The auditors of the FY2017 financial statements, Rogers & Company, presented their report, in person, to the M24June Audit Cttee & to the Th27June PNB. The Audit Cttee recommended its acceptance to the PNB, which duly obliged. The published report is dated Th27June. https://pacifica.org/documents/financial/2017/PACIFICA-17-FS_Final.pdf
No member of either the Audit Cttee or the PNB displayed any awareness of how harmful to Pacifica’s fundraising is the decision of the FY2017 auditors to offer no opinion on the material accuracy of the financial statements presented to them. I explained this harm in a piece written 26June (please see the link at the end).
The auditors started their work, then realised that Pacifica was finding it impossible to reconstruct & provide sufficient evidence, both quantity & quality, in support of the figures in the financial statements. Pacifica could have spent another six, nine months on the task, with no guarantee they’d come up with enough of what the auditors needed.
Also, fundamentally, no-one on the Audit Cttee & PNB displayed any awareness of how serious it is that the auditor’s opinion had deteriorated from the FY2016’s “qualified opinion” (also termed a ‘scope limitation’), Pacifica’s first, to FY2017’s “disclaimer of opinion”, again, a Pacifica first. (The third kind of ‘modified opinion’ is an ‘adverse opinion’.) So, no-one displayed knowledge of what’s made plain, made explicit, by AU-C section 705, the auditing clarification re ‘modifications to the opinion in the independent auditor’s report’: https://www.aicpa.org/content/dam/aicpa/research/standards/auditattest/downloadabledocuments/au-c-00705.pdf
The FY2017 financial statements presented by NETA, on behalf of Pacifica, were rejected by the auditor – not because they judged them materially inaccurate (in that case, according to auditing rules, they would have publicly issued an ‘adverse opinion’) but because there was insufficient supporting documentation to allow them to make a judgment (hence the refusal to issue an opinion; in the obscuring ‘diplomatic’ jargon of the profession, they publicly issued a ‘disclaimer of opinion’).
In plain language, not disclaiming, but refusal & hence rejection.
The auditors refused to validate the financial statements, refused to validate them to even the slightest degree.
The statements remain unvalidated. For all the money spent by Pacifica’s listeners, paying NETA to prepare them, and Rogers & Co. to audit them, what are they worth?
The auditors were saying, in effect, three things:
- take these financial statements as you find them – because they have inadequate support;
- rationally, one can only take them on faith; &
- so, how strong is your faith in Pacifica, both in 2016-7 & now?
My three-page discussion, originally sent to Chris Albertson’s blog: http://www.mediafire.com/file/rw9nofuwsbnr3k1/FY2017_Auditors%2527_Disclaimer_of_Opinion_W26Jun19_3pp.pdf/file