6 things that won’t be said at the Tu20July PNB Audit Cttee: an apology for breaking state law, pensions audit fiasco, liquidity gibberish, covenant gibberish, net current liabilities concealment … & a motion to remove Chair Rosin

[This post will be written up properly by Su25July. The audiofile of the Tu20July mtg., 57mins (apologies, as the recording starts with the end of agenda approval): audible & downloadable at https://mega.nz/file/JBlAmKYI#mPcRo4UMezIDyhdCbzdQ_AHsjPuNB82n0VMEUrJpBkE. Because Jorge Diaz, principal auditor of Rogers & Company, goes thru the FY2020 auditor’s report, citing page numbers, one can use the withdrawn draft, viewable & downloadable at https://mega.nz/file/gc9h3SDQ#SG2SVOaJaniikB8-1oWcohAcp6KZVfd36dsLK4uYBsA. At the meeting, Chair ‘hapless’ Eileen missed an opportunity to partially redeem herself, forgetting to ask the Cttee if it wanted to carry out one of its crucial legal duties, so instead it passed the Cttee by, like a ship in the night: no motion was moved for the Cttee to accept the auditor’s report, as required by CA Government Code § 12586(e)(2). Oh.]

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For the FY2019 audit, the auditors never appeared publicly, in front of either the PNB Audit Cttee or the Pacifica National Board. Their last time in the limelight was Th16July2020, at the PNB (TS). Name. They also turned up x days before, at the Audit Cttee (TS). LINKS

The FY2020 auditor’s report filing with the CA AG fiasco …

What underlies all this is the cosy relationship PNB Audit Cttee Chair Eileen Rosin has developed with Pacifica’s bookkeeper & accountant, NETA, & with a NETA principal, Anita Sims, who is also Pacifica’s CFO. A consequence of this is that the PNB Audit Cttee has failed to maintain its strict independence from management, as required by both the established norms governing an audit cttee’s actions, & the California Government Code. LINK to the §, & to the audit cttee guides from KPMG et al. https://mega.nz/folder/Vd82AKJK#-i5tz0eVe5ejeWKSK8vR9w (& https://pacificaradiowatch.home.blog/auditor-s-reports/the-auditor-speaks-audiofiles-2004-present/)

. . . challenging . . . challenging management . . . KPMG Audit Committee Institute, Audit Committee Handbook, 2017, page 7https://mega.nz/file/Nd0FSaaY#8y-qjhpk3-78GULa5x4X_PTZyV4NgUC8a-OWNe6U7gU . . .

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Chair Eileen Rosin apologising to Cttee peeps for preventing them doing their legal duty – and explaining why she chose to do this

By the California Government Code, a charity corporation with Pacifica’s turnover has to have an audit cttee that has to … . LINK The Cttee has done none of this. Chair Eileen Rosin (WPFW listener-delegate) is responsible for this. She needs to make two apologies: for preventing the Cttee doing its work; & for causing Pacifica to break state law. But don’t expect any Cttee member to ask for these two apologies – and to ask her to explain why both deficiencies arose. For that, this public charity needs a culture of accountability – this it patently lacks.

Pensions audit fiasco

The latest publicly available info is that the last pensions audits attempted were XX. One needs to say attempted coz with them not being publicly available one can’t assume they were completed. Big difference. No-one has ever remarked on what the auditor’s opinion has been over the years – just the uninformed, commonplace, ‘the audit’s done’. For all anyone knows, maybe for years they’ve been issuing a disclaimer of opinion, even an adverse opinion. We simply don’t know – partly because all the pensions auditor’s reports are kept secret, & especially because no Audit Cttee member or director bothers to ask in a public meeting.

Liquidity gibberish

No-one noticed this, either on the PNB Audit Cttee or the PNB:

screenshot: $32 651 magically becomes $297 251

. . . beyond the year can never be of the year – MEGA LINK; & see https://pacifica.org/finance/audit_2019.pdf (page 14; p. 16 of the PDF) . . .

FY2020 (dated 30June2021, & never filed with the CA AG), Notes 4 & 5: p. 14; p. 16 of the PDF … $129 823 magically becomes $218 023

The gibberish: “[f]inancial assets that are available for general expenditures within one year of the statements of financial position date” (emphases added) – so necessarily excluding “[c]ontributions receivable” that are “[d]ue in one to five years”. Yet Rogers include this amount as available “within one year”. But as ED Lydia says, in Kurtian fashion, there you go.

And what’s Pacifica’s liquidity policy? “The Foundation strives to maintain liquid financial assets sufficient to cover 90 days of general expenditures” (FY2019 a’s r, p. 14; p. 16 of the PDF). Seems harmless, but what does it mean, what does it add up to? The 90 days is ~$11.868m ÷ 4 ≃ $3m (ditto – loc. cit. in Academese, loco citato, the same passage). And the corrected figure for the coming year’s available liquid assets is $89 678, not the stated $354 278 (sic); & assuming the $32 651 contributions receivable come in at a uniform rate, the 90-days total figure is ~$22 420 – stacked up against the $3m, that’s <0.75% (sic) of what’s required per policy, just 1-in-133. That’s the picture of a financially troubled public charity.

