<div dir="ltr"><div>
<p class="MsoNormal">Tim,<br></p><p class="MsoNormal"><br></p><p class="MsoNormal">The bylaws give the Audit Committee the power to select the
outside auditor.<span style> </span>One of the main
criteria in a decision to select a given firm is the size of the bill they propose
to send us. <span style> </span>Selecting a particular audit
firm is inherently an agreement to the rate they offered.<span style> </span>The Audit Committee wouldn’t select a firm
without knowing the price.<span style> </span>A low price
will probably increase a firm’s chance of being selected, and an outrageous
price would pretty much guarantee they would not be selected. Price is an integral part of the selection decision.<br></p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Agreeing to a rate is a different part of the process than expending
the funds to pay the bill, on opposite ends of the transaction timeline.<span style></span><br></p><p class="MsoNormal"><br></p><p class="MsoNormal">The LNC has already adopted a budget, which
gives authority for the Treasurer and staff to cut checks for $274,617 of “Administrative
Costs”, and as I already mentioned, we’ve been under budget so far in this
category.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Then take into account Policy Manual Section 2.03.3, which
states, “Funds shall not be disbursed for any budget line that exceeds the
total budgeted expense amount by 10% or $100, whichever is more.”<span style> </span>That gives another $27,461.70 of LNC-approved
flexibility before a Treasurer has to refuse to disburse any more funds for
Administrative Costs.<span style> </span>If our total
outlay for Administrative Costs is less than $302,078.70 this year, the Treasurer is
operating within the bylaw to expend funds within the constraints given by the
LNC.</p>
<br></div>-Alicia<br><br><div><br><br>On Wed, Mar 18, 2015 at 9:05 PM, Tim Hagan <span dir="ltr"><</span><span dir="ltr">
<a href="mailto:lnc-business%40hq.lp.org?Subject=Re%3A%20%5BLnc-business%5D%20Fwd%3A%20Libertarian%20National%20Committee%20Audit%0A%20Committee%20Engages%20Gelman%2C%20Rosenberg%20and%20Freedman&In-Reply-To=%3C2017307527.306481.1426737905693.JavaMail.yahoo%40mail.yahoo.com%3E" title="[Lnc-business] Fwd: Libertarian National Committee Audit Committee Engages Gelman, Rosenberg and Freedman" target="_blank">timhagan-tyr@yahoo.com
</a>></span> wrote:<br><br>Article 7 of the Bylaws state, "The Treasurer shall receive, expend and
account for the funds of the Party under the supervision and direction
of the Chair and the National Committee." Article 8 states, "The
National Committee shall have control and management of all the affairs,
properties and funds of the Party consistent with these Bylaws." Both
of these tell me that expenditure authority lies with the LNC. I could
not find the Bylaws giving spending authority to the Audit Committee. <br><br>The
2013 audit cost $10,920, and the 2012 audit cost $10,500 plus $2187.13
in extra charges related to issues found during the audit. Previous
audit have been $12,000 to $13,500. I'm curious as to why the
accountants' quote is for $15,000 plus $500 additional expenses. Have
the auditors given an explained the reason for the price increase? Has
the auditor found our audits call for more work than a normal audit or
than they expected? Since we have a meeting in less than two weeks, I
ask that the audit cost and contracting with the auditor be included in
the agenda, and could be covered during the Audit Committee Report. In
my opinion, the budget should be adjusted if the LNC wants to pay the
higher cost.
