Notes from GHI Board/Audit Committee Work Session

Tuesday’s June 12, 2018 work session between the GHI Board and Audit Committee saw the boardroom filled beyond capacity with members interested in the conversation.

What follows are my personal and unofficial highlights of the meeting. I refer to all members who spoke as “GHI Member” because I could not capture every name. My post may contain unintentional errors so please post any corrections, clarifications or amplifications in the comments section for the benefit of all readers.

The purpose of the meeting was how the Board, Audit Committee, and General Manager can work together to forward GHI’s best interests on behalf of our members and cooperative. The meeting focused on these topics:

Topic A: The Audit Committee’s access to “all books and records of the Corporation” per GHI bylaws and the Maryland Cooperative Housing Corporation Act.

Topic B: How the Board and General Manager will accommodate the Audit Committee’s requests for access to GHI books, records, and activities (observing inventory count, etc.)

Topic C: Does the Audit Committee have a role in Member Complaints Process

Introduction

Board President Steve Skolnik opening remarks were this is not a Board meeting. No decisions will be made. Just a time for learning and hearing. All parties here have a common mission and are trying to work together and openly discuss how to do it amicably and effectively. (download agenda here: https://www.ghi.coop/content/board-directorsaudit-committee-work-session)

Audit Committee (AC) Chair Molly Lester: Distributed materials to supplement agenda attachments. She provided 1) Sampling of Issues Examined by Past GHI Audit Committees; 2) Applicable Provisions of GHI Bylaws to discussion and (3) GHI Green Member Handbook’s approved Board Policy Governing Access to the Books and Records.

The roles of the Board, the Audit Committee and General Manager were discussed.

Role of Board

Director Stefan Brodd stated it is important to realize that GHI bylaws let the Board assign the General Manager’s duties and only the GM has the power to direct GHI employees. The Board and GHI members don’t tell the staff what to do — the GM has that duty.

Board President: The Audit Committee can talk to the GM. When the Audit Committee is requesting staff time, there needs to be cooperation among all parties.

Role of General Manager

General Manager (GM) Eldon Ralph stated he reports to the Board and is accountable to the Board. The Audit Committee can make requests of him but he has to take the Board’s direction. He needs to have just one boss or else things “can get crosswise”. Important that GHI staff are not getting direction from others.

Role of Audit Committee

The Board President, Steve Skolnik referred to the bylaws’ description of the Audit Committee under Article VII, Committees, Section 2 – Audit Committee. See: https://www.ghi.coop/content/vii-committees
He said that the Audit Committee “stands aside the Board” to ensure that all GHI business is conducted in an aboveboard manner and efficiently.

AC Chair Lester supplemented the information by reading from the bylaws section Article VIII, Financial Regulations, Section 12 – Accounting System, Financial Records, and Internal Controls. See: https://www.ghi.coop/content/viii-financial-regulations

Access to the Books and Records

Board President stated the Maryland Cooperative Housing Corporation Act imposes some limitations on what members can see and state law supersedes GHI bylaws.

Maryland law is silent on whether the Board can define Audit Committee members as regular members subject to the same limits.

Directors Skolnik/Jones: GHI may need a legal opinion to determine whether the Board can define the Audit Committee members as “regular” co-op members with limited access to records under the Maryland Cooperative Housing Corporation Act.

GHI Member: Any attempt to bypass the Audit Committee or limit its ability to access all records is dangerous. Mistakes, graft, and corruption have happened in GHI.

GHI Member: GHI bylaws define what the Audit Committee has access to and the member suggests that the Board not make decisions about access that would contradict the bylaws.

How Requests will be Accommodated

GHI Member: Providing the Audit Committee with access to information is not an issue if there is a clear procedure for everyone (Board, Audit Committee, GM, and staff) to follow. The Board should not get the Audit Committee’s requests from the GM.

Board President: Per the attorney GHI consulted, the Board directs the GM even on the matter of providing documents to the Audit Committee. The Board wants to give the Audit Committee the room it needs to do its job.

GHI Member: The Board directs the GM and the Audit Committee requesting information from the GM is not directing the GM.

AC Chair Lester: The Board should ensure that staff roles include time to handle Audit Committee requests.

There was discussion on how specific information should be shared with the Audit Committee to ensure the security and confidentiality of the information. The need for the AC to have an ethics policy to protect confidential information was identified. The AC Chair stated the committee will establish an ethics agreement. There was general consensus that the AC should have access to the bank statements, bank reconciliation reports, investment statements, job descriptions and certain legal opinions.

With respect to the Audit Committee’s request to attend the staff’s quarterly inventory process the GM stated this is an operational matter and the attorney attending the June 11th board orientation agreed. Reports will be provided to the Audit Committee about the inventory process.

Role of Audit Committee in Member Complaints Process

The general feeling expressed by Board members and GHI members was there was no role for the Audit Committee in this process, except as stated below.

Director Brodd: The bylaws do not specify a role for the Audit Committee in the member complaint process. Does not want to give the impression to staff that there are two lines of investigation.

Director Hess: If a member goes the staff and the Board with a complaint that they feel is not being addressed, it would be appropriate for the Audit Committee to look at how the complaint was handled but the committee should not get involved with the complaint itself.

AC Chair Lester/Board President: The Audit Committee can still sit in on executive session meetings in which member complaints are being discussed.

Board President: All agree that the Audit Committee has a role in reporting on patterns of behavior with respect to how member complaints are handled.

Next Steps

The AC’s access to the books and records is a function of the bylaws. Members may petition changes to the bylaws for consideration at an Annual Membership meeting by a member petition signed by ten members. See https://www.ghi.coop/content/iv-membership-meetings, item #3 for more information.

GHI members can help translate Tuesday’s conversation regarding how that access will take place into policy as the Board emphasized that no decisions or actions would be taken during the meeting.

Post your ideas here or attend a Board meeting and share your ideas during the member comment section. See the GHI calendar for the next meeting here https://www.ghi.coop/about-ghi/calendar

 

Author: Mo Hamilton

Mo Hamilton joined GHI in 2013 after living in the Washington area for 18 years. She lives in large yard that was sold with a block honeymoon cottage attached. Contact Mo at mhfalls@outlook.com.

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