The quality of accounting and financial reporting, (directly related to the appropriateness and adherence to good accounting practice), is directly related to the adequacy of internal controls over accounting procedures both in their design and most importantly in their application. The quality of internal control over accounting procedures and processes "the control environment" starts at the top of an organization with the top of the managerial hierarchy.
The control environment In Hot Springs Village is more than suspect, particularly when you consider the source of the unease - Leslie Nalley. Here is a women that had a license (and may still have) to practice public accounting in Arkansas. Yet she willinging schedules annual meetings before annual audited financial statements are released and reviewed by property owners; She has bent facts for the political gain of David Twiggs and the Board; she has no empathy for lot owners preferring that they pay taxes above reasonable assessed values, and will willingly divert utility capacity to commercial uses and take said capacity from lot owners who have already paid for the capacity to the site of their lots.
Worse -- now that she is in control as "CEO" she downgraded her former position of CFO to Controller in order to maintain a better grip. She spearheaded the accounting conversion and we are using her version of accounting practices. And no one has really looked at all this. We definitely need a complete audit of internal controls to assure ourselves that we have the assets we are supposed to have, that the accounting system works and that our money is safe.
It is even more necessary to have full assurance that everything is copacetic with our accounting when you consider the bull headed approach that Nalley and the pledged brotherhood of the Board have taken to arriving at their "CMP."
Preparatory to the POA's reckless planning I did not find any of the reasonable steps that a legitimate organization normally takes. First among these steps is a SWOT Analysis. A SWOT analysis is a strategic planning technique used to help a person or organization identify Strengths, Weaknesses, Opportunities, and Threats related to project planning. Nor have I found any feasibility studies for the CMP as a whole or any of its major components. In 26 years of banking I can't recall once approving major financing for any organization that did not prepare and offer an economic analysis known as a feasibility that details how the success of the project is planned and laid out. This analysis should be for our review - we are the ratepayers.
The POA's CMP will take millions of dollars to implement, yet we have no tax base to help fund such costs. We have nothing but assessments on our existing residents. Notice I did not mention the majority of lots which have not been built on. Those folks are now used to paying less due to the 2 tier assessment and they will walk if the assessments go too high.
Further, in my experience there are always one or more known investors who show interest in the project on the front end. I know of no such interests. You can't interest serious money to get the project done without it. We have no such investors. If there are such investors and we do not know about them already, then we have even bigger problems. With a closed Board sworn to each other and existing management we have even more reason for our control audit. Who will make sure all transactions are arms length and not being made to the detriment of the property owners of Hot Springs Village?
There is even rumor that Nalley and Twiggs are in some kind of partnership and that we may have a common CPA with the one to which Nalley took the Village.
We need lots of "Sunshine" folks and there is no reason not to have it unless Nalley and "The Friends" have much to hide. It is way past time to find out - let's have our internal control audit!
IN 2017 $32.2 MILLION OF REVENUE AND AT LEAST AN EQUAL AMOUNT OF EXPENSE AND CAPITAL EXPENDITURES FLOWED THROUGH THE POA, THIS IS JUSTIFICATION ENOUGH TO INSIST ON A CONTROL AUDIT TO ASSURE US THAT ALL MONEY THAT SHOULD HAVE BEEN RECEIVED WAS RECEIVED AND RECORDED PROPERLY AND THAT ALL TRANSACTIONS WERE AUTHORIZED AND RECORDED APPROPRIATELY IN THE APPROPRIATE AMOUNTS.
BUT YOU WILL NOT FIND THIS COMMITTEE LISTED ON THE NEW POA WEBSITE. BUT ITS CHARTER THAT WAS SET ON 2-21-18 DOES SAY THE COMMITTEE HAS NO AUTHORITY TO SET POLICY. AND CAN MEET IN SECRET DUE TO THE SENSITIVE NATURE OF THE SUBJECT MATTER!
TO DEMONSTRATE HOW FAR OFF BASE THIS COMMITTEE IS AND THE DEGREE OF EMASCULATION BY THE DESIGN OF NALLEY - NOTE THE BELOW LISTED SERIES OF QUOTES FROM A SPEECH GIVEN BY ROBERT K HERDMAN, CHIEF ACCOUNTANT OF THE Securities Exchange Commission WHICH COMMENTS SPEAK FOR THEMSELVES:
"THE INTERNAL CONTROL STRUCTURE AND THE INTERNAL AUDIT TEAM THAT TESTS AND REINFORCES THAT STRUCTURE, IS CRUCIAL TO THE SUCCESS OF A COMPANY STEMMING FRAUD AND ABUSE, AND IN THE PREPARATION OF ACCURATE FINANCIAL STATEMENTS."
"FORMER SEC CHAIRMAN ROD HILLS HAS SUGGESTED THAT AN INEFFECTIVE AUDIT COMMITTEE SHOULD BE CONSIDERED A MATERIAL WEAKNESS IN INTERNAL CONTROL. AND THAT A PREREQUISITE TO EFFECTIVENESS IS TOTAL INDEPENDENCE OF THE MEMBERS OF THE COMMITTEE, INCLUDING THE NOMINATING PROCESS."
"FOR PUBLIC COMPANIES IT IS A REQUIREMENT THAT (INDEPENDANT) MEMBERS OF THE AUDIT COMMITTEE BE 'FINANCIALLY LITERATE AND THAT AT LEAST ONE BE CONSIDERED A "FINANCIAL EXPERT"."
FOLKS OUR AUDIT COMMITTEE IS A JOKE AS IT RELATES TO BOTH INDEPENDANCE AND KNOWLEDGE. WHAT ISN'T A JOKE IS NALLEY PUTING BOTH HERSELF AND MATHIS ON THE COMMITTEE AND THEN GIVING THE COMMITTEE NO AUTHORITY. WORSE IS THE OTHER COMMITTEE MEMBERS ACCEPTING THESE INAPPROPRIATE CONDITIONS OF EXISTENCE AND CARRYING ON AS IF THEY ARE DOING A SERVICE TO THE PROPERTY OWNERS.