October 31, 2011 1 Comment
CIF’s Central Coast Section may enjoy sitting in the “gray area” legally on many issues , but CCS does not get to set, police and enforce the rules related to their tax status and financial management.
CCS Watchdog has received information that enough may be amiss in the management and structure of CCS that the Section’s tax status could be in jeopardy; or at least in serious trouble with Uncle Sam. Individuals who have served on the Board of Mangers or various committees have admitted to having little time, knowledge or ability to properly address issues related to CCS finances. There is also a false assumption that Directors and Officers have no personal or legal exposure by serving various volunteer positions within CCS. That simply is not true.
Directors and Officers insurance does not protect individuals if they are negligent or wrongful and individuals serving CCS have a fiduciary obligation to the organization. Simply approving or accepting information offered by CCS staff may not be adequate to fulfill that obligation. If not done properly, CCS does have exposure not only related to tax status but also for additional financial risks.
CCS Watchdog has obtained enough information to indicate the “appearance” of the CCS structure and management is not as is legally required and significant issues would emerge if an audit were to take place.
If CCS losses their tax status, what will that mean for athletes and schools who rely on corporate donations? If CCS has to pay huge legal and accounting bills , how will member schools absorb those costs and not compromise their athletic programs? Corporations will not donate if the tax exemption is in jeopardy. If CCS staff cannot handle the pressure and requirements of a simply CalPER audit, how will they handle an IRS audit and investigation? Our forensic accountants believe there is reason to worry.
Even if no mismanagement has occurred, it is up to the volunteers of each board to ensure that there is no appearance of mismanagement and that simply has not been done. From eligibility to expenditures in the CCS office, the “appearance” indicates there may be a problem.
We are drafting a letter to the Board of Managers and the Executive Committee and will present the letter here on this site when it is complete.