======================= Grand Council Chronicle ======================= Issue #33 -- September 20, 1995 Contents of this issue: Sec'y: List moving soon Gareth: Accountability Alban [partly fwd from Ellisif]: accounting Myrdin: GAAP This is the Grand Council Chronicle, the proceedings of the Grand Council of the Known World, a body chartered to examine the structure of the Society for Creative Anachronism, Inc., and make recommendations of changes. The contents represent the opinions of the contributing authors, and do not necessarily represent the official policies of the SCA, Inc. ---------------------------------------- >From the Secretary's Desk -- Due to the considerable demand for it, it's looking like we're going to switch over to an interactive mailing list, pretty soon. The responses haven't been unanimous, but they've been better than 2-to-1 in favor of the switch, I believe. Kwellend (the GC sysadmin) is working on this now; we're combining it with the switchover to a new site, which we were going to have to do anyway. Expect to see a test message from the new site (aol.com) sometime in the next week; there, I'll give more information about how to interact with the mailing list in its new format. We are exploring ways to digestify the list, so that those who prefer it can continue to receive the minutes of the Council in larger chunks. We will probably succeed in this, but I will warn everyone up front that volume is likely to increase, simply because people will be able to respond more quickly. -- Justin ---------------------------------------- Sender: rgathercoal@foxmail.gfc.edu (Roy Gathercoal) Subject: GC--Response to #31, 32 Response to digests #31 and #32, from Gareth. Fiacha writes about accountability >It seems to me that at present, accountability is achieved (or not as the case may be) by calling the most influential person you know and bitching at them. If we are to replace this 'system' we must replace it with something that is as responsive as and effective. >It still appears that the vast majority of the populace have no desire to get involved in such a process. Either because they do not expect their complaints to carry any weight or because they believe that they do not know anyone adequately influential. >We lack any mechanisms for collecting popular opinion. > I contend that this means that we must invent some effective formal channels so that the harassment via the informal channels will be minimized. And Alban writes > as for face to face accountability, there are 7 directors, and 25,000 members. there's damned little face to face. i see a director once a year, at pennsic. most members wouldn't know a director by sight if one came up and bit them. try telling your senator/representative, both federal and state, that he's accountable to you because he sees you occasionally, not because you can replace him. And Serwyl writes > Re Accountability: This is a major factor in all our discussions, be it in committee or in the Chronicle, and it is the spark the touched off this most recent reform movement of which we are a part. Some members are proposing elections of various officers. Elections, in and of themselves do not guarantee accountability. In fact, I don't doubt that some of our political problems might be worsened by it. We have a hard enough time trying to find one qualified and willing person for most positions without having to worry that someone with a big household and no qualifications will come in as a ringer. To each of these statements I would mostly agree. I do believe that the great majority of people do not get involved in the process of governance at the Society level because the majority of people do not know enough about it to formulate informed opinions. This is not because SCA folk are stupid, but rather because we have generally accepted the assumption that business is stuff that is best left to martyrs, and that if we absolutely need to conduct business, it should be done in the shortest time possible. I believe this is a dangerous assumption, and to a large part responsible for the bad feelings between the board members (current and past) and people who care deeply about one or another issue. The board says (partly rightly) "if you are going to participate meaningfully in this decision, you must better understand the background and current policy, otherwise we will spend our entire allotted time educating you in what is the current situation and not have time to get to the problem at hand." Meanwhile, the concerned member says "there is no real way for me to find out how things are done now--board business is mostly conducted outside of public meetings and everyone seems so concerned about confidentiality that I can't get a straight answer. " Much of the misunderstanding comes from different invocations of this shared assumption. For example, when the board started 'taking the show on the road' to hold board meetings outside of Milpitas, it was done with the express purpose of allowing people see their board at work. The assumption made by many attendees, however, was that these meetings were an invitation to join in the decision-making process. So some people came prepared to ask questions, debate positions and argue policy. This frustrated the board, which was concerned about getting through the required agenda so that they could keep things running until the next quarter's meeting. It also frustrated many of those attending, because they felt like they were being shut down and ignored. Fact of the matter is that the board has done a historically abysmal job of communicating anything to the membership (yet this is not an easy thing to do--note the tremendous problems that crop up over