Audit

 

Pacifica Foundation Budget and Finances:
A Report to the Pacifica Community-
How are we Doing?

by CFO Lonnie Hicks
February 2004

This is a report to the Pacifica Community on the finances of the Pacific Foundation, and, simultaneously, I hope to give the new Board and Local Station Directors a short primer on the over-all finances of the network.

I also hope to give those new to network finances points on how to read the budget and finance documents we work with. More pointedly, the goal is to provide an understanding of the financial dilemmas, choices and issues in our financial structure. 

Overview of Network Finances

The fiscal year of the network begins October 1 of each year and extends to September 30 of the following year. As most of you know we receive most of our funds from listener fund drives which occur three times during the year. Most stations add a summer drive as well.

Revenues
This fiscal we will, on projection, raise $14.79 million dollars. Seventy-seven percent of those funds will come from individual listener donations. This is tremendous support for the network but it is also our vulnerability. If listeners materially reduce their support (as occurred at WBAI this fall) it can be difficult for the network.

We also receive significant funds from grants, including those from the Corporation for Public Broadcasting which total $1.38 million or 9.3 percent of total revenue.

Expenses
Expenses are projected to total $13,157,708, half of which is used for salaries and benefits. The remaining expenses include administrative expenses which such as telephone, postage, and bank finance charges connected with on-air fund drives, utilities and the like. Administrative costs vary from station to station but average 22 percent for all stations.

Legal Expenses: One of our Biggest Headaches
One of the largest expenses are legal and professional service firm fees which have been with us since the change-over from the old Board to the interim Pacifica National Board (1999-2001). As most of you know, this has been a daunting challenge and in recent months, we've faced new bills related to both old litigation, legal costs in the bylaws area, and final settlement costs from old suits.

The good news is that most of the litigation is behind us. The bad news is that we have new current legal bills to pay. As of this date, the Pacifica Foundation faces current due and payable legal debt of approximately $475,000. This debt includes personnel cases, by-laws, elections, new legal settlements, and, of course, attorney fees. In addition, Pacifica faces $370,000 in legal and professional service firm debt dating back several years. Most of this $370,000 service firm debt is not active, not currently being invoiced, and is a potential write-off for Pacifica.

Please note that some of these legal costs are moving targets and may change as the fiscal year proceeds.

Central Services
Central Services are those expenses managed by the national office on behalf of all stations and on behalf of the network. They include insurance (204k per year), National Board expenses, Federal Communication Commission related costs, legal expenses. (these can be very large and vary from normal attorney costs to large dollar amounts stemming from legal settlements, expenses and taxes). Also included are National Office staff: accounting staff, a Development Director and Human Resource Director and other staff who work on network wide issues.

Staff costs total 33.5 percent of total National Office expenses.

Other expenses at the national level include monies for audit and legal, election expenses, and National Programming including Democracy Now! and other special event and news coverage.

Central Services in the proposed FY04 budget total 16.6 percent of total expenses, 14.8 percent of total revenue and 19.1 percent of listener income. The National Office holds the FCC licenses of the network and is the office with responsibility for the overall operation of the network. 

The Bottom Line

The net surplus/deficit line indicates a total surplus of $1.64 million on expenses of $13.15 million. This is a return of 12.5 percent on "operating." Operating expenses are those expenses incurred by the organization in the normal course of its yearly operations. Twelve and one-half percent is an excellent return. Operating return identifies how much surplus the organization can produce in a given year. By comparison, this amounts to saving $312/per month on a $2,500/per month salary.

After operating revenue and expenses are calculated, Pacifica's practice in the past has been to add on a "Capital and Cash Budget" below the operating budget. This "Cash and Capital Budget" has been in use for several years. It tells the reader how each station plans to spend its "surplus" in a given fiscal year on capital items or other items which may require a cash layout. This particular aspect of the budget, I believe, ought to be eliminated because it causes some real difficulties not only for the network but also for staff as we seek to manage the finances of the system.

As I have relayed to the Board, here are a few points on this to consider:

Accounting practice is not to mix income statements, cash flow statements, and capital expense items in the same statement. This causes confusion and mixes apples and oranges, and is incorrect. It also confuses our bankers, our creditors and others who are not used to seeing this statement mixed in this way. It should be eliminated.