Covenant gibberish

No-one noticed this either:

ss of “Bequests received by the Foundation beyond April 19, 2021 are subject to additional interest charged by the lender to varying percentages depending on the direction and restriction of the gift (0% if restricted, 50% if a general, unrestricted gift and 30% if directed to a particular station).”

. . . cap . . .

FY2019: Note 7, p. 16; p. 18 of the PDF

FY2020 (dated 30June2021, & never filed with the CA AG), Note 7: p. 16; p. 18 of the PDF

The gibberish: “[b]equests received by the Foundation beyond April 19, 2021 are subject to additional interest charged by the lender” – the Foundation for the Jewish Community, operating as FJC, is charging interest on a particular kind of income received by Pacifica?

Net current liabilities concealment

The last time net current liabilities were disclosed in an auditor’s report was FY2016 (p. 2; p. 5 of the PDF) – https://pacifica.org/finance/audit_2016.pdf. That was the last audit done by Regalia & Associates. Once Rogers & Company came in, things changed: net current liabilities weren’t disclosed – neither on the balance sheet nor in an accompanying note. Even if Rogers gave no disclosure in the report they presented to the PNB Audit Cttee, the Cttee, & indeed the PNB, could have asked for a change. If it valued financial transparency, facing reality, it would have.

But there’s an external reason too. Disclosure is desirable for a financially troubled public charity like Pacifica because any possible grantor, for example, will simply apply the g-dhead of accountancy, auditing, & risk assessment, namely, prudence, & in erring on the side of caution they’re more likely to overestimate Pacifica’s net current liabilities. Concealment is counter-productive.

The last time Pacifica had audited net current assets at year-end was 30Sep2009https://pacifica.org/finance_reports.php.

Having net current assets is also known as being liquid, having liquidity. Contra the common misconception, liquidity is a difference, not a term: having lots of cash doesn’t necessarily mean the organisation has liquidity. Furthermore, liquidity is not just a positive difference but a time-specific one: having more assets available to be used up in the next accounting period, usually a year, than the liabilities falling due in that period. Hence the talk of ‘current’. And the size of liquidity is the excess of current assets over current liabilities, the difference.

By contrast, Pacifica has a negative difference: for over 11yrs, being illiquid, having illiquidity. That’s why its CFO is actually the JIC, the Juggler-in-Chief, with an able team of five station managers who double up as MMJ’s, Mini-Me Jugglers. ¡¡¡Presente!!!, shouts Lawrence from the seats up with the g-ds.

On the sorry tale of Pacifica & liquidity, please see https://pacificaradiowatch.home.blog/auditor-s-reports/auditor-s-reports-from-fy2005/ (note 8)

So the $3.165m owed to the Foundation for the Jewish Community, operating as FJC, becomes a current liability in 3mths’ time, on 31Oct2021, because contractually Pacifica has agreed to pay that debt by 30Oct2022 (FY2019 auditor’s report, p. 15; p. 17 of the PDF – https://pacifica.org/finance/audit_2019.pdf).

A motion to remove Chair Eileen Rosin for dereliction of duty

. . . Maybe the Cttee peeps don’t realise the legal duties they acquired, maybe they just wanted to be on the Cttee. Maybe they don’t care if they break California law – I mean, it’s hardly the first time, & who’s going to do anything, this is PacificaWorld, right, it’s not RealWorld, is it?

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The questions that need to be asked of Chair Rosin, the Rogers’ auditor, CFO Sims, ED Brazon, & all the directors

• re an alleged extension of the 30June2021 deadline for filing the audited financial statements (& accompanying notes) with the CA AG, why has no-one cited a letter from the AG granting such an extension?

• raising the question, why has no Pacifica director or other LSB delegate even thought to insist on seeing the supporting evidence for the assertion?

• indeed, correlatively, why is Pacifica’s alleged request for an extension not in the public record of the AG, the Registry of Charitable Trusts, in the section named, surprise, surprise, Filings & Correspondence?

• &, surprise, surprise, why is there no AG extension letter in the Registry?

• why have all concerned consistently spoken of the auditor’s report being completed, & never of its filing – which is the actual nature of the task in hand? Yet again, words are shown to matter.

• what is the claimed sequence of events:

when did Pacifica request an extension for filing the FY2020 auditor’s report?

who submitted it – the CFO, the ED?

how did the CFO & ED find out that an extension is possible, not least because the AG’s own webpage says, unambiguously, “[Q:] Does the extension for filing IRS Form 990 also apply to the completion date for the audit? [A:] No. The statute does not provide for an extension of time.” (emphases added – https://oag.ca.gov/charities/laws#collapseFAQs8)?

(This fact is consistent with what the law says, it ascribing no discretionary power to the AG or anyone else: “[t]he audited financial statements shall be available for inspection by the Attorney General and by members of the public no later than nine months after the close of the fiscal year to which the statements relate” (emphases added), CA Government Code § 12586(e)(1), so for Pacifica this is 30June, given its 30Sep year-end.)

when did the AG grant their extension?

when was this received by Pacifica?

by whom?

when did each of the ED & CFO learn of the AG’s decision?

