New RA-Aus Accounting issue

[Captain]

Rocky

 

Further to Andy's post # 47, if you go back over the history of these types of discussions on this forum you will find that most of the criticism of RAA Management, Executive and Board have flowed from failures of process, outcomes & communication over a number of years.

 

It has just all come to a head this year with the numerous issues that have caused the flurry of posts over the past couple of months.

 

I don't know anyone who is posting here who is a "hothead". When/if you speak with most who are pushing for change, you will find that most are calm, considered & mature people with very considerable business/professional backgrounds who really just want to fly, but who are concerned that RAA has to be as efficient and well run as possible in order to facilitate & guarantee that.

 

By any reasonable test over recent years the RAA has lurched from disaster to disaster of management and governance, and the treatment of a number of past & present Board Members has been deplorable.

 

Regards Geoff

 

 

[drifterdriver]

Surely Geoff you could have used the words "self inflicted" somewhere in you previous post.

 

 

[winsor68]

Any chance the " enquiry into staff conditions of service" is anything to do with the "rumour" that a former employee was given almost $100k to relocate their household?

 

Anyone heard anything?

 

 

[shags_j]

Hi All,

 

I have been an accounant for 10 years, treasurer of an association (of course nowhere near as big as this) and prepared audits on a daily basis (albeit superannuation fund and general public offer fund audits).

 

Now for my opinion: I will qualify this with the fact that as of next week my RAAus membership will lapse and I will NOT renew it. I am moving to GA.

 

I was the one that asked at the AGM that the notes to the financials be presented as the financials are useless without them.

 

Today I received my sports pilot magazine with the financials attached. I immediately noticed (unless I missed something, I am tired) but Note 1 is missing. Note 1 contains very important information relating to accounting methods that are used and various other important tid bits. Maybe this is part of the 8 pages of "techncial information" that wasn't deemed to be important. If any note should be included, it should be Note 1.

 

Also if this was my business I would be concerned regarding some of the discrepancies on the financials, ie. extreme increases in staffing costs not in line with increased revenue and with the ballsups that have been made of late you would wonder if that was money well spent.

 

Anyway back to the OP's question of the irregularities. The Auditor's do NOT audit to find fraud etc. They audit to ensure compliance with certain regulations, in this case the incorporated association, company law etc. It is not their place to locate fraud in an organisation. THIS IS THE JOB OF THE TREASURER and PRESIDENT! There should be adequate internal controls in place to ensure this does not happen.

 

One last point: regarding the note on the outstanding litigation that was in the magazine proper: they say that the insurance no longer has enough benefit to cover continuing litigation or any damages that RAAus may have to pay. I actually sent the question of this, and hypothetical situation were RAAus made to pay to the plaintiff. My board member passed the email along to the president but after a number of weeks I said don't worry about an answer as I decided to leave RAAus. If I were staying I would be interested in the answer to this question as it may have an enourmous impact on the future of the association.

 

Anyways, just my 2c. Just to reiterate though, do not go mental at the auditors for not finding the "discrepancies" in the accounts. It is not their job unless hired to do just that seperate to the annual financial audit.

 

Cheers,

 

Shags

 

EDIT: BTW, I think the treasurer is completely unsuited to his position and may be of better use elsewhere in the organisation (I am being nice). A more suited person should be placed in this position.

 

 

[AlfaRomeo]

Shags,

 

We'll be sorry to lose you to GA - please come back and share your wit and wisdom sometimes when you get the urge.

 

Note 1 is part of the 8 pages of tech stuff deliberately omitted. However, the Auditor's Report, a critical document was also omitted but by mistake. To rectify this stuff up, the info that was put up on the RAA website is complete with no omissions. Too bad for anyone who doesn't go there.