misunderstandings around royalty in each of the kingdoms, and these are among people who are far more likely to know each other). Meanwhile, many of the membership have not been responsible contributors. They have sometimes lobbied for changes that turn out to have already been enacted, based elaborate proposals on hearsay from not-competent lay "authorities" and have taken the position that says "you should do this because I want it, even though many other members do not want it. " This is not to lay blame on either the board or the membership, but to point out that we have not had effective communication and this is not due principally to personal character flaws of each board member. Most board members are conscientious and do try to make good decisions. Thus enacting a way to more easily or directly remove a board member will do little to fix the problem. It may increase the weight of persecution complex to the causes for board member burnout, but it won't make effective communication any more likely. Likewise, elections won't help much, either. Sure, people might feel better, having elected a board member but the fact is most of the people don't know enough about people outside their kingdom to cast meaningful votes. On this Grand Council (arguably among the leadership of the Society) did not know each other before the council was formed, and could not have been informed electors. Just a test, look over the last list of candidates for board positions. Is there even one person on this forum who has even heard of each of these people? How can we expect anything other than "back room politicians" to select board members in a society-wide election? I'm not willing to see us spend the money that truly international campaigns would cost, and I would not want to see the large kingdoms dominate by simply electing the people they know, which would be a common result of elections without campaigning. Again, I suggest that a board charged with forging a consensus across the Society on the really important governance issues, accomplished through a variety of methods which could include position papers in the TI, the organization of local town meetings on certain topics, and electronic communication (as one, not the primary means of communication). The important distinction is that the board would be charged primarily with developing and protecting the process, rather than making the decision. So rather than a situation in which we collectively delegate decision-making responsibility (as is now the case) or in which we attempt to achieve a meaningfully representative body (at least entirely difficult) we have a board that is responsible for fostering communication (education and opinions--all directions) about the important stuff in our society. It is indeed the case that an organization of 25,000 cannot reasonably expect individual face-to-face interaction with seven board members. However, if the board members are regularly engaged in face-to-face contact with various groups from among the 25,000, and if the board takes as its charge to facilitate the education of the members by each other (rather than either hearing opinions then making decisions or by making decisions then convincing others of the wisdom of these decisions) then meaningful accountability can occur. I would contend that my senator, to use the example given, is not overly concerned with any one citizen's opinion or threat to vote for someone else. In fact, most corporate elections are won by candidates backed by management, unless there is a significant well funded opposition. Management can control the organizational resources and controls most of the communication channels. Thus election of board members would result in tipping the accountability scales more in favor towards management (Society officers and Crowns) than towards the membership. Crowns are currently accountable (in the selection and removal sense) other than the board. To then make the board accountable to the Crowns would effectively remove our only check on the Crowns. Thus I am proposing that the same kind of accountability we currently have on the Crowns within kingdom (the face-to-face, my neighbor kind) be expanded (there are too many limitations on these checks now) and extended to the board. I really like Alysoun's proposal to solicit reviews of kingdom and society officers from branch officers. on the domesday form. I would further encourage that these comments be compiled, summarized and redistributed to the kingdom and branch officers. This not only has the advantage of completing the accountability chain, but it also would allow comparisons such as "118 seneschals in this kingdom commend the kingdom seneschal, and three condemn the kingdom seneschal." This says something very different than simply listing the negative comments. Perhaps we should consider the same for Crowns? They do function as officers, after all. (oooh, can-o-worms time!) ---------------------------------------- Sender: ALBAN@delphi.com Subject: accounting this is a forwarded message from ellisif, dealing with one of my suggestions about accounting and finances and such: Date: Wed, 13 Sep 1995 From: Monica Cellio >[Alban, would you forward this to the GC if you feel it appropriate? Thanks.] >Greetings from Ellisif Flakkari, >In the latest GC Chronicler, Serwyl reported on a conversation he had with >the corporate chancellor of the exchequer. This is the person who handles >reports from kingdom exchequers, kingdom chroniclers, the college of arms, >etc. She says (I'm summarizing here) that GAAP would be a bad idea >because these reports already mirror the IRS form 990s that the SCA is >required to submit, and switching to some other