[Vision2020] Moscow Chamber Review: Some Relief, More Work To Do

[Tom Hansen]

>From Today's (October 23, 2004) Moscow-Pullman Daily News:

 

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A review of the Moscow Chamber of Commerce's financial dealings over the
past year didn't uncover major financial discrepancies, but it did spell out
several areas where the chamber could improve its accounting practices. 

"We're still running along. We're not in a perilous position," said Paul
Kimmell, executive director for the organization. 

 

"Can we be more fiscally responsible?" he added. "You bet." 

 

With questions regarding what appeared to be discrepancies in financial
statements, the chamber board this fall hired the Moscow accounting firm of
Hayden, Ross & Co. to review and report on the chamber's financial records
for the past fiscal year. 

 

The report was completed Oct. 15 by Certified Public Accountant Jim Pilcher,
a principal in the firm, and chamber leaders released copies of the document
for public review Wednesday, after going over the results in private with
the executive board Tuesday. 

 

The report also has been released on the chamber's Web site, at
www.moscowchamber.com. 

 

Pilcher in his cover sheet called the review "substantially less in scope
than an audit." 

 

Chamber President Janice McMillan noted the analysis didn't find anything
major enough to warrant an audit. 

 

Pilcher was out of town and could not be reached for comment. Hayden, Ross &
Co. officials abstained from comment in Pilcher's absence. 

 

McMillan said the board was prepared to have an audit if the review found
evidence of mismanagement. 

 

"We said we would do that," she said, noting Pilcher had been made aware of
the board's commitment to seeing matters through. 

 

But while not warranting an audit, the review did outline several areas
where revisions were needed. 

 

 

They include 

 

* Assigning liability for ownership of the chamber building to the Moscow
Chamber Foundation, rather than to the Moscow Chamber of Commerce. 

 

"That was one big thing we were not taking into consideration - how we
handled the foundation's obligations," McMillan said. "They were listed on
the chamber's side (of the books), and they should have been on the
foundation's side. 

 

"We were showing it as a chamber liability, when indeed it was a foundation
obligation," she added,1 

 

The foundation, which purchased the downtown chamber building from Avista
and is now renting it to the chamber and several private businesses,
operates under a different tax structure than the chamber. The foundation,
which can take tax-deductible donations, is a 501 (C-3) nonprofit entity,
while the chamber is a 501 (C-6). The chamber's status means it can't take
tax-deductible donations. 

 

That change in liabilities represents a large chunk (approximately $50,000)
of what had initially appeared to be a $74,000 deficit in the chamber's
retained earnings. That apparent deficit was part of what spurred the
chamber to have the financial review in the first place. 

 

McMillan said the chamber's executive board members also were operating as
foundation members. The practice is legal, but it can complicate members'
understanding of what organization is responsible for what liabilities. 

 

"It might be better to have separate board members," McMillan said. "They
were not thinking of the fact they had chamber hats on when they were making
foundation decisions." 

 

The foundation is paying off the building purchase with rent from the
building occupants, including the chamber. 

 

* Errors in accounting records led to a decrease in net assets of the
chamber by $11,386. 

 

McMillan said the bad-debt issue is related to a policy the chamber board
adopted this summer. Under the new policy, the chamber now writes off items
such as unpaid dues or other compensation after 60 days, rather than letting
them hang on year after year. 

 

"There was some stuff that had been sitting out there for two and a half
years," McMillan said of funds the chamber expected but never got. "The big
write-off was in June. You won't see it happening (in that high an amount)
again." 

 

The receivables issue is related to the earlier error of assigning liability
for the chamber building to the chamber, rather than the foundation. 

 

* The chamber is too reliant on the city's economic viability. 

 

Pilcher noted in his report if "economic conditions deteriorate within the
city, the chamber's continued viability would be threatened." The
organization derives a large share of its income - 70 percent - from
membership dues by the business community. 

 

The chamber's cash balance is currently $17,883 and McMillan said she is
expecting to see another $20,000 in grant money within the next few months. 

 

Net assets for the chamber are in a deficit situation at negative $11,504,
due in part to the $11,386 errors in accounting records. 

 

The chamber president added that when the executive board approved having
the financial review done, it also strengthened the language of its bylaws,
to require such a review annually. 

 

"It's a good idea, especially when you have as complicated financials as
these are," she said.

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