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Tusker
Unregistered User
(1/18/02 8:42 pm)
Reply 		SRF/Enron
Most people are probably aware of the developing scandal involving Enron and the Andersen accounting firm. One of the key issues at the heart of this scandal is the conflict of interest inherent in accounting/auditing firms also providing consulting services to their accounting clients: if they blow the whistle on “creative” bookkeeping and other questionable financial practices they may lose not only the accounting income but also the extremely lucrative consulting income from that client.

This very problem exists at SRF: Ernst & Young has been the SRF financial auditor for many years. In 1995, over the protests of SRF IT management, the bad ladies hired E&Y to perform IT consulting in addition to financial auditing. SRF IT managers repeatedly raised the issue of the unsuitability and impropriety of this arrangement, but to no avail. The bad ladies continued to use E&Y as IT consultants through 1998, and may well continue with this conflict of interest arrangement to this day. E&Y auditors require SRF to pay E&Y consultants to perform security audits of the SRF computer systems. This is bad enough, but the fact that IT management never receives the security audit reports only makes it worse. Several of the grossly overpaid consultants working on the dreaded PeopleSoft project came from E&Y to the SRF project because of the incredible opportunity to milk the SRF cash cow. The IT managers who raised the alarm were viewed by the bad ladies as disloyal and were all disposed of, monks and employees.

So, take notice of Enron and Andersen, and give some serious thought to the strange relationship between SRF and Ernst & Young. Whether there is a scandal here involving “creative” bookkeeping I can’t say, but the enabling environment has existed for years.

The core issue here is that when people become lost in money, as the bad ladies have, everything else goes: sense of ethics, discrimination, kindness, love, ... No, SRF is not Enron. But underneath the surface differences, much is the same.

Be very careful about giving SRF and the bad ladies your money, or supporting the clueless, vindictive, and possibly illegal things they do.

Lobo
Registered User
(1/18/02 9:12 pm)
Reply 		Re: SRF/Enron
The relationship between an outside auditor and the entity that it audits is supposed to be exclusionary so that what is found through the audits is correct, true, and complete. Without that the report becomes political, slanted to provide the unspoken demand that a certain type of report that simply rubberstamps the actions of said entity be produced.

How much money do you think, or know, that SRF has. Not in property which I'm aware is worth millions, but the actual monies including stocks, bonds and other investments. I wonder if that information is a matter of public record and if so where it would be found so it could be accessed by the public. After all they are a non-profit corporation and are exempt from taxes as a religious corporation. That would seem to mean that the IRS and the State Francise Tax Board (State of California) would get yearly reports of earnings etc. from SRF.

And if so that information must be available publicly, it would seem. Maybe not. Anyone know for sure?

Accountant
Unregistered User
(1/18/02 9:51 pm)
Reply 		SRF/Enron
The SEC, and other government agencies, have been studying for some time whether to force the "big 5" to divest themselves of their consulting businesses. Some have already started the process, seeing the writing on the wall and wishing to divest on their own terms and not have them dictated by the SEC. The reason is that there is clear conflict of interest in providing both auditing and consulting services. Enron is only the most recent, and large, case in point.

If SRF is having their auditors set their IT direction, then they are, frankly, stupid. Even companies that use these firms as consultants don't turn their decision making over to them. Who knows if there's hanky panky going on? Regardless, their behavior sure makes it look like something is fishy.

Deep
Unregistered User
(1/18/02 10:03 pm)
Reply 		Blowing the Whistle
I believe that most in the SRF IT department tried to blow the whistle on this one. The problems were blatant and widely understood. The result of their trying to help Master’s work was that SEVEN monastics were forced out of the IT department (all of them) and FOUR IT employees terminated, including the two managers.

So much for trying to help SRF.

I read where Enron was being charged $1 million for Arthur's services. SRF is allegedly paying about $100,000 a month for it's own little scandal.

chuckle
Unregistered User
(1/18/02 11:32 pm)
Reply 		Thanks for the whistle!
Although you guys obliquely referred to this stuff many moons ago, this is the first somewhat detailed account I've read of this incident. Although I shouldn't be shocked by now, I am. I think detailed reporting of suspicious stuff like this will go a long way in convincing members that there are serious problems and we aren't all just talking about some psychobabble stuff, as one calcium- enriched person has suggested.

I guess I'm going to have to change my letter to SRF which asked for regular audited financial statements for the members. Now I'll have to ask that they not be audited by E&Y (and not by Andersen, either ;-) ). Wonder what good my letter will do?

It now seems we have a moral obligation NOT to send money to SRF because it could end up being used in unethical business practices. Sigh.

Of course, the SEC can't do anything about this situation, but surely the IRS or the CFTB would be interested in this development, wouldn't they? Or is SRF's situation here just bad, as opposed to unethical, management?

Lobo, I think AumBoy checked into the accessibility of the financial records. Evidently, because SRF is a church they are excluded from publicly disclosing financial records. This seems bizarre in the light of so many scandals involving churches over the years.


Crog
Unregistered User
(1/19/02 8:47 am)
Reply 		Whistle - New Temple Computer Systems
How many of you out in the Temples have had to use the new amazing Peoplesoft accounting system? SRF is now pushing their new accounting system into the temples. Many more will now see first hand what SRF is really like on the inside. This is a good thing to help with change!

The (former) E&Y consultants, all still employed by SRF, are making over $140/hour, some almost $200/hour, to provide this type of facility for SRF. Do you wonder how your Sunday offering is spent?

A typical SRF temple will collect $2000 at a Sunday service while these consultants are making $6000 to $7500 a week! The drain on SRF’s funds is disappointing. On top of this consider that SRF has kept the salaries of their own member employees at a minimum, and have announced that they don’t have the money for raises this year! Makes you wonder doesn’t it?

By the way I count 8 monastics that were forced out of the computer department over blowing the whistle on this very scandal. Two employee managers were fired and two other computer department people later “laid off”. The cover up continues to this day.

SRF is not held accountable for its behavior like Enron. SRF is not a publicly held company with stock and a real board of directors. They are a little family run business (i.e. cult?) and their reputation allows them to solicit funds from the public. There are rules for how that money needs to be spent if they are to legitimately call themselves a non-profit. Does anyone know those rules?

In the eyes of the law deceiving SRF members about what is done with their donations is not the same as what Enron did.

The Insider
Unregistered User
(1/19/02 2:01 pm)
Reply 		Info for Lobo
Regarding your question above, I know that SRF holds a large percentage of stock in a German-based company, Bentley Pharmaceutical.
I believe that members of a church can demand internal audits. But good luck with that one -- the faithful flock is too busy lining up to be fleeced. (I've always thought "flock" was an interesting choice to describe followers of a religion.)

Lobo
Registered User
(1/19/02 9:31 pm)
Reply 		Re: Info for Lobo
The Insider,

Thanks for the info. I thought SRF was against drugs!!!!

It would be interesting to find out what else they've invested in, armaments, pollution causing energy companies, gasp, tobacco companies???? Well Daya Mata is the spiritual advisor for the dearly departed Doris Duke, tobacco heiress, and the benefactor of the remodeling done at Mt. Washington.

Maybe I'll do some investigating and see what I can come up with in terms of financial reporting responsibilites and their availiability to the public.

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