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    Highlights of the ICANNWatch Archive
    (June 1999 - March 2001)

    Budget and Expenditures Questions for ICANN's Accountants
    posted by michael on Tuesday May 25 2004, @09:45AM

    ICANNfocus.org writes "According to the financial statements prepared by ICANN's non-audit CPA firm, Bremer & Hockenberg, over 30% of ICANNís net assets in 2003 consisted of accounts receivable that were more than 180 days past due and for which there is no written agreement. In contrast to the Bremer & Hockenberg statements, ICANNís auditor, KPMG, made no note or other reference to ICANNís decision to deviate from their written accounting policy nor of the magnitude of the corporationís accounts receivable that are not supported by written agreements.

    In an attempt to obtain answers to key questions arising from ICANNís accounting practices, the Center for Regulatory Effectiveness (CRE) sent letters to KMPG and Bremer & Hockenberg asking questions about the financial statements. In its letters, CRE stated that they would publish each accounting firmís verbatim response on the ICANNfocus.org website. No response has yet been received from either firm."

    "CRE asked KPMG several questions about ICANNís audited financial statements including why KMPG elected to not note that:

    1) ICANNís management had decided to make exceptions to their stated accounting policy ďto reserve against all invoices that remain unpaid for more than 180 daysĒ; and

    2) Over 30% of ICANNís net assets in 2003 consisted of receivables and revenues not supported by written agreements.

    It appears to ICANNfocus, that ICANNís audited financial statements present the public and federal and state officials with a financial portrait of the organization that has the potential to be significantly misleading. ICANNfocus believes that ICANN and its accountants should clarify the organizationís financial position and practices as soon as possible.

    For more information, including copies of the letters sent to the two CPA firms, please go to www.ICANNfocus.org."

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    · More Budget and Expenditures stories
    · Also by michael
    This discussion has been archived. No new comments can be posted.
    Questions for ICANN's Accountants | Log in/Create an Account | Top | 2 comments | Search Discussion
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    I also sent letters
    by KarlAuerbach on Tuesday May 25 2004, @10:52AM (#13640)
    User #3243 Info | http://www.cavebear.com/
    When I was on the board, I also sent multiple letters to the auditors, who I believe included KPMG at the time, asking them to explain their reasoning with respect to ICANN's "pledge card" based revenues.

    I never received a reply.

    ICANN's auditors never once during my term communicated with the board. Which is odd because under proper forms of corporate governance, the auditors work for the board and the purpose of the audit is to inform the board.

    Instead, ICANN's auditors were led by the nose by ICANN's staff - that same staff who's acts are the subject of the audit. Is anyone so naive as to believe that the staff would chose to highlight to the auditors any information that would tend to discredit that same staff?

    ICANN has never had a board that understood even the most basic of business concepts. It is true that many of the individuals on the board have such knowledge, but in ICANN, they appear to leave it at the door.

    It was quite amazing that during my term ICANN's management did not have a clue whether 2/3 of a million dollars represented a gift, a loan, or an advance on future payments. I had to write letters to clear up the matter. This kind of management incompetence in dealing with money was completely overlooked by the auditors.

    One also has to remember that the level of audit required for most corporate reports is only of a cursory depth and is done with a non-skeptical eye.

    ICANN, in my opinion, would not fare well under a deep and skeptical forensic audit. (And I'm not speaking form a purely hypothetical position, don't forget - I have seen the materials that underly several years of ICANN's books.) I don't think that there are any illegal activities, but I do believe that there is much that is shoddy and much that constitutes excessive payments to consultants and potentially disqualified parties.

    I long ago recommended that ICANN bring in a real CFO, one with guts and a professional reputation to lose, one who would stand up to the president and board and say "this is being done badly". ICANN's current CFO is a very nice person. But a A CFO should not be a nice person.

    Even after Enron, and even after Sabines-Oxley, corporate audits are usually a joke. But ICANN's audits have year after year after year been so removed from reality that they are no longer merely humorous caricatures and, because ICANN is chartered as a tax-exempt and public benefit corporation, have become something that could be construed as a fraud on the public.
    [ Reply to This | Parent ]

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