The "Cash and Capital" budget should be two budgets (Cash Flow and Capital Budgets) and I am working on reorienting our current systems, (accounting, budgeting, cash management, accounts payable, etc.) to produce the relevant information. Our current finance staff has had possession of the books here for only six months and will require time to finish the audit and then we will take up these issues. This will take time, perhaps several months. But it will be ready for the 2005 budget year. Meanwhile, I have taken some stop-gap measures which I use to measure our current situation.

This notwithstanding, the budget represents a considerable step forward for the network in that each station now has a requirement of one months operating reserves in the budget to be achieved by September 30, 2004. This is crucial in that it allows the system to have reserves for emergencies in the fiscal year including monies for emergency repairs to transmitters, and for unexpected events such as earthquakes, fires, lawsuits and other mishaps. The one-month reserve also provides reserves to pay our staff in the event something happens. Many thanks to our General Managers, accounting staff and others for making this reserve possible.

However note that we live in a period that, while revenues are rising, so are expenses. Workers Comp is up 15 percent this year; medical expenses up 30 percent; new union contacts have increases; and insurance, litigation, elections, and By-Law related costs all add up to substantial sums. We need to control costs in all areas. As new Board members, job one is to control costs issuing from the Board itself. Executive Director Dan Coughlin and I have stated that every Board proposal, idea, suggestion or program ought not to be entertained by the full Board or finance committee unless accompanied by a financial impact statement such that we know how much that item will cost. The ED and I will insist that this rule be adopted by the new Board as well. A reserve is essential. It can be wiped with one bad drive, or one or several significant cost over-runs.

So one month is minimum to have in place. Common practice is to have three to six months operating reserves in place. To do less is risky.

But what happens if expenses do exceed revenue? For example, a dip in listener support can be devastating and immediate leaving little time to react or plan. What to do? We could:

1) Reduce costs to match any reduction in revenue

2) Identify new sustainable sources of revenue

3) Re-structure the unit or station to alter the over-all cost structure of that station

4) Re-conceptualize the cost structure to move expenses to a follow-on fiscal year.

5) Merge the unit with other units or stations

6) Fund-raise to match the new expenses

7) Obtain loans and other support from other sister stations

8) Obtain loans and other support from the National Office which often supports a given station, especially where funds are needed to meet payroll.

9) Finally, the Executive Director can ask for support from stations as a group to handle extraordinary expenses, or, he/she may allocate specific expenses to a station where it is clear that the station in question originated the expense (normally legal).  

Reserves to Back Up Our Reserves

A last resort is to dip into the accumulated funds each station may have from years of operation or from drives from previous fiscal years. This figure can be found in the year-end audits which break out how much cash on hand each station has or has available in liquid or near liquid funds (i.e., money market funds). See the network audit available at Pacifica.org website. On the whole at September 30th, 2003, internal documents show that the network had $1.3 million cash on hand. As of January 2004, that figure had increased by $1.1 million. Again, this is excellent since it tells us that this "second reserve" is available "in the system" if needed. Moreover, it is 2nd source support if needed to handle very large, unexpected expenses.

So, by way of summary, the three documents we have examined are the Profit and Loss Statement (the Statement of Activities), and the truncated "Cash Flow and Capital Budget" statement alluded to above.

In addition, there is the network's Balance Sheet which is normally published yearly or perhaps quarterly. Inventory counts are particularly difficult in the generation of a monthly Balance Sheet and, therefore, are not feasible on a monthly basis. 

Budget Issues and Questions

Note the Annual Operating Budget is a plan of action and often changes from the moment it is written, and, given our fund-drive based revenue the budget ought properly to be seen as a rolling forecast. For example, a new grant or contract comes in unexpectedly, therefore, revenue and expense estimates change. Expenses may be higher than anticipated or lower than anticipated.

Normally, larger changes trigger forecast changes which are then presented to the Board for review with variances highlighted. Or, often, guidelines are created where latitude is given to make small adjustments internally as long as there is no variation to any line item by more that 10 percent of the original budgeted costs. This maximizes flexibility meaning that small changes do not trigger a multitude of budget changes.

Finance Budget Issues and Questions

1) How do I read the budget and the Financials?
The Chief Financial Officer will come to each station upon request and explain the budget, its production, and goals upon request. Ask your General Manager for details.