<br><br>Tim Hagan<br><br><br><div class="gmail_extra"><br><div class="gmail_quote">On Tue, Mar 17, 2015 at 4:46 PM, Alicia Mattson <span dir="ltr"><<a href="mailto:agmattson@gmail.com" target="_blank">agmattson@gmail.com</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex"><div dir="ltr"><div><div><div><div><div><div><div>I believe the bylaws give the Audit Committee the power to engage an auditor on their own.<br><br></div>Bylaws Article 10.2 states (underline added for emphasis):<span class=""><br><br><div style="margin-left:40px"><span style="font-size:10pt;font-family:Arial;color:black">"Audits shall be performed
annually by an independent auditor. The non-officer members of the National
Committee shall appoint a standing Audit Committee of three members <u>with power
to select the independent auditor</u>. One member shall be a non-officer member of
the National Committee and the other two shall not be members of the National
Committee. The Audit Committee shall clarify for the National Committee any
recommendations made by the auditor.</span>"<br></div><br></span></div>That provision in the bylaws trumps any LNC policies that otherwise might conflict with it.<br><br></div>Even if the LNC could use budgets to effectively constrain the Audit Committee from doing their job (imagine if the LNC were to set an audit budget of $0), I don't see a budgetary problem here under current circumstances.<br><br>We use a lot of line-item details to help us decide what the top-level budget numbers should be, but when all the draft work is over, the LNC only adopts the top-level, broad-category budget numbers, not the line-item detail.<br><br></div>The audit, along with many other line items, are all rolled together into a big budget category called "Administrative Costs", for which we budgeted $<span style="font-size:10pt;font-family:Arial">274,617. As long as the grand total of expenditures for all the items in that big category are under the $274,617, we're within budget constraints.<br><br></span></div><span style="font-size:10pt;font-family:Arial">If elsewhere in that category we had planned to spend $100 for electricity and $900 for gas, but the actual bills came in at $500 electricity and $500 gas, we'd still be on budget for the top-level category. The LNC doesn't have to re-allocate $400 from gas to electricity because the net overage in the Administrative Costs budget is $0.<br><br></span></div><span style="font-size:10pt;font-family:Arial">As of the end of January, our actual expenses in the Administrative Costs were running $8065.49 below budget.<br><br></span></div><span style="font-size:10pt;font-family:Arial">The LNC could go ahead and increase the Administrative Costs budget figure if there is concern that over the course of the year this one increase would prevent us from staying under budget for that top-level category. Or the LNC can leave the top-level budget category as is with the expectation that staff will work to keep other line items under budget to offset a cost increase here.<br></span><div><div><div><div><div><div><div><div><div><div><br></div><div>As far as the specific price is concerned, even with the new price I believe the arrangement is less expensive than the previous firm we used for our audits.<span class=""><font color="#888888"><br></font></span></div><span class=""><font color="#888888"><div><br></div><div>-Alicia<br><br></div><div><br></div></font></span></div></div></div></div></div></div></div></div></div></div><div class=""><div class="h5"><div class="gmail_extra"><br><div class="gmail_quote">On Tue, Mar 17, 2015 at 8:08 AM, Nicholas Sarwark <span dir="ltr"><<a href="mailto:chair@lp.org" target="_blank">chair@lp.org</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex">Fellow Members of the LNC,<br>
<br>
While I was aware of the selection of the audit firm prior to<br>
receiving the forwarded message below, I had not received a written<br>
engagement letter for the audit of the 2014 financials until seeing<br>
the attachments to this message.<br>
<br>
It had been suggested that an audit could proceed without a written<br>
engagement letter, based on the same firm's written proposal for the<br>
audit of the 2012 financials, since that had a provision that there<br>
would be no more than a 4% maximum annual cost increase for auditing<br>
the 2013 and 2014 financials (the proposed cost was $10,500 for 2012,<br>
