One of the key principles of good governance is the structure of an audit committee and to have the INDEPENDENCE necessary without conflicts of interest or the appearance that an actual conflict is possible.
SCA AUDIT COMMITTEE’s mission is to assist the Board of Director’s oversight responsibilities with respect to:
1.Financial Reporting
2,External Audit Process
3.Internal Controls
4.Compliance with Laws and Regulations and the related risks thereto
The Audit Committee has 5 members:
1. SCA BOD Treasurer ( chair)
2. Another SCA BOD Director
3. Chair of the Finance Committee
4.Another Finance Committee member
5. At Large
A. The Audit Committee structure lacks the INDEPENDENCE both in appearance and practice to be self defeating and suspect. Some would correctly argue that the structure creates the FOX guarding the HEN HOUSE in appearance if not practice defeating the INDEPENDENCE universally accepted AUDIT STANDARDS. Board members Greg Swenson( chair) and David Meredith serving as committee members is just wrong because they are board members overseeing themselves.
B. And the 2021 external audit was performed by a California firm headed by Mr. Porter and is the same Mr. Porter through an offshoot company he owns in Nevada is doing the 2023 Reserve study. Not sure if his firm is doing the 2022 audit but if so there is an appearance of conflict of interest because there is a lack of Independence. Mr. Porter ought to do one or the other. Not both especially in the 2023 Audit as he would be reviewing his own work.
c. I claim that internal controls are weak. While the current CFO gave a good presentation she revealed and acknowledged the weak internal controls relating to the restaurant accountings and reporting. That’s pretty significant considering the amount of investment. And internal control oversight is not only limited to accounting.
d. The audit committee is charged to ensure compliance with the laws and regulations. That includes all rules regulations and governing documents of SCA. That requires internal controls. What oversight is the Audit Committee doing? What internal controls is it examining? There certainly wasn’t any INDEPENDENT oversight in the 2023 Main Assessment, the MAIN RESERVES, examining possible abuse of power claims by COO and the board and unequal enforcement claims. NO INDEPENDENCE.
And because of the above stated weaknesses one cannot and should not rely on the reporting. It lacks INDEPENDENCE and competence. The board of directors is responsible for the existing deficiencies and Mr. Quinn has laid out a very good case as to why.