2) Who is responsible for the Budget?
The budget is a collective product involving the Local Station Boards who work with the General Manager, the station Business Manager, the Executive Director, and the Chief Financial Officer to produce an initial budget. Generally, the Chief Financial Officer reviews the budget to see if it conforms to commonly accepted practice, is in line with Board and National guidelines and is correct and achievable. This preliminary budget process begins in April of each year and culminates in Board approval of the final Budget document at it's September meeting, in time for the beginning of the fiscal year October first.

3) What are the Financial Goals of the Network?
The Financial goals of the network are detailed in work plans yet to be presented to the Board. They include:

A two pronged goal structure of just two over-arching goals:

GOAL ONE:
Transform Pacifica into a financially sound, multi-platform, multi-media organization, with the capacity to be effective locally and to have an impact nationally

GOAL TWO:
Develop Pacifica to become internally a network which reflects its mission values, manifested in a how it treats staff, how it's internal processes actually work, where peace, justice, and fair play actually describe our internal relationships.

4) What are the Financial Objectives of the Network this fiscal year?
Given the stated goals above, it is clear all of that cannot be done in a single year. Objectives are those sub-goals we think can and should be addressed in this fiscal year. They include:

a. Reduce our vulnerability to revenue swings in listener support by developing long term, sustainable, replicable sources of revenue diversity. This will include exploring the internet as a source of new revenue through special streams, enhanced multi-media offerings, strengthening the on-line presence of the archives and historic recordings, and making available premiums listeners might want to pay for.

b. Explore the prospect of marketing more effectively to Pacifica's large number affiliates who have been clear with us around their needs and desires in the area of programming and support.

c. Develop internal goals aimed at supporting staff, reducing internal strife, developing employee individual growth plans, improve retention levels, benefits and organizing our considerable human resources to better support our mission values and goals. Specifically, I am exploring developing individual growth plans for each staff member where feasible to include:

-A written growth and development plan for each staff person.

-Information about home ownership and financial planning for each staff person where requested.

-Reviewing our various benefits to streamline them and make them more workable for each staff person. We have instituted voluntary direct deposit for staff wanting that convenience.

-Looking at the differing needs of older staff, volunteers, younger staff, single staff vs. partnered staff.

-Above all, looking at ways to improve the take home pay of staff.

d. Improving the administrative infrastructure of the network. Much work to be done in as regards payroll, benefits, phone systems, transmitters, technical quality all with an eye toward improvements within reasonable cost limits.

5) What are the legal and financial responsibilities of a new LSB or Board member?

This is a tremendously complicated area and I will address it in face to face meetings upon request. But please understand that as a Board member you and the network can be held collectively and individually responsible for each act, every word said in public and private. Such statements may be legally binding, actionable and may have enormous consequences. We must go to detail on how to proactively protect ourselves and the network.

Each LSB and Board member will get materials being developed by the National Office which will include essential source documents and information to include:

a. A job description and description of the duties of a LSB or Board member;

b. A copy of the latest network Budget, Forecasts, and Financials: (Income Statement & "unaudited" Balance Sheet) as of 12/31/03;

c. A copy of network By-Laws;

d. A copy of network Financial Polices under review;

e. A copy of network Employee Handbook under review;

f. A copy of network Communications Policy under review.

By way of summary: Much work is to yet to be done-Much to be achieved. Welcome aboard to all of you!

 

 

Date: March 30, 2005

To: The PNB Audit Committee

From: Donna J. Warren, Convener, Committee Member & Director from KPFK

Subject: Comments on the fax dated version of March 21, 2005 of the Independent

                  Auditor's Report for Pacifica Foundation at FYE September 30, 2004

 

 

This is an update to the report dated March 13, 2005 by Director Donna J. Warren on the auditor's report fax dated March 8, 2005.

 

Following are Director Warren's comments on the March 21^st fax dated Audit Report plus comments from the March 14^th meeting with Auditor Ross Wisdom, CFO Lonnie Hicks, ED Dan Coughlin, Audit Committee Members Bethold Reimer (WBAI) and Teresa Allen (KPFT), and Director Warren.  Controller Ben Garcia was ill and not on the call. 

