AHA PRESIDENT
LANCE WALTERS
Message from Lance Walters, AHA President
August 11, 2009
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August 11, 2009
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Since Convention last November, things have been busy at the Arabian Horse Association (AHA) office in Denver, Colorado. At the executive level, we have taken an extensive look at the Association's finances. As we moved through the budget process, we discovered that the financial information being provided was not adequate and up to standards. When I was elected to lead this organization last fall, I stressed the importance of accurate financials and the absolute necessity of them for the future success of AHA.
AHA is experiencing some of the same economical effects that many of our sister organizations have. Membership and registrations are down, while expenses are up. I want to assure our membership that your leadership-officers, board, Budget and Finance-and staff leadership are all working together to stay on top of these effects and anticipate any obstacles the best we can so that we can carry this association into a solid future.
With declining registrations and membership, as well as fluctuating numbers of entries at our qualifying and regional shows, the Budget and Finance Committee and BOD recommended and passed a budget that reflected these anticipated declining figures. In fact, since the beginning of the budget process more than $1 million has been trimmed from initial budgeted expenses to offset revenue declines. These reduced expenses include a staff hiring freeze, suspension of merit increases and matching 401k money, restrictions on overtime and travel, as well as changes in employee health insurance and benefits. The Horse Registration System IT Project, which has cost $2.4 million and has been paid for as it was developed (approximately $900,000 in the last 14 months), is nearing completion. Cash outlays, as of June 30, have effectively reached an end.
Accurate financial information is top priority to AHA leadership and management. Because of this, in December, shortly after my election I met with Glenn Petty (AHA EVP) and all of AHA's department heads. I conveyed to everyone that I was unwavering about correct financials and their importance to accurate budgeting for the future of AHA. I conveyed this also to Frank Galovic (AHA Treasurer) and shortly thereafter we started a compete review of our accounting processes, programs, and procedures. As a result of our complete review of the finances, it was discovered in the last forty days that restricted funds had not been redistributed to appropriate accounts in a timely manner as instructed by the Board.
The primary fund affected was Sweepstakes-a trust fund whose monies need to be kept separate from all other AHA funds. The current Sweepstakes balance is $6.6 million and approximately $750,000 of it was not transferred in a timely manner to the appropriate account as required by the board in August 2008.
The Executive Committee; Board of Directors (BOD); Glenn Petty, our EVP; a new Controller, Brad Short (CPA, inactive); an Accounting Advisory Committee, consisting of Frank Galovic (AHA Treasurer), Dave Corning (retired Budget Manager of Microsoft) and Dan Stevenson (a banker and chair of MDP), have worked diligently in the past month to come up with a solution. On Friday and Saturday, a plan was discussed at length at the BOD meeting in Denver.
With funds secure, the AHA Board and Trustee Board have devised a plan so that funds will be properly transferred over a three-year period. The Sweepstakes Fund will be paid interest at a rate comparable to what is being received by all of AHA's, Sweepstakes, and other fund investments. This restitution will commence immediately. The Sweepstakes fund is secure and Sweepstakes Payouts are secure. AHA and the Sweepstakes Trust has always and will continue to ensure all payouts are made by Sweepstakes rules. The plan will be executed as approved at the August Board meeting.
We also found that other accounts have been utilized in an incorrect fashion to cover expenses. After a thorough review, cash and cash investments will cover current budgeted obligations and prize money programs. Based on our current estimate of revenue, our current obligations are covered in the budget. With massive expenditures to the computer program over a period of 4 years, it is expected to take an equivalent number of years to recover. As we continue our review and refine our financials, I will keep you informed of any issues (good or bad) that arise each month.
I need to again stress that there are no programs that pay out prize money to our exhibitors that are in jeopardy. Because of this eight month review we have discovered the problems and they are being corrected so that AHA can continue to provide the shows, services, and programs that our members have come to expect.
The Accounting Advisory Committee (David Corning, Dan Stevenson, Frank Galovic and myself are working with our new Controller and EVP to thoroughly study our processes, procedures, and staffing to safeguard our association's funds-restricted, designated, and unrestricted. I have also requested a new procedure for acquiring our outside auditors that do our yearly audit.
In closing, the news of what has been found is unfortunate, but the good news is that we now have sound accounting processes in place and we are correcting the issues. We are tightening our belt to offset reduced revenues and, if necessary, we will make further modifications to ensure the success of AHA and its programs. We are monitoring all aspects of our operation in order to better serve our membership. As I travel to many of our events throughout the summer and fall, I encourage you to approach me with any concerns, questions, or comments you might have. You will also be receiving later today a message from Frank Galovic, AHA Treasurer.
