[Lnc-business] incorrect reserve calculations in monthly financials

[Tim Hagan]

I'm still looking into the reserve calculation. I will come up with a 
reserve formula that makes sense, and send a chart showing the newly 
calculated reserve for the past year. I want to make sure it's correct 
before changing the reports. Like Ms Mattson mentioned, we found out 
that the formula used has been changed. The last change is definitely 
incorrect in how it added deferred convention revenue.

---
Tim Hagan
Treasurer, Libertarian National Committee

On 2019-04-07 10:22, Caryn Ann Harlos via Lnc-business wrote:
> Has anyone else taken a look at this?  I am very interested in what is
> going on here.
> 
> On Wed, Apr 3, 2019 at 12:43 AM Alicia Mattson via Lnc-business <
> lnc-business at hq.lp.org> wrote:
> 
>> Colleagues,
>> 
>> It looks to me like the February financial report we just received
>> overstates our reserve amount by about $37k.
>> 
>> I am trying to make sense of the reserve calculations published in our
>> monthly financial statements (p. 3, Reserve Adequacy Trend chart), and 
>> not
>> just for this one most recent month.
>> 
>> Over the past two years, the FORMULA used to calculate the blue number 
>> in
>> that chart (called "Curr Month Resv" in the header) has changed 
>> several
>> times without our knowledge.  As I will show you, the several 
>> different
>> formulas used at different times give very different answers when 
>> applied
>> to the same month's data, often portraying our financial position as 
>> being
>> better than I think it really is.
>> 
>> It seems that for some LNC members, the reserve is the main number 
>> they
>> look at for a quick snapshot of our current position, so it's 
>> important to
>> get that number right.
>> 
>> First, a big-picture concept: what does our reserve level calculate?  
>> Why
>> is it an important measure?  It calculates whether we have enough
>> unrestricted cash on hand to pay the next month's worth of occupancy,
>> labor, and governance expenses.  The amount of cash we need to meet 
>> that
>> goal is listed as the "Resv Target" in that p. 3 chart on our monthly
>> financials.  The blue number is the available cash we currently have
>> relative to that target number.  The 2019 goal is to have $57,225 at 
>> the
>> end of each month.  The February 2019 chart shows us at -$11,529, but 
>> I
>> think we're really at -$48,839.
>> 
>> Please refer to the attached spreadsheet, and below I will walk you 
>> through
>> it.  You won't be able to follow this well on a phone...get your 
>> full-sized
>> screen.  :-)
>> 
>> The numbers in rows 4 - 15 are copied/pasted directly from the monthly
>> financial reports sent to the LNC on this email list.  I have listed 
>> the
>> page and line numbers where those figures can be found in each month's
>> report.  These are the data points that (at various times) have been 
>> (or
>> ought to be) used in the reserve calculation.
>> 
>> Row 21 is each month's reported reserve amount, also copied/pasted 
>> directly
>> from the blue "Curr Month Resv" in the p. 3 Reserve Adequacy Trend 
>> chart in
>> the monthly financial reports.
>> 
>> Row 16 contains the formula that represents how I believe the reserve
>> should be consistently calculated.
>> 
>> Rows 17-20 show four of the several different formulas that seem to 
>> have
>> been used at different times over the past two years to calculate row 
>> 21.
>> You'll quickly notice that the results of the four different formulas
>> applied to the same month's data aren't even similar figures.
>> 
>> MAR - SEPT 2017
>> From March 2017 to September 2017, it seems that the formula in Row 17 
>> was
>> used to calculate the published number in Row 21.  This formula is 
>> close to
>> my proposed formula in Row 16 for that time frame.  For three of those
>> seven months I noticed manual errors were made in calculating the 
>> published
>> number, as described in rows 25 - 27, but otherwise that formula was 
>> used
>> consistently for those seven months.
>> 
>> OCT - DEC 2017
>> I have no theory about how the October to December 2017 figures in Row 
>> 21
>> were derived.  The numbers don't track with any of the other formulas 
>> I
>> identified here.
>> 
>> JAN - FEB 2018
>> It seems the formula in Row 18 was used to calculate the published 
>> number
>> in Row 21, but only for two months.
>> 
>> MAR - MAY 2018
>> It seems the formula in Row 19 was used to calculate the published 
>> number
>> in Row 21, but only for three months.
>> 
>> JUN - JULY 2018
>> I have no theory about how the figures in Row 21 were derived.  The 
>> numbers
>> don't track with any of the other formulas I identified here.
>> 
>> AUG - DEC 2018
>> It seems the formula in Row 20 was used to calculate the published 
>> number
>> in Row 21 (with the exception of a $1000 manual error described in Row 
>> 28).
>> 
>> Whatever the correct formula is, it should be the same formula from 
>> month
>> to month, not changing at least five times within a two-year period, 
>> with
>> such wildly different results which overstate our position.
>> 
>> I had an email discussion with Mr. Hagan and Mr. Kraus about these
>> fluctuations just prior to our March 9-10 LNC meeting, and Mr. Hagan
>> intended to work with Mr. Kraus during that weekend to establish an
>> approved formula.  Now we have a new financial statement, and I can't
>> figure out how this one was calculated, either.
>> 
>> It may well be that Mr. Hagan and Mr. Kraus didn't have a chance to 
>> work on
>> it during the weekend of that meeting, but since the reserve is the 
>> lead
>> number that was referenced when the February report was sent to us, it
>> seems this should be sorted out sooner rather than later so that the 
>> LNC
>> can rely on consistent data.
>> 
>> -Alicia
>> 
> 
> 
> --
> 
> *  In Liberty,*
> 
> *Libertarian Party and Libertarian National Committee Secretary *- 
> Caryn.Ann.
> Harlos at LP.org <Caryn.Ann.Harlos at LP.org> or Secretary at LP.org.
> *Chair, LP Historical Preservation Committee* - LPedia at LP.org
> Call me at 561.523.2250 and follow my public figure page at
> facebook.com/pinkflameofliberty/
> 
> =========================================================================
> Peaceful Commerce With All Nations * Non-interventionism * Re-Legalize 
> All
> Drugs * End Government Intrusion In The Bedroom * Repeal All Gun Laws *
> Abolish All Taxation * Sound, Free-market Money * Abolish The Fed * End
> Corporate & Individual Welfare * Abolish The IRS and Repeal the Income 
> Tax
> * Privatize Transportation Infrastructure * Free-market Emergency 
> Services
> * Open Migration * Transfer Government Schools To The Private Sector *
> Eliminate Regulation *
> 
> *VOTE LIBERTARIAN * 800-ELECT-US or http://www.LP.org 
> <http://www.lp.org/>*
> =========================================================================