 

	Originally Reported on March 13th	This Report dated March 30, 2005
1	There appears to be no review of inter-unit transfers asked by PNB Motion 43 on August 23, 2004.	Per CFO Hicks, Alvin of Controller Ben Garcia's office is working on this as an internal audit project.  Ben will report on this as it progresses.
2	The auditor supports some but not all amounts by notes to the financial statements.  In the "changes in net assets" schedule, only three financial categories - grants, SCA income, and investment income - are supported by notes.  Why not the other categories - listener support/donations, community events, program services, etc.?  The audit report does not adequately explain the numbers.	The auditor explained that notes are reported in accordance with AICPA requirements.   In my opinion, the notes are insufficient for our purposes; they need to be extensive to enable us to be able to understand the report.  Therefore, I recommend the auditor explain each cost or expense in the report by a written note.
3	The auditor gave a clean report on the following: The financial position of Pacifica Foundation at September 30, 2004 - meaning the auditor verified that the balance sheet which includes total assets and liabilities in the amount of $6,396,584 is presented fairly.  Included in this $6,396,584 is $4,419,639 for "net assets - unrestricted".  "Net assets - unrestricted" is explained as "net assets that are not subject to donor-imposed stipulations".  I don't believe this is enough information.  I'd like a note to detail these net assets by name and dollar amount. Changes in net assets.  (Is this the "statement of activities and changes in net assets" on page 5?)  This includes "unrestricted revenue & support", expenses, and the resulting "increase in unrestricted net assets" (the term mentioned above).    It appears this schedule should match somehow the statement of financial positions since they both address "unrestricted net assets" but there's no reconciliation to match the two.  I believe we need to see such a reconciliation in the audit report. Changes in cash flows.  (Is this "the statement of cash flows" on page 7?)  This includes an increase in accounts payable for legal settlements of $148,345.  Legal is a very sensitive account for Pacifica yet the auditor does not reference any notes to any amount in this statement.  Again, I don't believe this is enough information.  I'd like a descriptive note to explain, e.g., what caused an increase in accounts payable for legal settlements of $148,345.	No change to my original comments (in green).   Additional comments - Changes in cash flows.  Increase in AP -legal settlements changed from $148,345 in the March 8th report to a minus $421,242 in the March 21st report.  The auditor needs to explain this.  (See page 5 of this report.)
4	The auditor did not audit and therefore expresses no opinion on: •·        "Statements of Financial Position, Activities, Other Revenue and Functional Expenses by Division" because the auditor states they are not a required part of the basic financial statements.  These statements appear on pages 18 - 26. •·        Included in the "Statement of Financial Position (By Division)" are $1,592,406 of inter-division receivables allocated to KPFA ($1,445,495) and KPFK ($146,911) only.  What are these inter-division receivables and why are they received only from KPFA and KPFK?  Could this be the inter-unit transfers asked by PNB Motion 43?	The auditor gave a "clean opinion" for the Statements of Functional Expenses on page 6 of the March 8th report.  He does not express an opinion on the "Statements of Financial Position, Activities, Other Revenue and Functional Expenses by Division" on pages 18 - 26 which page 6 is a summary of.   What's missing from the report is a statement by the auditor that he reconciled the amounts to the general ledger, that he performed extensive transaction testing of the accounts, and that he reviewed the accounting system and found it to be adequate.   The these inter-division receivables are received only from KPFA and KPFK and represent the inter-unit transfers asked by PNB Motion 43.
5	Who audits the stations if the auditor doesn't express an opinion on divisional amounts?  In effect, he comments on the whole ($6,396,584) but isn't that a little backward?  How do we know the figures from the parts from KPFA, KPFK, WBAI, KPFT, WPFW, and PRA are correct?	The auditor performed a limited review.  The audit of the stations is left to the individual GM's.
6	Looking at the audit report, I see no review of the expenses it takes to run the stations.  In fact, the auditor says "The Statements of Financial Position, Activities, Other Revenue and Functional Expenses (by Division) on pages 18 through 26 are not a required part of the basic financial statements of Pacifica Foundation but are supplementary information.  We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of allocations and presentation of the supplementary information.  However, we did not audit and express no opinion on it".  I believe the auditor is saying that he did not audit $15,119,876 worth of "functional expenses".  OK, did he at least reconcile these expenses to Pacifica's books and test some expenses to supporting documentation?	The auditor reconciled these amounts to the general ledger (G/L) and performed transition testing.
7	I have arranged these expenses in descending order so you can see that the biggest expense is salaries at $5,560,400 and the lowest expense is non-operating grant expense of $1,560.   How do you know this $5,560,400 includes only valid salary expense for employees?  The auditor purposely doesn't comment on these expenses.  You don't know the status of the recipient of this money.  Say, management had a spouse on the payroll who was not an employee, how would you know this if the payroll records are not reviewed?	The auditor reconciled these amounts to the general ledger (G/L) and performed transition testing.   See Excel attachment for the arrangement of these expenses in descending order.
8	The auditor makes a comment however on some of the expenses, like Note 16 on the Democracy Now Agreement but he doesn't show the expense for the year ended 9/30/2004 of $464,933.  He mentions in Note 16 that Democracy Now is $440,000 for the year ended 9/30/2003, and that annual increases are 4% to 10% to be negotiated.  OK, $24,933 is a 5.7% increase over FYE 2003.	The auditor said he reviewed the DN account by reconciling to the books and records and to the DN contract.  He did not reconcile the percentage increase to a supporting document.
6	Additional Comments	Per Ross Wisdom •·        He signs off on the CPB report but does not prepare the report.  Ben Garcia prepares the report; Ross checks the report to insure it's consistent with the audit report.  The auditor also prepares an information sheet that the CPB requires, e.g. statistics on listeners, grants, etc. •·        Central services of $1.6 million is to be zeroed out. •·        Final Report‘s estimate date of issue is to be issued before the NY PNB (don't believe this happened). •·        Management letter goes to the audit committee 2-3 weeks after the final audit. •·        There was discussion on a mid-year audit.  Advantages = get some work done in the middle of the year.  Disadvantages = additional cost & not an audit (will be a review which is subject to less stringent criteria). •·        Auditor reviewed the policies and procedures (P&P) in accordance with the manual reviewed by the finance committee. •·        Accounting System and System of Internal Controls is deemed to be adequate.
7	Additional Comments	I asked about the "one month reserve" to which Lonnie's reply was that he accumulates a one month operating reserve to add to the cash reserve.  Ross Wisdom added that this was building up the cash reserves in a "Board Designated Reserve Fund".  In my opinion, the question was not addressed and the auditor should audit this "Board Designated Reserve" to show if it's merely one month in total or one month each fiscal year.
8	I suggested the auditor present his findings to the board in person in New York during the upcoming PNB.	Agreed to by the auditor (who's based in New York) and the ED.  However, I don't think 30 minutes is enough time.  It should be 2 hours.
9	Differences between audit report faxed March 8th by Ben Garcia and audit report faxed March 21st by Ross Wisdom.	See below.

