No Accounting For It.

by: Dave Huelsmann

02 Nov 2011

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So our quick look at the published financial reports raised questions aboout whether the OSM Board and the rest of the Joomla! Leadership teams have actually been seeing accurate financial reports as described recently by Jaques Rentzke "... I can confirm that the OSM auto-generated un-audiited financial reports are shared weekly with the OSM list,..." It appears that the question I raised about why they show $2,000 per month from Demo Site hosting which indicates that the demo site is not exceeding the basic minimum number of subscribers may have hit a nerve. It has been confirmed by the Demo Site operators that they are doing significantly over the minimum subscribers which means that they are paying more then the $2,000 per month that shows up in the current financial reports. Yet, where is the money? One source indicates that the amount paid monthly is now $8,000. I don't know how many months that amount might have been paid but let's assume 6 months just for the sake of discussion. Then the missing amount would be in the neighborhood of $36,000 more or less depending upon the accuracy of the source and the number of months of payment. According to the Treasurer they will change the total at the end of the year. That is not how you do accounting - especially accrual accounting which is what OSM is on. If he didn't actually receive the money it should show up in his Accounts Receivable.

Unfortunately, that account shows:

Total Accounts Receivable $ -1,550.87

You don't have negative numbers in either Accounts Payable or Accounts Receivable. More sloppy accounting - I hope. So where is the money you might ask? I don't know. The Treasurer says he will have the accountant "fix it" at the end of the year. Are you buying into this is the way it works 99%?

Look at all the trouble the OSM Board avoided by not electing a Treasurer who has the knowledge and understanding of managing the timely preparation, submission and publication of statutory reports, including the annual financial statements, annual report, tax forms, in-year reports and mid-year reporting, withdrawals from bank accounts or who can ensure that the content of financial reporting is specific (unambiguous), measurable, accurate and valid, reliable and time specific.

It’s just like the old joke of the correct answer an accountant gives during the job interview:

Q. How much is 2 + 2?

A. How much would you like it to be?

Is It Fraud or Incompetence?

If you know where to look, you can usually find telltale signs of fraud fairly quickly. The most common place to find evidence of fraud is in the accounting records. Symptoms typically include:

Lack of a sufficient audit trail: unsupported balances or transactions, missing support or documents
Transactions not recorded in a complete, timely, or proper manner
Significant unexplained or last-minute items on reconciliations
Missing inventory, cash, or other physical assets
Unrecorded assets or liabilities
Overstated or understated expenses
Commingling of personal and business assets and transactions

Unfortunately, those are also the symptoms of accounting incompetence, and are fairly common in small businesses where no intentional fraud is occurring.

So, I will leave it up to you to make the judgement call but from my perspective, I would expect no less then the President of OSM and the Community Oversight Team to investigate and if they really want to ensure that there is nothing wrong, I suggest that their audit team start working now!

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No Accounting For It.
Wednesday, 02 November 2011

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Dave Huelsmann

Dave Huelsmann was Treasurer of Open Source Matters, Inc. from 2008 to July, 2010 and Joomla Forum Global Moderator from 2005 to November, 2010. Now retired, he was a senior healthcare executive who managed large and diverse clinical laboratory, radiology, electroencephalography, and centralized patient transport operations/departments in both not-for-profit and for-profit companies throughout the United States.

Dave was a Navy Corpsman who served in Vietnam while attached to Seabee battalion
MCB-71.

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Comments

0 # Anonymous Coward 2011-11-02 14:55

My personal option is that Joomla needs to hire an accounting firm. There have to be US based accounting firms that specialize in organizations like our that charges a reasonable rate.

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0 # David Huelsmann 2011-11-02 15:13

They have one. It is mentioned several times in the article. The accounting firm is based in New York and you can find the name by reviewing the tax filings. Note that the accountants receive their instructions from the Treasurer.

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