 

The 26% increase in the pay to senior staff may well have provoked the current audit checks but we don't know that as a fact. Based on Note 14 "Related Party Transactions", this massive increase relates to just the top 4 or 5 managers - "Key Management Personnel". It is a pity no explanation was offered by the Treasurer for this at the AGM. Perhaps a member might like to write and ask him what it is all about and pass on what they find out. Good luck with that.

 

Most of the stuff ups that have happened over the last 12 months or more have been kept very quiet by the Board Exec, to the members' utter frustration or blissful ignorance - whichever way you want to look at it. However, with a financial investigation it is quite different. It was essential that we find out from RAA that financial auditors have been called in because the word would have leaked out and speculation would have been out of control.

 

Until the auditors have done their investigation and reported, there should be virtually nothing more said about this issue. Speculation now can adversely affect the reputation of people who may be completely innocent. It could end up a matter for Police and there is no way anyone would want to compromise a prosecution. At least we can be very confident our Board will be able to maintain secrecy on this matter, it is after all what they do best.

 

So, we should all just take a deep breath and wait patiently until we can be told in detail what the problem was, how it came about and what's been done to fix the financial control weaknesses so it does not happen again.

 

Alf

 

 

[AlfaRomeo]

Rocketing, you bring a good degree of moderation to this discussion. Thanks for joining in.

 

As has been said, some of us have been ground down by the track record of some Board Members (sadly the majority) and now we almost expect them to exhibit the Cassanova touch with their every endeavour.

 

 

[408059]

Any chance the " enquiry into staff conditions of service" is anything to do with the "rumour" that a former employee was given almost $100k to relocate their household?Anyone heard anything?

In the scheme of things industry generally pays the highest salaries and presumably gets the best staff. CASA, with their cap on salaries they can pay, work with the remainder, train them up and loose them to industry. The RAA gets the leftovers. The only way RAA survives, I suspect, is because it trades off its good cause status. I’ve seen what they pay to their admin staff from the recruitment ads in the local rag over the years and it isn’t much.

 

Without a paper audit trail on staff benefit decisions then rumours will abound. Yeah, I’ve heard about the relocation costs and much worse. Most of the people concerned have long gone so it will probably end up as a judgment call on what to report. Let’s see what the auditors pull up.

 

A radical thought, why doesn’t RAA use some of its retained earnings and pay a decent amount for some good people to sort out the mess. They will not last long because of the politics but at least while they are there they can sort out the past sins of former managers.

 

Cheers

 

Steve

 

 

[dazza 38]

I agree with Shags.

 

It appears that our current Tresurer doesn't have much of a idea on how to be a tresurer. The job would be better suited to somebody who is a accountant.

 

 

[68volksy]

I'd disagree with the need for a Treasurer to be an accountant. There should definitely be an accountant or experienced bookkeeper either on the staff part-time or on a contract basis though. The treasurer's job is more to work with the staff to manage the business, prepare budgets and to analyse whether proposed board initiatives can be met. All on a volunteer basis.

 

It's because all these positions are volunteer that their roles should be kept simple and the work done by qualified employees. In my experience finding an accountant who hasn't been approached by dozens of organisations already and turned them all down is hard. I've said yes to a couple and what the boards expect to get for free has always blown me away. Many accountants are happy to provide advice on boards but they all know they'll get asked to prepare the financials, do the budgets and then get dragged into sorting out each and every day-to-day issue. Jobs that should be done by an employee, not a volunteer. There are some accountants out there with a list an arm long of the volunteer boards they've been on but look at these people very carefully. Some are honestly trying to improve their community but within the list lurks the down-trodden accountant with a chip in their shoulder and something to prove. They'll tear the place apart trying to make their point.

 

 

[Guest ozzie]

We just put a banker in as treasure in our club. made a huge difference.

 

 

[kgwilson]

Shags,Note 1 is part of the 8 pages of tech stuff deliberately omitted. However, the Auditor's Report, a critical document was also omitted but by mistake. To rectify this stuff up, the info that was put up on the RAA website is complete with no omissions. Too bad for anyone who doesn't go there.