 

 

Page	DesDescription	3/8/2005	3/21/2005	Difference
4	CurrCurrent Liabilities
	AccAccounts Payable	$     1,483,678	$1,458,599	$     25,079
	Deposit Payable	-	25,079	(25,079)
	Current Liabilities	$     1,483,678	1,483,678	-
6	No Difference	15,119,876	15,119,876	-	There was no difference in each individual cost.
7	Decrease in AP - Trade	(542,483)	4,492	(546,975)
7	Increase in AP - legal settlements	148,345	(421,242)	569,587
7	Decrease in Deposits Payable - Other liabilities	(7,070)	(2,467)	(4,603)
	Subtotal	(401,208)	(419,217)	18,009

 

A Note on Apparently Missing Records of the PNB Audit Committee
from Terry Goodman, former Member of the Committee

A meeting of the PNB Audit Committee was scheduled for 10/21/04.
The meeting occurred. R. Paul Martin prepared minutes.
A meeting of the PNB Audit Committee was scheduled for 10/26/04.
The meeting occurred. Terry Goodman prepared minutes.
A meeting of the PNB Audit Committee was scheduled for 12/13/04.
The meeting occurred. R. Paul Martin prepared minutes.
A meeting of the PNB Audit Committee was scheduled for 3/30/05.
No quorum was achieved.
A meeting of the PNB Audit Committee was scheduled for 5/18/05.
The meeting occurred. Mary Berg prepared minutes.
A meeting of the PNB Audit Committee was scheduled for 6/16/05.
A meeting may have occurred.  No audio recording is available.
A meeting of the PNB Audit Committee was scheduled for 7/20/05.
No quorum was achieved.
A meeting of the PNB Audit Committee was scheduled for 8/17/05.
No quorum was achieved.
A meeting of the PNB Audit Committee was scheduled for 10/19/05.
No quorum was achieved.
A meeting of the PNB Audit Committee was scheduled for 11/16/05.
No quorum was achieved.
A meeting of the PNB Audit Committee was scheduled for 12/21/05.
No quorum was achieved.
A meeting of the PNB Audit Committee was scheduled for 1/16/06.
No quorum was achieved.

