GREENBELT INTERNET ACCESS COOPERATIVE
1998 AUDIT COMMITTEE REPORT
Part 1 - July 1, 1999
Individually identifiable subscriber account information is obscured in online
reports. Full reports on file in the permanent records of the Cooperative are
available for inspection on request by Members.
OBJECTIVES OF THE 1998 AUDIT
- To verify Member Journal balances.
- To compare payments received to bank deposits.
- To verify all disbursements.
- To evaluate GIAC record-keeping procedures.
Timeliness of the Report
Per GIAC Bylaws, the Audit Committee is charged with producing this report
"within 90 days of the close of operations for the fiscal year" for inclusion
with the Annual Report of the Board of Directors to the Annual Membership
Meeting. However, nonfeasance by the original Audit Committee and the
subsequent resignation of its chair (the Vice-President) resulted in the
appointment by the Board in May 1999, of a replacement ad hoc Audit Committee
charged with producing the required report.
Findings of the Committee
GIAC's checkbook-related records were found to be in good order; however,
numerous transaction and account balance errors were identified in the Member
Journals. In addition, conduct of the audit was made unnecessarily difficult
by the condition and incompleteness of the materials presented to the Committee
for examination. This report therefore addresses and emphasizes the need for
changes to GIAC policies regarding financial record keeping and reporting
procedures. A major goal of the recommended changes is to facilitate
subsequent handling and understanding of the financial records by GIAC
principals, tax preparers and future Audit Committees.
Detailed examination of one hundred seven (107) Member Journals and comparison
with GIAC Webmaster records revealed a relatively large number (78) of
transaction errors and omissions resulting (if uncorrected) in a net loss to
the Cooperative of $224.00. [Some errors were in favor of the Cooperative
(i.e., against the Membership), but most were against the Cooperative.]
The largest number of errors resulted from the misapplication of GIAC policy
with regard to the assessment of VIP activity fees. An adjustment is
recommended in the Proposals section below to achieve an equitable application
of fees to all Members.
Other Journal corrections should be made, if possible, in collaboration with
each Member affected. [Some affected Members have resigned and are long gone.]
Payments and Deposits
Total 1998 bank deposits were reconciled within $14.00 of total Member payments
(the difference possibly being attributable to an unrecorded Member payment or
error by the Audit Committee).
[Due to the lack of itemized breakdowns for each deposit, this analysis
essentially required the reconstruction of all deposit records.]
[Special comment: The notable absence of an interest-earning account (ordered
by the Board in July 1997) to house GIAC reserve funds has resulted in an
estimated net loss to GIAC of at least $500.00.]
Each check written in 1998 was validated as to proper payee and purpose.
[However, incomplete details (i.e., supporting documentation) were provided
regarding the makeup of most payments (e.g., the monthly ISP service payment
The financial records presented for review were found to be disorganized,
inconsistent and incomplete, with many errors and omissions becoming evident
under close scrutiny. This was no surprise, considering the frequency of
account balances disputed by Members during recent months (after receiving
service suspension warnings). In particular, far too much time was required by
the Committee to decipher and verify the records. There is much room in this
area for improvement.
A number of needed procedural and record-keeping changes were identified and
will be incorporated into the upcoming Treasurer and Accounts Manager
In addition, steps should be taken by the Audit Committee to contact all
affected Members (and ex-Members) for the purpose of applying the identified
corrections to individual accounts.
[Considerations and details regarding these proposals will be immediately
forthcoming via e-mail proposals to the Directors.]
- Member accounts should be adjusted to account for improper and inequitable
application of the VIP activity fee since August 1998.
- All disbursements to Members should be reviewed for compliance with GIAC
policy (perhaps by the Audit Committee) before refund payments are
- Payments to GIAC principals who normally authorize payments should be
reviewed by a second party (again, perhaps the Audit Committee).
1998 Ad Hoc Audit Committee
July 1, 1999
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