JACC Accountant Refuses to Return Financial Records

One of the things that the new JACC leadership has had to deal with is piecing together where they are financially.  While they have a handle now on how much money is in the bank, they don’t have any handle at all on what went on for the last six months of 2008 financially.  The JACC accountant (an independent contractor who has worked for JACC for 12 years) has refused to return JACC’s accounting records.

Due to a family emergency, the accountant has been working only part-time for the last half of 2008, and she chose to let JACC’s bookkeeping go after the fiscal year end (5/31/08) books were done and the taxes filed.  At the December 19th “opening of the books,” meeting, she admitted that there was seven months worth of accounting to be caught up and promised to finish it by the end of January.

When the leadership at JACC changed, some strange things happened.  The accountant was normally paid once a month, and it appears from bank records that the old leadership pretty much kept to that schedule, even though no bookkeeping work was being done.  All of those bills (at $84 an hour) must have been for meetings and phone calls with the executive director and/or board.  The old leadership last paid the accountant on January 9th.

The accountant not only enters transactions into JACC’s accounting software and prepares financial reports; she also prepares the monthly requests for reimbursement of JACC expenses from its CDBG and NRP funds.  None of these have been submitted for seven months…if they have even been prepared.

Just after the new leadership took over, the city let the accountant know that it recognized the new leadership.  About a week after the city notified the accountant, JACC received a bill for $900+ for the accountant’s services for December and half of January.  Four business days later, JACC received a rather threatening e-mail stating that the accountant must be paid immediately and the check must clear the bank before she would release any of the accounting information back to JACC along with financial reports and CDBG and NRP reimbursements requests.

There are a number of interesting things about this:

  1. State law and CPA rules prohibit an accountant from refusing to return an organization’s financial records whether or not the account is in dispute (this one isn’t–JACC has made it clear they are ready to pay for the services when they receive the records, reports, accounting database and draw requests).  There is a fine of up to $2,000 that can be assessed against the CPA who does this.  If the account is in dispute, the accountant can refuse to turn over the things that the accountant has prepared but not the organization’s records (receipts, for example).
  2. The delay in providing the accounting information has placed JACC in jeopardy because the accountant has the records that will determine whether or not JACC needs to issue 1099s (which had to be in the mail by 2/2/09) to people paid in excess of $600.  The IRS can penalize JACC at least $50 for every 1099 not issued on time.
  3. If the accountant is worried about being paid, it would seem sensible that she would want to get the draw requests in JACC’s hands so JACC can collect its CDBG and NRP funds and thus have money on hand to pay the accountant.  NOTE:  JACC is perfectly able to pay the accountant at this time even without the reimbursements, but if the accountant was worried, wouldn’t it make sense to make sure your client gets every dollar of income it can?
  4. The JACC treasurer has offered to meet the accountant and hand her a check and collect the papers but that, too, was refused.
  5. Since the accountant was paid on January 9th and is paid monthly, you would think she would have expected another check during the first week of February rather than the third week of January.  Why was she adding the bill for half of January instead of waiting, as she usually did, and billing for the full month.
  6. Finally, why was she charging JACC about $4,000 for seven months of services when none of the bookkeeping was being done?

It gets even  better.  In recent exchanges with the JACC treasurer, the accountant has now refused to turn over anything to JACC because she does not recognize the authority of the new leadership (even after the city tells her who it recognizes and who it is willing to pay?  It is generally city funds that pay for the accountant!).  And yet she expects the JACC leadership that she does not recognize to pay her bills and still says she won’t turn over anything because she doesn’t recognize them.  Does this make any sense to anyone?

The accountant has placed JACC in a very bad situation.  She brought in no extra help to get JACC’s bookkeeping done in a timely manner when a family emergency sidelined her.  She has possibly caused JACC to miss important tax deadlines.  She has denied JACC access to its income by refusing to provide the paperwork JACC has paid for and is willing to pay for.  She has stated that she will continue to accrue charges to JACC’s account (with no indication of what those charges are for) despite JACC not sending her any additional bookkeeping information to enter or report on.  She said she will hold JACC to her contract’s 90-day termination clause, but sent a copy of her current contract with no signatures.  The only contract JACC has in its files was signed 12 years ago and does not contain a termination clause like that.  And why would she try to hold an organization that she does not recognize to a contract that has no signatures?

I’ve done accounting work for the past 15 years, and while I’m not a CPA, I’ve never heard of anything this bizarre…and neither has the CPA I work for, and she’s been around a long time!


6 Responses

  1. This is really unfortunate. The sad thing is it looks predictable that another court action will stem from this.

    Do you have any numbers to compare of what JACC has spent on accounting services for each year in the past recent years? I am interested in seeing the comparison and any analysis you might offer.

    thanks for keeping the community informed.

  2. Is the accountant in question actually a CPA?

    If they are then an official complaint needs to be lodged with their Professional organization.

    Also, it is time to call the Better Business Bureau and probably the State Attorney Generals Office.

    Trying to foist off false Contracts is against the law.

    Trying to charge for something when services have not been rendered is against the law.

    Keeping someones property when you have no right to it is called theft. and it also is against the law.

    I can understand the JACC board not wanting to make waves, not wanting to toss a business person from the community under the bus, but, it is the fact that people in the community think that they can get away with things like this that leads to honest above board business not moving in.

    It also means that if the accountant in question is over billing and breaking rules with the community board, chances are good that they are doing the same thing to other members of the community.

    ( also, a family Emergency does not last for six months… if it did it would not be called an Emergency.)

    Then again, what do I know, I’m just a fly on the wall waiting to fall into the ointment.

    • The thought had crossed my mind that there needed to be some consequences for breaking the rules. Certainly the behavior appears to be unethical. I think the JACC board is treading lightly at this point because they have their hands full with a lawsuit and taking charge of an organization that was heading into chaos. They have done an admirable job so far, but there is more to do to stabilize the financial income and expenses. Just tonight, I received an e-mail from a vendor who has not been paid. Yet a number of us were informed early in January (before the elections) that this vendor had been paid. Why the former executive director felt it was okay to lie to board members and stiff a vendor is beyond me, especially since nearly half of the amount owed was provided by an outside agency. This vendor is a very small business that really helped us out by giving us a good price on our mailing for the election and worked very hard to do the job as inexpensively as possible. To this company, $987 is a big chunk of change!

      It is embarassing as a member of this neighborhood that our organization would do something as despicable as this. Worse, it gives North Minneapolis yet another black eye. It typifies the behavior many believe is common in this part of the city. This is what makes it hard to get decent contractors to come into North Minneapolis. They don’t expect people to pay for the services they get. And here we have the leadership of a large neighborhood doing just that. This is why it was necessary to change the composition of the JACC board.

  3. This is extremely bizarre and disappointing to say the least. Unfortunately, I smell another lawsuit/court action coming on.

    dottie, can you give us more info on the cost’s of accounting services over say the past 5 years, like rate per hour and total money paid to the accountant per year. I’d like to see how her accounting business has benefited from JACC.

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