 

 

MINUTES

PNB Audit Committee

Teleconference Meeting May 18, 2005, at 8:00PM EDT

Notes submitted by Mary Berg, secretary pro tem.

 

I.          MOTIONS PASSED:

 

1)    Donna Warren is nominated for chair.

 

            2)    Terry Goodman and Mary Berg are nominated for secretary.        

 

3)   Donna Warren and Mary Berg are elected chair and secretary pro tem for this           meeting, without objection.

 

4)     Motion:  The meetings will take place on the third Wednesday of every month; if, on the day before a meeting, no agenda items have been submitted, the chair or the secretary will send out notice that the meeting has been cancelled.

 

5)     Motion:   The Audit Committee recommend that the PNB adopt the following policy regarding membership on the Audit Committee: 

 

Any member of the Audit Committee who has three consecutive absences which are not excused by a majority of those present at the meetings shall be removed; and their position may be filled by the same process by which it was originally filled.  The policy shall take effect starting with this meeting.

 

 

II.        MEETING  MINUTES:

Determination of Quorum:

Present for all or part of the meeting:    MB, JB, BET, BL, BR, SR, DW, CW, TA, TG.

Note: Ben Garcia is also on the call, in his capacity as controller, non-voting.

 

Absent: SB, CG, AL, NK, SY            

                                                                                                                       

Quorum is met.                                    

 

TA=Teresa Allen

MB=Mary Berg

SB=Sarah Bittle

JB=Jim Brown

BET=Brian Edwards-Tiekert

TG=Terry Goodman

CG=Cheryl Griffin

NK=Ngozi Kamau

BL=Bob Lederer

AL=Ambrose Lane Sr

BR=Berthold Reimers

SR=Sarv Randhawa

DW=Donna Warren

CW=Carol Wolfe

SY=Susan Young

 

 

1.  Nominations:

 

Nominations for Chair: 

MB nominates DW.   No other nominations. DW accepts the nominations but will leave the nominations open on line for 1 week.

                                                                                   

Nominations for Secretary: BET and BR nominate TG in absentia.  DW nominates MB.

 

Donna Warren and Mary Berg are elected chair and secretary pro tem for this meeting, without objection.

 

 2.  Approve Agenda:

BR: Add to agenda: Item 6.  Detailed info on bank credit card account that Pacifica opened and then closed.

 

BL: Add to agenda: Item 3. Frequency/end time of meetings.

 

Agenda approved as amended.

 

3.  Frequency/end time of meetings:

 

We agree to end meeting at 9:15 EDT.

 

BL: Doesn't seem necessary to meet every month. Every 3 months would seem OK.

BR: Feels we should meet monthly, every 6 weeks at most. Feels we are underestimating the value of the audit committee. If anything, there is a backlog of work to do, a lot of issues to be discussed.

SR: What do bylaws say about the scope of audit committee's work?

BET: (reads) nothing; only that it oversees the annual audit and that members cannot also be on finance committee.

DW: Agrees with BR. Did a lot of research on audit committees. There is a lot of work to be done. Sent out a lot of information; will send the information again. We can basically write our own mission statement. Proposes we meet monthly. If on the day before the meeting, there is no agenda on given month, secretary can send out notice that the committee will not meet.

BL: Moves that the committee meet bimonthly (every other month) unless it determines otherwise, on a case-by-case basis.  Motion is seconded.

BET: Proposes substitute motion: that the committee set the time and date of its next meeting at the end of each meeting, on an as-needed basis. Substitute motion is seconded.

 

BR: Feels that's very unrealistic, waste a lot of time trying to find a date all can agree on. Better to  set monthly meetings in advance and to cancel if nothing to discuss on a given month. Makes substitute motion to set up monthly meeting, and the chair or secretary will contact members to see if the meeting is necessary.

DW: This was her original proposal. She and BR clarify language:

 

Motion:  The meetings will take place on the third Wednesday of every month, at the same time every month; if, on the day before a meeting, no agenda items have been submitted, the chair or the secretary will send out notice that the meeting has been cancelled.

 

Further discussion ensues.

