for three years! 

	 My fellow students and scholars, the choice in front us is
crystal clear. These si nithignthat we can argue about. the real
question is hy we making these kind mistakes and who made us to make
these kind mistakes? For the ones that attended 5th congress we will all
remember the person lied to all of us loud and shamelessly about the workload
and quality of this treasurer. And those persons also have unescapable
responsibility for these terrible mistakes. 

	For our money, we can afford the best we can get! Cost is not a
issue in selecting who we want to work for us. Several hundred dollars more
expensive is not going to to break us.  We are paying hundred thousand
more for compromising the excellence of the work. And these is no
deadlines that we need to rush either. Council received the notification of
CPA bidding in Jan 10, 1994. and also notified at the same
time unconstitutionally that if there is no resolution has been passed about 
bidding before Jan. 14, 1994,(which is  today by the way) in a e-mail 
conference which was  scheduled to start at 6 pm Jan. 13, 1994, but not 
started yet, or may ever start, THE HQ WILL PROCEED TO SELECT THE CPA THAT 
THE HQ RECOMMENDED!  

	Lets look who our HQ recommeded and why? Jeff Lin is a CPA that did
the tax for IFCSS two year ago. That is when there was no good financial
record keeping in IFCSS.  And  this good CPA helped us to file our tax.
We are rather grateful for that. But we should move on. The situations
that happened in the earlier years should not be happening again. Covering
will kil the organization after all. We must not doing that again. Are there
any other reason, that make this CPA stand out? If we read his proposal
careful enough there is sentence as following: " If management has elected
to omit substantially all of the disclosure and statement of cash flows
required by general accepted accounting principle........,  Another
statement will be included....".  Aha! He offered that the management, 
which in our case is HQ, a electing to omit substantially the information
that are required by general accepted accounting principle. What kind
choice is that? We are now facing a financial "myth" that we can not figure
out. Are we willing to pay to get another financial "myth"? Certainly not.
In the contrary, the Myint & Butua presented  a 4000 words proposal and
offered a three year plan to work with us, and help to professionalizing
this organiztion. Who would have any confusion in kselecting between these
two firms. 

	In this whole process, there are many questions that have been
perplexing me. Why some people in our organization so unwilling to do
things in a better and more effcient way? Why are the people work in this HQ
willing to risk being suspected by the students and scholar community
and do not avoid this situation of conflict of interest. I sincerly ask
everybody, help me out on these questions.

Council members, Please vote no to Jeff Lin and yes to Myint & Butua and Cohen
Rutherford Blum & Scott, PC, Certified Public Accounting. See how many
people we can get for our money to work for us by selecting the later.

                                                         Cheng Liu

---

From: [email-masked] (priv=-10 D.C.)
Date: Sat, 15 Jan 94 04:03:55 -0500

Mr. Chair,

	First, I appreciate the hard work of Finance Committee. Due to
them we will have probably the most comprehensive finance auditing in
the IFCSS history. But, nevertheless, there are many things wrong in
the process.

	Here is my reply to Mr. Liu Cheng's article.

	For Liu Cheng's criticism of the current Treasurer, I am not
sure how much I can agree or disagree, because I did not go through the
account myself. But surely the Finance Committee and Mr.  Liu does not
appreciate how complicated the IFCSS finance account can be.

	I know one small company here with only 3 persons. They even
keep an half time treasurer. Certainly the IFCSS's finance situation,
transactions are much more complicated.

	Also, from talking to the Treasurer of the 1st term, also to Gen
Xiao who tried to do the accounting in his term, I know the IFCSS's
account is very complicated. In fact, lacking sole duty treasurer is
part of the reason that we have messy accounting situation for the first
three terms.  Gen Xiao hired Ms. Jiang, our current Treasurer because he
felt it was beyond what he could handle and he wanted to professionize
our accounting system.

	Later, Mr. Liu claimed "three months of her work can be done by
two layperson in 4 hours". Do you really believe that ? Do you know the
different between organizing a file and glancing through the file ? I
can read a novel in two hours, but can I then claim that writers should
be able to write books in a few hours ? I know this is not a very good
example, but the point is there. Think about it, if you two, non
professional, have no background in accounting, can do accounts in a
few hours, why CPA need to spend time studying accounting for more than
two year? Also, I have to point out that the better an account is
maintained, the easier and lesser time it takes for reviewing. So from
what you said, I might conclude that our account is very well
maintained.

	BTW, when later he claimed that the reputable CPA will do the
accounting for us for "A LITTLE OVER TWO THOUSAND A YEAR", that is
totally wrong! What the firm proposed is (read the proposal again
please!) that they will charge $2300 for the year end compiling of our
account, and under the condition that we have an accountant do the
everyday accounting the right way.

	Saying that the to-be-hired CPA will do what Treasurer
supposedly should do is inconceivable.  Suppose we had so called
"qualified" accountant, then don't the CPA need to do anything for the
proposed job ?  If you read the proposal of "Cohen, Rutherford,
Blum&Schott, PC", the job of our treasurer include at least "typing of
select confirmations if deemed appropriate, retrieval of all required
financial and tax information, preparation of all bank reconciliations
and requested workpapers, and conformance to our standard client
assistance schedule", etc. And the CPA's job is just "compilation of
the accrual basis financial statements", "annual tax returns" and other
"accounting and consulting services"

	Actually, the simplest way for us to evaluate how well Ms. Jiang
performed is to talk to some accounting firm. Just to see how much they
would charge for them to do the everyday accounting for us. Also, we
will have our opportunity to ask the CPA at the D.C.  Working Meeting
after he/she evaluates the whole finance situation of IFCSS.

	The second big part of the article is his insisting the missing
$230K.  For this, I would blame more to the Finance Committee than
anybody else right now. Why ? Because Finance Committee did not do
their home work, or not enough before they reached their conclusion.
Have you ever see how a professional do inspection ? You first have to
try to work out the difference with HQ, ask them questions, talk to
them for several rounds; then you state what you have known and what
you still not know with solid facts, numbers. But what we see here is
that Finance Committee just claimed there are 230K missing with such a
poor writing and supporting facts, even before trying to get an
explanation from HQ.  Here, I am not even try to work out the possible
overlap as pointed out by the "open letter", nor try to figure out if
IFCSS can afford to have 230K missing without notice (see Anzhi's
article in the ifcssvc net, if you want, I can forward to you).  Even
further assume what FC claimed is the case, have we, the council member
ever been informed ?  Why didn't FC bring such a serious SERIOUS
finding out in the 2nd teleconference ?  It is irresponsible and
irrespective to other council members for the FC to post such an open
accusation without informing us. I know the FC will blame HQ for not
cooperative. But is uncooperative the same as confirmation of missing
230K ? If FC is really serious about the reputation of IFCSS and of
itself's, just state the fact (e.g.  complaining about HQ's bad
attitude or something like that), do not present your wildest guess as
the truth. And most importantly, respect other council member.

	The last part is for CPA bidding. What I want see is an
objectively comparison of these for proposal. but after reading why HQ
recommend Jeff Lin, the only thing I can say is Finance Committee has
lost basic trust with HQ. Further cooperation between FC and HQ is not
possible now.

	I will post my analysis of bidding CPA in next mail.

In conclusion, my points are,

=> I will judge our Treasurer's work only after consulting the the CPA
   who has evaluate our whole finance situation

=> The finance committee's claim is not well supported

=> The Finance Committee's "open letter" is irresponsible

=> Even though I do not know as much accounting as our FC colleagues, I
   can still see many obvious misleading/wrong point of articles/letters
   of FC.

Dong Chen

          __                                         Mail address:
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