Implementing Better Procedures to Avoid Misappropriation

Tuesday February 14, 2023 comments

Any accounting, business or tax advice in this hair podcast is not intended as a thorough in depth analysis of your specific issues. It's not a substitute for forming an opinion. It is not good enough to avoid tax related penalties. 

Hey, it's Chyla Graham CNRG Accounting Advisory. This week's episode is about some government quasi state shenanigans. So like I said before, this season is talking about shenanigans: misappropriation, misreporting, misbehavior of organizations, and how you can prevent from being in the news. So this one is coming from Maryland. 

So in Maryland, the headline reads, MES board says they were told Hogan approve severance, Governor has denied it. So in this case, what we have is someone who is stepping down as an executive. So this executive who stepped down, told the board that the Governor of Maryland approved them to have a large severance package when they left the organization to become Chief of Staff. Mislead. 

It's not funny, it's not funny that the board thought that they understood what was happening. This is why documentation. So as a board, it's not enough for them to say oh, so and so knows. So the board's job is not to say, oh, cool, that other person is okay with you getting this severance. That other person is not this organization. So this organization needs to think about are they okay with the package with the severance with whatever because it's this board that's responsible for what's happening at this organization. That is my recommendation for board members. 

If you are unclear about hey, is this appropriate? Make sure you'd have it in writing if someone says oh, so and so said it was okay. Like Great. Can you send me an email? Can you bring that to the next meeting? Can they attend the next meeting and have a conversation with us? If the person who is presenting on behalf of someone says like, Oh, they're not available. Say like, Well, okay, well, whenever they are available, we'll record a liability for you. We owe you this money but until we get the documentation to support it, we are not going to pay it out. That is one way of achieving a middle ground. 

So that you can see like, Hey, what is the right place? What is the right balance to strike? Do not be afraid of hurting feelings or offending. I think in this case, they were afraid that they would offend the governor by not approving the severance package. But the governor is not over this organization. So the governor can be offended if they would like to, because they're not the ones who have to defend this decision. So that's it for this week. 

Board members, listen up. This is your work this week. Think about how you can implement better procedures, better documentation and better oversight.

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MES board members say they were told Hogan approved severance; governor has denied it



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