which calculates out to $10,920 for 2013, and $11,356 for 2014).<br>
<br>
In response to that suggestion, I had previously informed the Audit<br>
Committee that I needed a written engagement letter prior to<br>
authorizing the contract, as the audit would cost over $7,500,<br>
requiring approval of the contract by the Chair. (Policy Manual sec.<br>
2.04(3)).<br>
<br>
While there is a written engagement letter attached below, it<br>
indicates an audit cost of $15,000. That cost is in excess of the<br>
$13,500 that was budgeted by the LNC for an audit, as well as<br>
exceeding the 110% of the budgeted line item ($14,850) that could be<br>
spent without further approval of the entire LNC. It also exceeds the<br>
annual cost increase ceiling from the written proposal for the audit<br>
of the 2012 financials.<br>
<br>
Had I been asked to sign (or for approval to sign) the engagement<br>
letter below on behalf of the LNC, I would have declined due to the<br>
cost being in excess of the budget. I was not asked and did not<br>
approve the signature on the attached.<br>
<br>
If the LNC wishes to ratify the agreement, purported to have been made<br>
on its behalf, at the meeting on March 28 in Phoenix, the audit can<br>
proceed under the terms below. In the interim, no funds will be<br>
disbursed and no work will be done related to the audit unless or<br>
until I receive an engagement letter for my signature that is within<br>
the budget the LNC has approved.<br>
<br>
Yours in liberty,<br>
Nick<br>
<div><div><br>
<br>
On Mon, Mar 16, 2015 at 2:47 PM, Alicia Mattson <<a href="mailto:agmattson@gmail.com" target="_blank">agmattson@gmail.com</a>> wrote:<br>
> Below is a message with two attachments, forwarded to you upon request of<br>
> the Audit Committee.<br>
><br>
> Alicia Mattson<br>
> LNC Secretary<br>
><br>
><br>
><br>
> ---------- Forwarded message ----------<br>
> From: Aaron Starr <<a href="mailto:starrcpa@gmail.com" target="_blank">starrcpa@gmail.com</a>><br>
> Date: Sun, Mar 15, 2015 at 8:23 PM<br>
> Subject: Libertarian National Committee Audit Committee Engages Gelman,<br>
> Rosenberg and Freedman<br>
> To: Alicia Mattson <<a href="mailto:agmattson@gmail.com" target="_blank">agmattson@gmail.com</a>><br>
> Cc: <a href="mailto:mcarling@gmail.com" target="_blank">mcarling@gmail.com</a>, Gary Johnson <<a href="mailto:sedition@aol.com" target="_blank">sedition@aol.com</a>><br>
><br>
><br>
> Secretary Mattson,<br>
><br>
><br>
><br>
> Please forward this email to the members of the Libertarian National<br>
> Committee.<br>
><br>
><br>
><br>
> According to Bylaw Article 10.2:<br>
><br>
><br>
><br>
> The National Committee shall cause an efficient double-entry system of<br>
> accounts to be installed and maintained. Financial statements of the Party<br>
> shall be prepared in accordance with Generally Accepted Accounting<br>
> Principles (GAAP). Audits shall be performed annually by an independent<br>
> auditor. The non-officer members of the National Committee shall appoint a<br>
> standing Audit Committee of three members with power to select the<br>
> independent auditor. One member shall be a non-officer member of the<br>
> National Committee and the other two shall not be members of the National<br>
> Committee. The Audit Committee shall clarify for the National Committee any<br>
> recommendations made by the auditor.<br>
><br>
><br>
><br>
> We members of the Audit Committee have chosen to once again engage Gelman,<br>
> Rosenberg and Freedman for the 2014 annual audit and have executed their<br>
> standard engagement letter, which you will find attached along with a letter<br>
> from Gelman, Rosenberg and Freedman addressed to the Board.<br>
><br>
><br>
><br>
> Field work for the audit is scheduled to take place during the week of April<br>
> 20, 2015.<br>
><br>
><br>
><br>
> Respectfully submitted,<br>
><br>
><br>
><br>
><br>
><br>
> Aaron Starr<br>
><br>
> <a href="tel:%28805%29%20583-3308" value="+18055833308" target="_blank">(805) 583-3308</a> Home<br>
><br>
> <a href="tel:%28805%29%20404-8693" value="+18054048693" target="_blank">(805) 404-8693</a> Mobile<br>
><br>
> <a href="mailto:starrcpa@gmail.com" target="_blank">starrcpa@gmail.com</a><br>
><br>
><br>
><br>
><br>
><br>
</div></div>> _______________________________________________<br>
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</blockquote></div><br></div>
</div></div></blockquote></div><br></div></div></div>