I have no idea who's right and who's wrong in in this. In fact, I don't even know what they're fighting about. What I do see is people who should be talking getting their backs up and letting their emotional responses take hold. That usually has two results: 1) Somebody (or maybe everybody) does really stupid things because it is so very important to prove their point, reality be damned; and, 2) it makes the whole mess more expensive to clean up.

Has anybody else here noticed that the majority of the disputes we see which reach this point end up with everybody losing?

GME

I'm not sure who's right or wrong, but in Mr. Webster's link (nice sleuthing) to the Feb 28, 2014 opinion piece (by Mr. Bassett)

This phrase caught my eye:

"While the City and the Foundation each own half of the railroad, the Foundation has been responsible for the operation of the railroad museum."

It doesn't take a genius to understand this is a condition lends itself to contest involving urine.

If their in a cooperative ownership, perhaps a daily backup of money records should be given to a CPA or whomever, but to break and enter just to deal with money records is over the edge. But it just shows again.... "own yer own stuff..."

Good points.....

Then there's this issue , even if he can access the computerized records, how can he conduct a professional audit without working with the source documentation.... to say nothing of licensing issues.

any bets this winds up as a court case?, in which case the parties involved should /wiil clam up

Bob H.

"Then there's this issue , even if he can access the computerized records, how can he conduct a professional audit without working with the source documentation.... to say nothing of licensing issues."

It's even worse than that. You CAN'T conduct an audit without making inquiries of management, even if you have "source documents". Many items on financial statements are estimates (depreciation, bad debt reserves) that have no source documents.

One of the other links provided by Mr. Webster made mention of a discussion about inadequate segregation of duties. When such a situation exists, you have to make inquiries about what kind of compensating controls exist-and while it's not ideal, it exists anywhere there's a "small" organization (meaning the vast majority of tourist/heritage railroads).

I think some of us are talking about two different things when the subject of auditing comes up.

Yes, your organization should be audited on a periodic basic by an outside accounting firm, preferably not the one that you use all the time (if your organization uses one). Auditing by an outside entity is just good, sound business practice.

I have mixed feelings about "forensic accountants" based on my experience as an attorney. I used them in some cases when I was an insurance defense attorney, namely on showing that a claimant's business income loss claim was grossly inflated. Even then, they can't fully reconstruct everything when documentation is gone/missing.

On the other hand, I've seen forensics accountants misused. For example, two business partners in a mostly cash-based business have a falling out. Partner 1 hires forensic accountant after locking out Partner 2. Partner 1 is the only person that is allowed to answer questions asked by the accountant. Partner 1 uses biased forensic audit report to cash in on employee dishonesty policy and try to basically "frame" Partner 2 for embezzlement. In this scenario, the audit is used as an offensive weapon, and lacks any real objectivity. Dealing with such audits in this scenario is often very heartburn-inducing, but also fun to make the accountant squirm during the deposition.

Just my two cents.

The reason there is confusion here is because of the manner in which Mr. Miller allowed himself to be used.

In short, the accounts of what transpired bear as much realism as the old movies where some surprise witness bursts into the courtroom and yells breathlessly "your honor I have new evidence" as if the rules of discovery did not exist.

Actually, to make it more relevant to the audience here; this is starting to look as realistic as "Unstoppable" or "Atomic Train".

"I have mixed feelings about "forensic accountants" based on my experience as an attorney. I used them in some cases when I was an insurance defense attorney, namely on showing that a claimant's business income loss claim was grossly inflated."

"On the other hand, I've seen forensics accountants misused. "


Well, since you engaged an accountant as a soothsayer....you might want to consult counsel to assess your own culpability in this regard.

Be glad you aren't deposing me.

A local attorney (google Karl Rominger, who was a part of Jerry Sandusky's defense team) and who no longer practices courtesy of mishandling client funds, used to be a frequent guest on the late afternoon talk show.

He once decided to attack the practice of accrual accounting. I heard it, called in and took him apart like a cheap happy meal toy. After he was left chastened and conciliatory, I asked him to confine himself to the practice of his own dark art.

No, I just realize when I've used accountants, they are operating on a limited set of facts, due to a variety of circumstances, and I never use them for the "surprise" or "gotcha" moment. I always make sure to disclose this, and to never build up testimony to be what it isn't. I'm cynical enough to understand that the expert witness I consult with, and potentially disclose is more than likely to render an opion favorable to me. However, I also understand that the opinion needs to be based in reality, practices, and pass the "smell test." Some do not understand this.

That being said, no account is better than the facts/information they are provided with regard to the conclusions they reach. 99.99999% of them will tell you this.

Back to practicing some dark arts....

I have no dog in the fight and no specifics, but what's not being mentioned is pretty simple, and that's what's in the operating agreement between owner and operator. Most of the good ones will have both right of entry on the property and right of access to financial records and/or reports on a timely basis. Clearly spelled out.

We're no stranger to this kind of things, including some rather interesting audits in the past on the request of owners to operators. Only one ever resulted in the immediate dismissal of the operator for clear evidence of diversion of funds for personal use to evade paying a percentage of operating income to the owner, and it was pretty clear-cut. But there was always a process established for physical entry and audit, via written notice. And I've ALWAYS have a representative of the operator keeping an eye on me, expected, when I'm in their office. Heck, I insist on it, as I don't want to get accused of anything either.

And what usually comes out of this bluntly, is a notice of violation of the operating agreement when they are properly written, which puts either the operator or owner in the spot of a contract violation, possibly with financial damages.

Bottom line - your operating agreement matters. Make sure you know what is in it, and what it means. Sometimes owners have to be reminded as well. It's good to hold the high ground when you can.

Most likely knowing that the NN was closed on Tuesdays, the City appears to have had every intention of performing chicanery to obtain some form of "smoking gun", whether real or perceived.

Expect this mess to continue (whatever the issue may be) for some months to come. And its never a good thing when the local newspaper files a police complaint against boorish City employees.

An update from The Ely Times: Sheriff’s investigation finds council had right to enter railroad office (September 12, 2014)

A short excerpt:

I don't know why they couldn't choose an open time to do it than a spy vs spy ordeal.

So the same sheriff's department who authorized the breaking and entering investigated themselves and determined that they didn't do anything wrong. I'm shocked.

Sigh.

The article I linked to (Sheriff’s investigation finds council had right to enter railroad office) said:

A few more updates from The Ely Times:

(1) Recall filed for entire city council (September 12, 2014)
Here's a short excerpt - please read the full article before commenting on it:
and
(2) Mayor says council is ‘not giving up’ (September 12, 2014)
Here's a short excerpt - please read the full article before commenting on it:

And, for some background on the Mayor, check out this article:
(3) New Mayor Van Camp wants to ‘clean up’ Ely (March 21, 2014)
It says that she did not win an election, but was instead appointed Mayor by the City Council:

And here is another article says that the Mayor is trying to be the subject of a "reality-television" program:
(4)‘Small Town Mayor’ shoots in Ely (June 6, 2014)