Alf

Has anyone counted the number of mistakes made and continuing to be made?

 

If the auditor's report was omitted by mistake then why was the front page of the printed copy posted with the mag entitled "RA-Aus AUDITORS REPORT - YEAR ENDING 30 JUNE 2012" when this is not part of the financials posted on the website?

 

I have said it before and will again. RAA is a $2.5 million annual operation and requires professional management at all levels including the entire Board. In saying this even professional managers are human and make mistakes. One difference between the management we currently have and top level professional management is that the former fails to learn from mistakes while the latter learns from them and establishes processes & procedures prevent recurrence.

 

 

[Spriteah]

Kgwilson another prospective board member. I look forward to seeing your nomination in the not to distant future. I can honestly see light at the end of the tunnel.

 

Thanks guys and gals. Lets get this organization humming along.

 

Jim

 

 

[facthunter]

That's the express train coming the other way Jim. Nev

 

 

[AlfaRomeo]

I'd disagree with the need for a Treasurer to be an accountant.

Need? Perhaps not need but there can be a distinct advantage especially if we are talking business accountant (usually CPA) rather than chartered accountant (CA). I see the Treasurer more as the Finance Director. And as you say 68V, an employed accountant is a top priority. Most younger accountants have good IT skills and RAA definitely needs that.

 

So the "Finance Director" has a quality control role and is an advisor to the Board. The FD reviews the process for putting the Budget together but preparing the Budget is the job of the CEO supported by Manager reports and the accountant. The CEO presents the Budget to the Board as his/her plan and the FD assures the Board that the process for assembling the Budget was good and then asks the difficult questions of the CEO.

 

If you are on the Board and you don't have a clue about finance then do us all a favour and don't put your hand up for the job.

 

Alf

 

 

[shags_j]

I'd disagree with the need for a Treasurer to be an accountant. There should definitely be an accountant or experienced bookkeeper either on the staff part-time or on a contract basis though. The treasurer's job is more to work with the staff to manage the business, prepare budgets and to analyse whether proposed board initiatives can be met. All on a volunteer basis.It's because all these positions are volunteer that their roles should be kept simple and the work done by qualified employees. In my experience finding an accountant who hasn't been approached by dozens of organisations already and turned them all down is hard. I've said yes to a couple and what the boards expect to get for free has always blown me away. Many accountants are happy to provide advice on boards but they all know they'll get asked to prepare the financials, do the budgets and then get dragged into sorting out each and every day-to-day issue. Jobs that should be done by an employee, not a volunteer. There are some accountants out there with a list an arm long of the volunteer boards they've been on but look at these people very carefully. Some are honestly trying to improve their community but within the list lurks the down-trodden accountant with a chip in their shoulder and something to prove. They'll tear the place apart trying to make their point.

Never said accountant. Just someone that knows something about all this. I would suggest though someone from a finance background.

 

 

[turboplanner]

i'm not financial savvy...but...reading the auditors report...

 

Employee benefits expense ( whatever that means) increased by $335,000 in the last year

 

Insurance costs went up $63,000

 

Member subscriptions went up by $148,000

 

ASIC fees went up by $34,000 (revenue)

 

ASIC fees (as expense) up by $39,000

 

Board expenses up by $31,000...almost 100% increase on last year

 

Payables include "Provision for time-in-lieu"..$$51,000....nothing last year....

 

Key Management Personnel Compensation- short term benefits..(what ever that is )..up by $83,000...

 

seems to be $$$$'s going everywhere!

Good work CFI, but others have given glowing reports of the financial status. maybe they just didn't see what seems to be obvious.

 

 

[Captain]

So can Jim T or John McK of Gavin T kindly confirm whether RAA employs a full or part time office accountant?

 

And re the recent comments here on the Treasurer's Treasurership, an accountant would be great, but just someone with a clue would be good.

