One of my last audits in the New York State Comptroller’s Office was of a not-for-profit, Community Action Agency in Franklin County that is primarily funded by New York State and federal grants.
This is a good audit to review because the auditors appropriately assessed the control environment component of the COSO framework for internal controls.
But it also highlights the good work of a local CPA who had the courage to stand up and not be intimidated by the management of the organization.
For his courageous act – he was fired.
As stated in the audit report:
“Another example of the poor control environment at ComLinks involved Ms. Reich’s firing of an independent CPA. Federal Circular OMB-A-133 requires not for profit entities who expend more than $300,000 annually to have a single audit done of their financial statements. To be compliant with this regulation, ComLinks initially hired Mr. Doug Wood, CPA to perform their single audit. For the year ending September 30, 2006, Mr. Wood was going to issue a report with a qualified opinion about ComLinks financial statements because he questioned numerous adjustments and reallocations of costs among grants; identified late payment charges, and delay of revenue causing serious cash flow issues; and noted missing supporting invoices. According to Mr. Wood, Ms. Reich asked Mr. Wood to change his opinion from qualified to unqualified. In return, Ms. Reich made an inappropriate offer to Mr. Wood. Mr. Wood declined the offer and Ms. Reich fired him.”
I commend Doug Wood for having the courage to do right according to his professional responsibilities. He is a hero and I encourage all of the people in the northern part of New York State to visit Doug for their accounting and tax work.
You can read the audit report and find out about other professionals, including another CPA, who failed in carrying out their professional responsibilities.