Sierra Club related parties questionnaire

In being Sierra Club's assigned contact person for the financial statement auditors, I field inquiries from all over the place. Payroll, donations, vendor contracts, lawsuits. Anything that has an impact on financial statements -- which encompasses just about everything -- is fair game.

One request the auditors have had since the beginning of the audit was for information around Sierra Club's "related parties." This is a routine inquiry in financial statement audits, aimed at spotting potential conflicts of interest and such. As part of the inquiry, Sierra Club was asked to disclose to the auditors any entitites that Sierra Club is related to. Those related entities include the numerous political action committees it maintains thoughout the country.

I forwarded this partuclar inquiry onto the CFO, who has not provided an answer all summer long. Interestingly, last Friday, one of the auditors followed up with the CFO via email, coping me. The auditor asked the CFO, How are related parties identified? How do you ensure your related parties list is complete?

The CFO replied, Affiliated PACs go through an approval process prior to being formed and then are tracked, monitored and reported on by the Compliance Team at National.

The only problem is the CFO's statement just isn't true.

In fact, my colleagues in the Office of General Counsel have told me that state chapters have been known to go off on their own and establish PACs without any real internal process to ensure compliance. Sometimes the Office of General Counsel would only find out about the existence of a PAC because a staffperson in Massachusetts, for example, needs assistance in dealing with a campaign finance compliance issue or a regulatory inquiry.

I'll continue to keep my powder dry on this one. Like I told the CFO, I'm their staff accountant, not their advocate. My not my job to defend Sierra Club's unique accounting positions.