Friday, July 11, 2008

Membership Accounting

Mike Nolan of the USCF commented on Wednesday's post in the USCF Forum. He said that this would be a radical departure from current USCF practices.

What people may not understand is that each year, ongoing discussion about USCF finances are mooted by the large uncertainty of what the revenues are going to be reported. Last year, management continually stated that revenues would not be known until the auditors made the annual year-end adjustment.

But what is this adjustment and how do the auditors figure the amount?

What they have to do is to arrive at year end figure I did in the below post for all the members. They have to perform elaborate calculations in order to do this.

There are two problems with this approach: (1) More work has to be done at the back end by high priced labor (auditors) because the USCF does not do the necessary work at the front end by lower proced labor (bookkeepers using software) and (2) the USCF does not know it's true financial picture until after the year is over.

In short, the USCF has to play the game without knowing whether it is a pawn ahead or a pawn (or 2 pawns or more!) behind. Even after the game is over, it cannot look back at the score sheet and see how it was doing in the earlier phases of the game.