 

 

[Guest airsick]

When reading this information what I am hearing from the board is:

 

1. We have a problem but in typical non-disclosure fashion we are not giving you details, telling you the magnitude of the problem or giving you any real detail.

 

2. We had a problem in the past with respect to complying with CASA requirements and didn't tell anyone until it began having a significant impact on the members and we could hide it no longer.

 

3. To address these issues (and potentially more that we haven't told you about) we are appointing a new General Manager (we changed to name from CEO to give the impression we are doing something) but almost a month after posting the job ad we still haven't got a job description and almost certainly anyone with the skills and experience required to carry out the duties and rectify the outstanding issues has already gone on Christmas holidays and won't be able to apply in time so we will appoint Middo or SR to do the job and pat ourselves on the back.

 

Cynical? Maybe. Justified? Probably...

 

 

[AlfaRomeo]

Never said accountant. Just someone that knows something about all this. I would suggest though someone from a finance background.

A smart accountant can do the job better and in less time with less effort than your average Tasmanian Flight Instructor - and I'm not talking about cficare. A person without much experience in general management or finance will not be as successful.

 

 

[AlfaRomeo]

So can Jim T or John McK of Gavin T kindly confirm whether RAA employs a full or part time office accountant?And re the recent comments here on the Treasurer's Treasurership, an accountant would be great, but just someone with a clue would be good.

RAA do not have a qualified accountant on staff. They rely on the external auditors for technical accounting. They do have a clerk who is high quality and learned on the job.

 

There is virtually zero IT expertise in house but Bas is doing a great job in getting some real improvements.

 

 

[damkia]

I'd disagree with the need for a Treasurer to be an accountant. .. The treasurer's job is more to work with the staff to manage the business, prepare budgets and to analyse whether proposed board initiatives can be met....

The position description you give is that of the responsibilities of the Secretary not the Treasurer. The Treasurer should be 100% focused on the financial books, with the skills necessary to do so (= an accountant). There was no accountant/treasurer responsible for the books as it was, and this is what is now causing grief. Do you really want a repeat performance? The solution is an accountant for the position, whose focus is solely on managing the finances.

 

 

[AlfaRomeo]

Only a Board Member can be Treasurer. We have 13 Board Members, of them how many are accountants? Nil? Perhaps we should elect people based on their skills not where they live!

 

 

[terryc]

The position description you give is that of the responsibilities of the Secretary not the Treasurer. The Treasurer should be 100% focused on the financial books, with the skills necessary to do so (= an accountant). There was no accountant/treasurer responsible for the books as it was, and this is what is now causing grief. Do you really want a repeat performance? The solution is an accountant for the position, whose focus is solely on managing the finances.

I believe that what we need is a competent book keeper. I would also like to make the point that the role of the board is one of governance and oversight not the performance of work and until we and the present board grasp this concept we will struggle to achieve the outcomes we want.

 

 

[Gibbo]

i'm not financial savvy...but...Employee benefits expense ( whatever that means) increased by $335,000 in the last year

 

Key Management Personnel Compensation- short term benefits..(what ever that is )..up by $83,000...

 

quote]

 

Key Management Personnel Compensation- short term benefits.. ? Nice payout for a long term contract cut short. or. Unfair dismissal payouts.

 

Employee benefits expense ( whatever that means) increased by $335,000 in the last year.. ? Who's driving a nice new car?

[damkia]

Only a Board Member can be Treasurer. We have 13 Board Members, of them how many are accountants? Nil? Perhaps we should elect people based on their skills not where they live!

Very good point.

"You don't call a plumber to fix a blown fuse"

 

Accurate and meaningful position descriptions with minimum qualifications are what is needed. "Incorporated Clubs" do not usually have the $1m+ cashflows that the RAA have, nor do they have the requirements for stringent financial audit and reporting processes that goes with that. All of that is irrespective of the systems audit processes that are imposed by CASA.

 

It s time to treat RAA as a "business" rather than a "club" and employ responsible, qualified professionals to run it.