accounting method would >complicate the process. >The corporate finances, on the other hand, are a different matter; it's a >different pool of money, managed entirely by the corporation (not kingdoms >or local groups), and no coherent accounting system is currently being used, >unless they've fixed that this year. *This* is the pile of money for which the >GC should be urging the use of GAAP; those are the books that are currently >a mess, and they represent a budget of about $1 million a year. A year and a >half ago, the corporation's own accountant disowned those books; we have >no reports that they've changed procedures since then. >By all means, let the kingdoms and local groups keep doing what they're >doing. It doesn't sound like that's broken. But we *must* implement >controls and tracking on the corporate money. >Ellisif i asked her about these "pools" of money, just to be sure i understand what she was saying. one pool is the finances that local groups collect - event fees, demo payments, donated regalia like coronets and feast gear. this pool is reported regularly on the IRS 990's. the other "pool" consists of membership fees, interest on corporate CD's, and the like. this is the money from which things like corporate salaries, headquarter's utilities and rent, and the like are paid. _this_ is the money that badly needs regular and normal accounting procedures put in place for. in essence, i was half right and half wrong: accounting procedures need to be put into place for the corporate headquarters, but what's used for the rest of us is okay. alban ---------------------------------------- From: "Potter, Michael" potterm1@mary.iia.org Subject: GAAP Date: Tue, 19 Sep 95 09:39:00 PDT Sorry that it has been a while since my last posting. I have been able to keep up with my reading, but my job has kept me from being active in the discussions here. I'm going to make an effort over the next week or so to re-read the posts, but I do have time to make a few comments. 1) I would prefer the current weekly format over using LISTSERV because I receive my e-mail remotely and it is easier for me to get one mailing. In general, I find that the current format leads to more thought and care in posting than has been my experience with mailing lists or USENET news groups. 2) I'm a little confused about the discussion to use "GAAP" accounting. I am an accountant (a Chartered Accountant - the Canadian equivalent of a CPA), and I know that GAAP (Generally Accepted Accounting Principles) can mean many things. Normally, non-profit organizations use a form of accounting called fund accounting. From my perusal of the financial statements printed in TI, the accounting appears to be ok. It may not give the information that some want, and it may be unclear as to exactly what is in each account, but I wouldn't say that it does not follow GAAP. As was posted previously, if the system is set up to make tax reporting as easy as possible (which can be an onerous task), then I would hesitate to make wholesale changes. Maybe the concern is about the bookkeeping that is being performed. If the bookkeeping is untimely or inaccurate, then the financial statements may not be a good source to base decisions on. 3) There was a proposal that the SCA be audited every year. I would like to warn you that an audit performed by a public accounting firm is not what many people think that it is. The purpose of an audit is to gain enough information to support an opinion on the fairness of the financial statements. An audit does not mean that the statements are correct, nor does it mean that no fraud has taken place. All it really means is that they are not materially misstated in the opinion of the auditor. I have seen postings in the past that express alarm because of the wording used by our public accounting firm in reference to our financial statements. Actually, the wording is pretty standard for a "compilation" engagement. Public accountants have three basic levels of engagements. The first is an audit (see above). The second is a "review" which basically is a comparison with prior periods, known business trends, and accounting principles. Management is asked to explain any differences. The third (and lowest) level is a compilation. Basically, the public accounting firm takes the accounting records and makes a financial statement with them (or just takes the customer's financial statements as they are). No review (other than making sure that they add up) is performed. Because many people automatically trust financial statements that have a public accountant's name attached to them, compilation engagements have a very direct statement attached to them to clearly warn that no opinion is being expressed and that no verification has been performed. I think that an audit would be a waste of money. An independent review by a Board member (or another qualified member) of expenditures and receipts along with the original supporting documentation would probably suffice. 4) Lastly, there may not be a need to incorporate just because a branch is in a different country. Contrary to popular belief, many countries do recognize foreign corporations as "persons". Usually, incorporation is used to limit liability. If the branch is otherwise protected (by insurance or by recognition of the US corporation), there may be no need to incorporate outside of the US. Where it is needed, it may make more sense to make as few incorporations as possible (i.e. - not one for each branch or each province/state) to cut down on the amount of annual filing with the government that would be required. regards, Michael G. Potter Sir Myrdin the Just potterm1@mary.iia.org ----------------------------------------