So many questions – but they all need answering if this public charity, with a membership of c. 42 500, is to earn a reputation for both transparency & holding office-bearers to account for their acts of both commission & omission.

https://pacificaradiowatch.home.blog/non-financial-pacifica-data/the-knell-pacifica-membership-passing-over-time/

• (But let’s be honest, there is no extension correspondence, is there? As quoted above, the law gives no discretionary power to the AG, or to anyone else, neither CA’s governor nor any former AG, even if they now happen to be the current vice-president of the GOC, G-d’s Own Country.)

• [UPDATE: re the important revision of the pensions liability estimate, what is the sequence of events, not least what new evidence turned up after W30June, & when? who discovered it? how quickly did Rogers & Co. change their mind on the estimate? Also, when did ED Brazon instruct what she called “the non-profits lawyer” to halt their review of the FY2020 auditor’s report they had received on Deadline Day at 6.30pm EDT from CFO Sims herself (her report to the Tu13July2021 PNB Finance Cttee, 56:46 – https://kpftx.org/archives/pnb/finance/210713/finance210713a.mp3; & (approved?) minutes, unpaginated but p. 2 of the PDF – https://kpftx.org/archives/pnb/finance/210713/finance210713_7122_minutes.pdf)? 7.30pm? 8.30pm? 9.30pm? If it wasn’t because of the pensions matter, what was the reason? Also, why would a lawyer – any lawyer – be paid to look at an auditor’s report, to what purpose? what expertise could they provide? And this from a lawyer who is only “licensed to practice law in both Pennsylvania and Florida”, so neither in California nor in Washington, DC where lives the Corporation for Public Broadcasting – https://www.lawyers4nonprofits.org/team. This is all a crock, yes?

The lawyer: turns out it’s Jeff, Jeff the Brief, trading as Lawyers for Nonprofits – proudly denoted in its logo emblazoned across the masthead of its homepage, & then twice again, as “VIRTUAL LAW OFFICE”: https://www.lawyers4nonprofits.org/. So, Jeff, maybe working out of Mom’s basement. Jeff, apparently scrutinising an already done-‘n’-dusted auditor’s report – what for? Spelling errors? arithmetical errors? typos? formatting inconsistencies? Maybe a director, this side of the Styx, will ask ED Brazon what expertise Jeff, uniquely Jeff, brings to ‘the Pacifica family’.

Lawyers for Nonprofits: well, not so much ‘lawyers’ as Jeff, witness the ‘Our Team’ tab mentioning … only Jeff. Just Jeff. So, Jeff for Nonprofits. But Jeff Fromknecht is a busy guy. The bottom of each webpage says, “Lawyers for Nonprofits is a project of Side Project Inc., a 501(c)(3) public charity”. “Project”? The ‘About’ tab adds nothing, but money often talks, & the ‘Get Involved’ page, alongside more caps, “DONATE”, is more literal: “Side Project, Inc, [is] a 501(c)(3) public charity that operates Lawyers for Nonprofits”. Finally a verb, not a noun. Disclosure of a control structure. And surprise, surprise, who’s their CEO & Managing Attorney? Yup. With another Fromknecht, young Daniel, being a director – Side Project, Inc.’s website, https://www.dosomeorganizing.org/officers-and-board. Indeed: ‘do some organizing’. Charity, literally, starts at home.

Lastly, when Brazon et al. mentioned Lawyers for Nonprofits in July2021 they said it was itself a 501(c)(3) – which is untrue. But the two sites cited are written in such a way that one can easily make this mistake. We get this ambiguous formulation, no doubt carefully crafted & reviewed many, many times in draft: “[s]ince 2012, Lawyers for Nonprofits, a project of Side Project Inc., a 501(c)(3) public charity, has provided [blah, blah]” – https://www.lawyers4nonprofits.org/about. But in the mentioned footer, things swing the other way, having “©2020 Side Project Inc.”, evidence of hierarchy. Nevertheless, Lawyers for Nonprofits, strangely, but modestly, doesn’t appear on their project page – https://www.dosomeorganizing.org/projects. If you’re also confused, why not take a swim. A swim, you say? Yes. But where? Well, capping it all, the footer also makes the misleading claim that Lawyers for Nonprofits itself has a “Corporate Headquarters”. Nice. An HQ nicely located, on the beach: West Palm Beach.

Why is it that the sellers of specialist services to The Liberal Conscience of the Nation, non-profits, never themselves end up in North Kennedy Tract, or the Fashion District, or Far North, or Brentwood, or Hunts Point?

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The basics

• another disclaimer of opinion, the 4th (FY, ). Paying auditors so that they find themselves forced to say ‘materially’;

• another going concern warning, the 7th (FY, );

• unaudited net loss of ~$1.060m ($893 363 per NETA-prepared management accounts + ~$170k depreciation (the unaudited FY2019 charge was $188 398 – p. 6))

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