CWOA Financial Review Committee Update
21 September 2021
From: CWO4 Christian Westerdahl, National President
To: CWOA Members
Subject: Financial Review Committee
Fellow CWOs,
By now you should have received the following letter from your Chapter Presidents for discussion. I am forwarding this on to ensure our members who are not part of a Chapter are also aware.
I am writing you today to address some recent events. At the annual meeting, I called for the formation of a Financial Review Committee, the members of that committee who graciously volunteered were: CWO James Pulse, who I appointed as Chairman, CWO (Ret) Mark Cortor and CWO LeeMelvin Gavino. These three members were on track to start their financial review, but after discussing it with the Executive Director, Michael Little, and our contracted General Counsel, Aniela Szymanski, I have decided that performing a financial review at this time would not provide an accurate picture of our finances.
Here are the relevant details:
Upon hiring Michael as our Executive Director, our Board of Directors asked him to report to us regularly as to the status of his turnover, and to identify deficiencies as he came across them. One area that he identified was lack of visibility of our financial accounts. Despite diligent efforts by Michael and our former Executive Director to transfer access to bank accounts, the financial institutions presented many hurdles to accomplishing this. For example, every institution requested different historical and organizational documentation as well as a variety of notarized letters and forms that had to be researched, collected, executed, and processed. This left Michael and our Treasurer, CWO Justus Marks, without access to our organizations’ financial information. This included Sun Trust, Pen Fed Credit Union, Bank of America, First Georgetown, Victory Capital (USAA), and Navy Federal Credit Union accounts. It was decided that the best path forward was to utilize our contracted General Counsel to assist in resolving these account issues and we have now been able to have Michael and CWO Marks added to almost all financial accounts and anticipate that we will be fully mission complete soon.
In addition to the account access problems, Michael also reported that our organization had problems with our QuickBooks accounting. Prior to hiring Michael, we used a desktop QuickBooks 2018 version, which is in the process of becoming obsolete by the company. One of the first steps Michael had to take was to convert to QuickBooks online which was not an easy task. He had to go through our QuickBooks accounting in detail and found that our QuickBooks 2018 records showed we had tens of thousands of members and hundreds of separate bank accounts, all of which was inaccurate. After analyzing it further with CWO Marks, who now has access to our accounts and QuickBooks for the first time, we hired an outside firm to reconcile our QuickBooks accounting. That meant that for a few months we were not even able to touch our QuickBooks account to process payments, reconcile balances, etc. while that was underway. The company eventually informed us they couldn’t finish their job without having access to the financial accounts we were missing, and their work was put on hold while the account access issue was being resolved. Because of this, and after consulting with QuickBooks, they advised us that we download all our data as a backup so we can provide it to our CPA when he does our annual 990 and start a brand-new QuickBooks account. Unfortunately, that triggered a string of events including re-establishing our payroll system, getting locked out of our account, and further delays. Thankfully, through Michael and CWO Marks’ efforts, that has all been resolved now and our QuickBooks online is operational. Thanks to the QuickBooks conversion, we have also been able to eliminate paper checkbooks and all transactions are now virtual and clearly visible on our online account for our Treasurer to see in real time. However, what remains to be done is a QuickBooks audit for the timeframe of 01 July 2020 to 30 June 2021 to ensure full transparency and accountability. The outside firm stated this will take up to 30 days to complete from the date we have full access to all our financial accounts.
Further, we are in the process of closing out various bank accounts and consolidating them with First Command. This decision was made to simplify the ability to manage our finances and prevent these problems in the future. Some accounts have already been moved to First Command and others - SunTrust and PenFed - are in the process of being closed and transferred, while others will be transferred imminently.
If we do a financial review right now, before our CPA and an independent audit firm can reconcile these records, before we have access to accounts, and while they are in the process of being transferred, we will not have an accurate financial picture. This will make a financial review at this time futile in truly understanding our financial situation and merely cause confusion.
Michael is reporting to the Board of Directors monthly and the Permanent Finance Committee quarterly, and speaks with the members of both weekly, if not daily, to keep us apprised of the progress and situation.
Allow me to explain some facts as well as the proposal that has been made by Michael, CWO Marks and myself. A search of our past financial reviews made us aware that the last one was completed on 18 April 2015. According to our bylaws, this review is supposed to be completed every time the Treasurer changes or no more than three years. The association has now gone six years since our last financial review. This review should have been accomplished at least three times since our last one was completed. The difference this time is we are not ignoring the fact that we need a financial review, we are instead taking many steps to make sure we never go this long without one again. Michael has asked for three key items to happen at our next annual meeting.
- The executive director is currently working with the Bylaws Committee to change the bylaws to include naming the financial review committee and detailing when it must meet, to include how many members must be on the committee. This will help ensure that the financial review can no longer be skipped in our association.
- The executive director will propose to the Permanent Finance Committee that we hire a third-party auditing firm to audit all our books. A complete review of everything from our last audit, which was completed on 30 June 2003 to present. This audit will go even deeper than an internal financial review and will ensure there was no negligence by any individuals who served during the time that the financial review was skipped from 2015 to 2021. The last review of this type before 2003 was in 1994. This puts us on track for completing an audit at the same intervals we have historically performed them in the past.
- A complete administrative review of the association. In his turnover, Michael has identified several documents that many of us on the Board as well as Michael did not know existed. With the help of our legal counsel, Michael is currently re-writing our standard operating procedures to align with the business operations of the association as well as the general tasks of our members, committees, volunteers, officers, and board members.
We have also identified that our last IRS audit of the association was completed on 28 October 2010 which identified several discrepancies. We are currently trying to determine if the association took the actions needed to correct these issues. These items will be presented to the Permanent Finance Committee for review to ensure we have fixed the discrepancies identified by the IRS. It is imperative that we do all these correctly in case the IRS audits us again, like they did in 2010.
In closing, I am prepared to call the Audit Committee to meet at the annual meeting in 2022 and begin the process of their review at that time. This is more than enough time to have given Michael to properly identify and correct the issues facing our association and allow our members to internally review not only our finances but also to complete an administrative review as well. While we understand the concern of disestablishing the Financial Review Committee, and the optics that surround it, we hope that you can see the vital work being completed by our Executive Director and understand the timeframe that we are trying to provide him so we can better run our organization, as an Executive Director should.
It is for these reasons that I am disbanding the Financial Review Committee for 2020 and will recall them at the next annual business meeting when they can truly give us a full picture of what our finances look like, and a better assessment on how finances are being used.
The executive director and I are always available to take your questions. You can email me at president@cwoauscg.vet and you can reach him at mlittle@cwoauscg.vet.
Very Respectfully,
CWO4 Christian Westerdahl, USCG
National President
The Chief Warrant and Warrant Officers Association of the United States Coast Guard was established on 1 January 1929.
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