Quite an extravaganza, the August board meeting was filled with leadership’s self-applause and vague references to purported misinformation imagined to be swirling about the community. In fact, it seems that leadership sometimes goes to extraordinary lengths to ensure that the property owners “believe” that all is financially wonderful in Big Canoe. Unfortunately, all is never exactly as it may appear.
That said, a detailed discussion of the year to date financial information is definitely in order and will be forthcoming posthaste. But first, and for now, given the abundance of concerns cited in the previous post on this site, (1) https://bcmatters.org/the-domino-effect/ an update on those issues is deemed necessary.
Yet another denial . . .
As mentioned previously, the director of finance graciously provided answers to many Ask the POA questions regarding the new fire engine loan. In fact, an offer was even extended to sit down with this writer at the Canoe Lodge to review the loan documents. It was as though a ray of light had just broken through the clouds of financial mystery that so often seem to shroud the actions, decisions and intentions of our POA board of directors.
Aah, but alas, a member of the POA board quickly swooped in to intercept that correspondence and ongoing plans to meet by declaring that the finance director’s offer was a “gesture of transparency, but erroneously made”. (2) Wow. And with that, this writer was once again instructed that under Georgia Nonprofit law . . . “this [is] not a document you are legally entitled to review . . .”. One must wonder where exactly was the GM whilst the board member was admonishing one of his managers? (3)
For the record, no where does the Georgia code specify that the disclosure of loan documents to members of the Association is “prohibited or exempted”. That is a choice made by leadership (much like their recent choice to disregard a property owner petition now containing over 200 member signatures). (4) Instead, the code (14-3-1602) merely specifies those records that are “required” to be disclosed.
The check’s in the mail . . .
As it turns out, after several followup questions (prompted by the finance committee chair’s failure to even mention the July 27th loan in the cash flow summary presented at the August board meeting), it has now been learned via questions to Ask the POA and management that there are actually a number of glaring inconsistencies regarding the details of that recent fire engine loan. Perhaps these contradictions are insignificant to the readers of this blog. And perhaps they are not. Let the reader be the judge. For example:
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Is it a loan? Or is it a lease? What was described as a loan in early August has now been defined as a lease.
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Which is it? (Details do matter, and there are significant differences between a lease and a loan.)
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Further, in August, this writer was advised that the “loan” was dated July 27th. However, after inquiring about why the loan had not been disclosed on the recently posted July 31st financial statements, this writer was later told that the documents were not actually signed until July 28th with the check not received by the POA until August 2nd.
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Now seriously . . . do financial institutions really handle $500k plus loan disbursements these days via a check presumably in the mail? Presumably Wells Fargo does? And was the POA’s handling of this transaction in accordance with GAAP?
Regardless, due to leadership’s extreme lack of transparency and the discrepancies noted above, one can not help but wonder if there could be serious secrets hidden within all these “protected” financial documents. And needless to say, these questions and any aura of speculation could have been avoided if our leadership simply practiced openness and transparency by allowing member access to the loan documents.
A very dangerous optic . . .
Seriously now. Let’s think about this. It is both unacceptable and frankly alarming that our board can actually pledge OUR common property and borrow $20 million without OUR approval while using OUR money (assessments) to subsequently repay the debt while advising property owners that they are not entitled to review those very loan documents.
Now, that is a very dangerous optic indeed.
It also can not be forgotten that our board could and actually might also spend part or all of that $20 million without OUR approval should they decide to classify the expenditure as maintenance or replacement. (Perhaps that explains the board’s real reasoning for their disregard of the petition requesting an amendment to the covenants that would have prevented this from happening.) (4)
Neighbors and friends . . . this clearly is not good, and no community’s leadership should ever have this much power.
The clandestineness continues . . .
And remember that second quarter capital report with the missing column? (1) It has now been learned from a board member that the Finance Committee directed the accounting department (5) to hide or remove the column containing the 2022 expenditures from the second quarter capital report because “it would be confusing to most property owners why expenditures to date were so far below amount budgeted for Replacement Capital this year . . .“.
What an insult. And, does the Finance Committee now manage our accounting department? If so, this is completely contrary to board policy and procedure 300.4 (6) And further, once again, where was the GM and who is really running the show? For that matter, why was the board silent when this decision was made?
As an additional note, while appreciation is extended to that board member for forwarding a corrected copy of the second quarter capital report including the hidden column to this writer, the corrected report does not appear to have been posted to the website for any other member’s review.
And what about that mysterious UCC filing in favor of Jerry Pate Turf & Irrigation, Inc. (7) . . .
Leadership has now confirmed that the Association did indeed purchase the irrigation equipment for the Creek 9 renovation (totaling $290k) directly from Jerry Pate Turf & Irrigation, Inc. (8) And although, the board insists that those parts were purchased and paid for by the end of May 2021, the UCC securing various association equipment was filed three months later in August 2021. When asked why, the board representative stated that they “have no idea why a UCC was filed then”.
IF UCC protocol was followed, someone within the POA should have been aware of and/or agreed to the filing of this document. And yet, without conducting any suggested due diligence whatsoever to determine if anyone within the Association could have authorized this instrument or established an account at that time, the board simply responded that the POA was “unconcerned” with the UCC filing. Now, how can that possibly be?
Honestly, in today’s world, should not all entities (especially non-profits) be completely informed and familiar with the circumstances and background of any “accounts” established by a potential creditor and UCC filings securing the (“our”) entity’s assets? The lack of concern and any internal control regarding this matter is simply astounding.
Make no mistake. The board is either woefully failing in it’s responsibilities to protect the Association’s assets or they are being purposefully untruthful. Which is it?
One more very bad idea . . .
And as if the Association doesn’t already practice extreme secrecy while also suffering from a severe lack of internal controls, the Audit Committee has now been rendered extinct by virtue of it’s merging with the Finance Committee. (9) And contrary to leadership’s assertion, the consolidation of these two committees would not be commonplace practice for an organization the size and complexity of Big Canoe. Because of this, there will be no independent oversight of the financial function; no whistleblower function or protections; and the Finance Committee will be responsible for selecting the independent auditors and CPA firm (Mauldin & Jenkins) to audit and review the accounting and financial functions and policies of the Association.
Looking ahead . . .
With all that said, attention will now be diverted back to the numbers and a discussion of the recent financial reporting to be posted to this site in the coming days.
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As always, please feel free to post comments or contact me at thepcrosses@gmail.com for questions or further discussion. Likewise, should you wish to see additional articles posted in the future, please subscribe for an email notification or check back frequently. Meanwhile, take care, stay safe and thank you for your readership.
Patricia Cross (10438 Big Canoe)
References:
1) “The domino effect”, bcmatters.org, August 11th, 2022, https://bcmatters.org/the-domino-effect/
2) Ask the POA Ticket #7543, response dated August 23rd, 2022.
3) Big Canoe Policies and Related Procedures, 053.3 Communication with POA Management and Staff, dated August 20th, 2020.
4) “True Colors”, bcmatters.org, July 20th, 2022, https://bcmatters.org/true-colors/
5) Ask the POA Ticket #7749, request and response dated August 25th, 2022.
6) Big Canoe Policies and Related Procedures, 300.4 General Guidelines for All Board & Management Committees, dated August 20th, 2020.
7) Jerry Pate Turf & Irrigation, Inc., UCC Filing recorded August 19th, 2021, Pickens County, Georgia.
8) Ask the POA Ticket #7772, dated August 26th, 2022
9) Big Canoe Board of Directors meeting minutes, dated August 25th, 2022. (POAwebsite>login>meetings>BoardOfDirectors>MeetingNotes>August252022)