Financial Report - Mr. Wright you're wrong again!

Mr. Wright is wrong again!

The Village News November 1^st “ Money Matters column by Interim Treasurer Richard Wright reported that “Through 9 months the (financial) performance is essentially on track…with income $301,000 better and expenses $264,000 worse than budget. However, the expenses profile…will wind up slightly negative”.

The remaining narrative was a series of un-intelligible explanations of the alleged income and expenses categories line item amounts and anticipated 2007 year end budget variances. While attributed to Wright, the report was written in the familiar unreliable financial “Lois speak” style prose of Lois Campbell.

The Observer has restated the MVF financial statements through September 30, 2007. While both versions used the exact same income-expense general ledger accounts and cumulative line item amounts, the Observer’s rendition leads to a much different conclusion about the state of MVF’s financial health. (See schedule p4)

Financial Reporting Goals

The effectiveness of the of the financial management budget reporting systems depends on the board’s confidence and willingness to take prompt corrective action and make good financial decisions on unfavorable variations from the budget as indicated by the monthly financial reporting system.

All that said it seem reasonable that the primary goal of the budget and financial reporting system is to produce an accurate, complete, timely, understandable income-expenses budget comparison and balance sheet statements each month.

Inherent in all successful business, non profit and community association organizations is an intuitive sense of urgency about financial reporting, that mandates complete accurate financial reporting communicated thought out the organization normally within days of the end of the reporting period.

MVF Financial Reporting Traditions

In addition to a well planned and deliberate misleading, confusing and convoluted reporting system, the Foundation has developed to a fine art of time stretching from the end of the reporting period to when the MV Village News Money Matters feature fictionalizes the MVF financial highlights.

Because the staff driven bureaucracy has no sense of urgency about completing and distributing MVF’s inaccurate, improperly prepared and misleading financial reports until a few days before the monthly board meeting, any meaningful communications is already 2 to 3 month old.

The Realities of the MVF Financial Report System

The MVF financial statements and reports prepared by staff, presented to members of the Board of Directors in advance of meetings, summarized and reported by the MVF Treasurer at the MVF monthly board meetings and reported in the MV News deliveries an empty message. This results in a distorted and misleading accounting presentation of revenue, expenses, assets, liabilities and equity accounts.

By all indications reporting accurate, complete, timely, financial information is not intended purpose or desire of the senior staff, the Board of Directors and the Audit Committee.

Limited selected financial information is only communicated to create an illusion of favorable financial condition and excellent staff performance as well as to justify past and current board decisions and actions.

Mr. Wright, Prove Me Wrong!

Dick, you may take exception and disagree. If so please set the record straight when you give the Treasurer’s Report Thursday at the December 6^th Board meeting.

Make sure when you report “It (year end budget to actual variance) is expected that the year will wind up slightly negative” discuss and refute The Observer’s projection of a deficit of ($1,002,479) in 2007. (See schedule p4)

When you explain that the Maintenance Activity Fund (MAF) only has a ($42,122) deficit for the first 10 months of the fiscal year please mention that MAF income includes contract income of $603,750 “Fixed Price & ala Carte for Administrative Facility” which isn’t really income but an internal bookkeeping entry . . (See schedule v)

When “Fixed Price & ala Carte for Administrative Facility” is excluded on the 2007 audit report the projected MAF deficit in 2007 will be $1,231,553. (See schedule c)

When you state “Expenses are worse than budget by ($171,016) explain the budgeted line item amounts for “Direct Expenses” accounts used in the budget to actual comparison report are not the amounts approved and published for the 2007 budget.

As you know $674,290 of the direct operating expenses for the first 10 month of the fiscal year was charged to “Fixed Price – Maintenance 5590” which off course is only another bookkeeping entry so no one is really sure if money was actually paid, services preformed or what direct expenses were actually charged. (See schedule i)

When you report that “Through October Reserve spending was $422,000 and Reserve contribution and reserve interest income totaled $276,000” it would be helpful mention the $422,000 “Reserve spending” was not really spent on capital improvement projects but transferred to “Fixed Assets” account under “Fund Balances” , (another bookkeeping transaction off course) .

Also remind everyone that $276,000 “Reserve contribution and interest” isn’t really contributed to the “Reserve Fund” because the Designated Reserves fund is no long is classified as a MVF fund type. Why don’t you, Lois, Keith or someone from the Audit Committee explain how the majority of funds budget for “Reserve Contribution”, “Reserve Interest” and “Reserve spending” (via the “Fixed Asset” account) is used to fund the on going annual deficits of the Community Management and Maintenance Activity Fund.

Dick, if you don't feel comfortable commenting in your Treasurer’s report at the meeting please feel free to post your comments on The Observers blog