As we go forward together, I want to assure you I will continue to work tirelessly for the protection of the Arabian Horse, AHA, and you the members.
My best,
AHA is experiencing some of the same economical effects that many of our sister organizations have. Membership and registrations are down, while expenses are up. I want to assure our membership that your leadership-officers, board, Budget and Finance-and staff leadership are all working together to stay on top of these effects and anticipate any obstacles the best we can so that we can carry this association into a solid future.
With declining registrations and membership, as well as fluctuating numbers of entries at our qualifying and regional shows, the Budget and Finance Committee and BOD recommended and passed a budget that reflected these anticipated declining figures. In fact, since the beginning of the budget process more than $1 million has been trimmed from initial budgeted expenses to offset revenue declines. These reduced expenses include a staff hiring freeze, suspension of merit increases and matching 401k money, restrictions on overtime and travel, as well as changes in employee health insurance and benefits. The Horse Registration System IT Project, which has cost $2.4 million and has been paid for as it was developed (approximately $900,000 in the last 14 months), is nearing completion. Cash outlays, as of June 30, have effectively reached an end.
Accurate financial information is top priority to AHA leadership and management. Because of this, in December, shortly after my election I met with Glenn Petty (AHA EVP) and all of AHA's department heads. I conveyed to everyone that I was unwavering about correct financials and their importance to accurate budgeting for the future of AHA. I conveyed this also to Frank Galovic (AHA Treasurer) and shortly thereafter we started a compete review of our accounting processes, programs, and procedures. As a result of our complete review of the finances, it was discovered in the last forty days that restricted funds had not been redistributed to appropriate accounts in a timely manner as instructed by the Board.
The primary fund affected was Sweepstakes-a trust fund whose monies need to be kept separate from all other AHA funds. The current Sweepstakes balance is $6.6 million and approximately $750,000 of it was not transferred in a timely manner to the appropriate account as required by the board in August 2008.
The Executive Committee; Board of Directors (BOD); Glenn Petty, our EVP; a new Controller, Brad Short (CPA, inactive); an Accounting Advisory Committee, consisting of Frank Galovic (AHA Treasurer), Dave Corning (retired Budget Manager of Microsoft) and Dan Stevenson (a banker and chair of MDP), have worked diligently in the past month to come up with a solution. On Friday and Saturday, a plan was discussed at length at the BOD meeting in Denver.
With funds secure, the AHA Board and Trustee Board have devised a plan so that funds will be properly transferred over a three-year period. The Sweepstakes Fund will be paid interest at a rate comparable to what is being received by all of AHA's, Sweepstakes, and other fund investments. This restitution will commence immediately. The Sweepstakes fund is secure and Sweepstakes Payouts are secure. AHA and the Sweepstakes Trust has always and will continue to ensure all payouts are made by Sweepstakes rules. The plan will be executed as approved at the August Board meeting.
We also found that other accounts have been utilized in an incorrect fashion to cover expenses. After a thorough review, cash and cash investments will cover current budgeted obligations and prize money programs. Based on our current estimate of revenue, our current obligations are covered in the budget. With massive expenditures to the computer program over a period of 4 years, it is expected to take an equivalent number of years to recover. As we continue our review and refine our financials, I will keep you informed of any issues (good or bad) that arise each month.
I need to again stress that there are no programs that pay out prize money to our exhibitors that are in jeopardy. Because of this eight month review we have discovered the problems and they are being corrected so that AHA can continue to provide the shows, services, and programs that our members have come to expect.
The Accounting Advisory Committee (David Corning, Dan Stevenson, Frank Galovic and myself are working with our new Controller and EVP to thoroughly study our processes, procedures, and staffing to safeguard our association's funds-restricted, designated, and unrestricted. I have also requested a new procedure for acquiring our outside auditors that do our yearly audit.
In closing, the news of what has been found is unfortunate, but the good news is that we now have sound accounting processes in place and we are correcting the issues. We are tightening our belt to offset reduced revenues and, if necessary, we will make further modifications to ensure the success of AHA and its programs. We are monitoring all aspects of our operation in order to better serve our membership. As I travel to many of our events throughout the summer and fall, I encourage you to approach me with any concerns, questions, or comments you might have. You will also be receiving later today a message from Frank Galovic, AHA Treasurer.
As we go forward together, I want to assure you I will continue to work tirelessly for the protection of the Arabian Horse, AHA, and you the members.
My best,
Lance Walters
AHA President
AHA President