The DCI 990s

[chaos001]

Does DCI (the actual mother ship, not the member corps) really sell THAT many souvenirs? When I am at events, I don't see that many DCI branded clothing being worn. It is almost exclusively corps specific stuff.

They also send merchandise to the corps to sell that blend both the corps' and dci's logo on them.

[N.E. Brigand]

So, garfield . . .

Is it not true, many items can be buried under several categories, with no one being the wiser? This inspection is fascinating, for sure. It's just that certain 'things' can be done and gotten away with? To some extent, I'm not comfortable in the utility of putting these figures out there. Yes, these figures ARE out there for inspection. It's just that . . . well, there's maybe more to the story. Do you agree?

I'm not garfield, but the answer is yes, although it's generally not a matter of deliberately hiding something as of satisfying the specific questions and slots the 990 features. It includes only so many categories, and everything has to go somewhere, so naturally some things get bundled together. On the other hand, there are also questions that every non-profit filing a 990 has to answer that only apply to a few. This one cracks me up: "Did the organization receive any payments for indoor tanning services during the tax year?"

[garfield]

So, garfield . . .

Is it not true, many items can be buried under several categories, with no one being the wiser? This inspection is fascinating, for sure. It's just that certain 'things' can be done and gotten away with? To some extent, I'm not comfortable in the utility of putting these figures out there. Yes, these figures ARE out there for inspection. It's just that . . . well, there's maybe more to the story. Do you agree?

Interesting, Fred, but I've yet had anyone say here or in conversation that "...that item really needed to be in this section..." or "...that item is partly covered over here, not over there where you're looking..."

Sure, there are explanations that are not here in the 990's. But the IRS has laid down guidelines, and most CPA's are putting their reputations on the line by categorizing these numbers correctly because, in the face of an audit, it's their reputation on the line and it will be their problem if the IRS challenges and wins an argument about where things are shown in the 990's. We are, to a large degree, placing our faith in DCI's CPA to present the data in its correct place and form, but I ask, what motivation would a CPA firm have to "fudge" numbers? I would contend very little, especially when considering the CPA's reputation with the IRS v. the confiscatory fee they might collect from a tax exempt entity such as DCI.

If DCI were a C- or S- corporate entity (as opposed to a 501c3) and they were "cooking the books" with misdirection and misleading statements, we'd likely never know about it until the IRS audited them and discovered it. To that extent, the CPA doing DCI's books is no different that them doing a C-corp or S-corps books; if the CPA discovers it he has to decide if it's worth losing a license or reputation to cover it up. I just don't think it's realistic.

True, C-corps annual and quarterly reports have supplemental notes that fully explain the numbers but, just because we don't have that detail here doesn't indicate that the numbers are fudged, covered, hidden, or flat-out fictitious.

I believe - numbers don't lie. People do.

[Fred Windish]

Yes, it's people that lie. For the most part, I believe CPAs take what they are given, as it is given, and make it work. I really don't believe they care to verify the validity of what's 'down low.' There is NO way I think any CPA would get involved in "Now, about those t-shirts . . " in today's world, it's all about 'get in, get out.' Maybe I'm a too cynical. Either way, the 'public' figures for DCI are just figures, nothing more.

[2muchcoffeeman]

Dan Acheson's salary is on the low side for a not-for-profit of this size, by the way.

I was just thinking the same thing.

[N.E. Brigand]

Yes, it's people that lie. For the most part, I believe CPAs take what they are given, as it is given, and make it work. I really don't believe they care to verify the validity of what's 'down low.' There is NO way I think any CPA would get involved in "Now, about those t-shirts . . " in today's world, it's all about 'get in, get out.' Maybe I'm a too cynical. Either way, the 'public' figures for DCI are just figures, nothing more.

Can you be more specific about what kind of malfeasance you think is possible? Walk us through an example of how DCI might be cooking the books, if that's what you suspect. What about those tee shirts, for instance? I know that our auditor is onsite for a week, testing all of our numbers in various ways, asking tough questions about how we process our income, making sure that all valuations are reasonable, etc. DCI presumably goes through a similar process.

[2muchcoffeeman]

Um, if someone has evidence of crime, they should be taking it to the appropriate district attorney.

If they don't, they shouldn't be making up "an example of how DCI might be cooking the books," on a public website, even in hypothetical terms. As a news professional, I would never allow that kind of idle speculation into print. It's irresponsible.

My two cents.

[Fred Windish]

SLOW DOWN!

I am NOT implying malfeasance. What I am saying is, numbers are just numbers. 'Numbers' have no ultimate validity, when posted. There's an explanation behind the numbers. That explanation can very well change one's initial interpretation. That's the risk in this endeavor. Recognize it.

[garfield]

Can you be more specific about what kind of malfeasance you think is possible? Walk us through an example of how DCI might be cooking the books, if that's what you suspect. What about those tee shirts, for instance? I know that our auditor is onsite for a week, testing all of our numbers in various ways, asking tough questions about how we process our income, making sure that all valuations are reasonable, etc. DCI presumably goes through a similar process.

I, too, would like to have an example of something in DCI's business that is better described on "THIS" 990 line item instead of "THAT" 990 line item but I didn't want to presume that Fred was speaking to any particular number or issue. My perception is that he's talking in general terms, not specifics (and I don't presume he intends to claim any malfeasance on the part of DCI or it's CPA).

In the broad sense, sure, it's possible that the organization could attempt to convince its CPA to categorize something here instead of there but to what purpose? What is in DCI's balance sheet or 990 filings that could benefit DCI by mischaracterizing it? Profitability? Unlikely, because each component of income is categorized, and I think the same conclusion can be made of most, if not all, DCI 990 line items. What benefit would it provide DCI or the activity to misdirect or mislead?

These 990 filings are not at all complicated for anyone who's spent time perusing C-corps filings with the regulators or the IRS. Really, the line items and their crude explanations in the supplemental filings are quite simple. It's not as though we're talking about an organization that can shift taxable income to somewhere else to avoid taxation, for example. It's pretty straight forward stuff.

Do I know exactly to whom the more than $1million of salaries is paid to and do I know that those people filed the time-sheets to back up those payments? No. But, do I need to know that in order to understand what DCI pays in salaries and employee costs? Nope.

Do I need to know specifically the accounting for the time that DCI paid to DSM or The Art Department? Nope. I only need to know the total.

Last year, someone complained that DCI's increase in INCOME came about from them characterizing the gifted photo collection as income. Huh? Since when is a bunch of photos an income item? Can DCI pay Tom Blair with photos of old drum corps? Um, I don't think so. No matter. This person was convinced that DCI was not in as good a shape as the 990's show because of a gifted photo collection was included in income. THAT kind of shenanigans is a clear red flag for any CPA who's pulling together data to file, and I just don't see a reputable CPA (which I presume DCI's is) putting his reputation on the line for the cheap, charitable work it does for a 501c3 like DCI.

Just my opinion, non-qualified as it is.

Edited August 20, 2014 by garfield

[garfield]

SLOW DOWN!

I am NOT implying malfeasance. What I am saying is, numbers are just numbers. 'Numbers' have no ultimate validity, when posted. There's an explanation behind the numbers. That explanation can very well change one's initial interpretation. That's the risk in this endeavor. Recognize it.

Wait, Fred. Does your contention make sense, really?

Isn't it more possible that the numbers do make sense on their own and, when they appear to not make sense, a footnote is written to explain them?

In my experience (such that it is) the numbers tell the truth. It's only when the numbers DON'T make sense that a background explanation is necessary.