DW: calls questions on the BR's substitute motion. BET objects; says therefore 2/3 vote is needed to end debate.  BL: can't call the question in committees. When time is up, move directly to a vote or move to extend time.  Roll call on vote:

 

5  YES:   MB, BR, CW, JB, DW.                                                       

3  NO:     SR, BL, BET. 

MOTION PASSES.

 

BET suggests that someone check on the legality under our bylaws of cancelling noticed  meetings on short notice. 

 

Note from secretary pro tem: I researched the bylaws and found nothing regarding cancellation of a meeting, whether PNB, LSB, or other national or local committees.  I also found nothing in Robert's Rules on the subject. As far as I can determine, policy and practice of the PNB committee meetings has permitted cancellation on notice shorter than one day, e.g., the Election Review Committee meeting originally scheduled for Monday 5/23, which was concelled less than an hour beforehand.

 

4.  Removal of Members Who Haven't Attended Meetings:

 

DW:    The bylaws say LSB delegates are automatically removed after three consecutive unexcused absences from LSB meetings [Article 4, section 9©], PNB Directors are automatically removed after three consecutive unexcused absences from PNB meetings [Article 5, section 7©], but make no provision for removing people from committees of either body based on their attendance. Only five members made the last meeting, only eight on this one. She has asked that people listed as members notify her if they wish to be removed from the list. Do we want to make rules on this issue, knowing that it may result in frequent lack of quorum?

 

BET: Moves that the Audit Committee recommend that the PNB adopt the following policy regarding membership on the Audit Committee: 

Any member of the Audit Committee who has three consecutive absences which are not excused by a majority of those present at the meetings shall be removed; and their position may be filled by the same process by which it was originally filled.  Seconded.

DW: makes amendment that the policy take effect starting with this meeting. Seconded.

 

BR: Three consecutive absences, excused or unexcused, should be a reason for dismissal.

 

Discussion ensues as to when the PNB might take this up. BL feels it should not be retroactive, otherwise people would have no notice.

TA [just joined the call]: Must be very proactive in insisting the PNB approve this motion at its next meeting.

[TG announces he has joined the call]

 

VOTE on amendment that policy start with this meeting:

 

6  YES: MB, TA, BR, CW, JB, DW

3  NO:   SR, BL, BET,

1  ABSTAIN: TG.

Amendment PASSES.

 

VOTE on BET's original motion:

YES: TG, MB, BL, TA, BR, CW, JB, DW, BET, SR

PASSES unanimously.                                                                                                 

 

[9:00 PM EDT: SR, CW leave]

 

5.  Report by PNB Directors on Audit Committee's Report at NY Meeting:

 

DW: The auditor, Ross Wisdom, did attend the NY meeting. They asked how he audited the amounts. He said they only reviewed the actual items from two station. He said his report was in compliance with AICPA. Her concern was that the report was not detailed enough, and there were not enough notes. She wants to move that we request the auditor to provide enough detail for us to be able to use the report. 

BL: asks for a few examples

DW: Travel. We might want to know more than just that the invoices were there and were paid. Consultants.  How are they actually charged? How are they defined and classified?

Ben Garcia: The  LSB Finance Commitees should be looking at these numbers every month, before they ever get to an audit.

DW: If those LSB Finance Committees got the information they needed, would be a sort of semi-audit. But they don't; and sometimes they may not fully understand the system.

TA: Many items - like hotels - are incurred on the national level and wouldn't be reflected anywhere on the local level.

 

At this point, it is 9:15 EDT, the time of adjournment.

BR: moves to extend for 10 minutes.

5 YES: MB, TA, BR, JB, DW

0 NO:

3 ABSTAIN: TG, BL, BET

PASSES.

 

BR: Moves  to carry over DW's motion until next meeting. Seconded.

[BET leaves] PASSES without objection.

                                                                                   

BR: Moves that we request details on the credit card account opened and closed by PNB. Wants printed copy of the monthly bank statements.

 

DW: There may be more than one credit card account.

 

Discussion as to whether this is in the purvue of the Audit Committee, and how we can identify which is the account in question.  We agree that BR should bring more info on this to the next meeting of the Committee.  He will ask PNB Director Patty Heffley to get the information.

 

MB: Asks DW to resend all the documents she sent out earlier.

 

Meeting adjourned at approximately 9:35 EDT.