GREENBELT INTERNET ACCESS COOPERATIVE

1998 AUDIT COMMITTEE REPORT
Part 1 - July 1, 1999
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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.

SUMMARY REPORT

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.

DETAIL REPORT

Member Journals

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.]

Disbursements

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 
calculation).]

Record-keeping Procedures

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.

PROPOSALS

Procedure Proposals

A number of needed procedural and record-keeping changes were identified and 
will be incorporated into the upcoming Treasurer and Accounts Manager 
orientations.

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.

Policy Proposals

[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 
    authorized.
  - Payments to GIAC principals who normally authorize payments should be 
    reviewed by a second party (again, perhaps the Audit Committee).

Respectfully submitted,

Neil McLeod
1998 Ad Hoc Audit Committee
July 1, 1999

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