United Cancer Council, Inc. - Page 53

                                       - 37 -                                         
                    organization.  It is our understanding that the                   
                    1986 budget totals $520,000 including grant                       
                    commitments of $100,000.  You expect to fund this                 
                    ambitious budget with the excess of revenues over                 
                    expenses from the direct-mail campaign.  What will                
                    the Council [petitioner] do if the excess of                      
                    revenues over expenses does not materialize at the                
                    level expected?                                                   
                    The General Fund must borrow heavily from the                     
                    Donor Development Fund [Escrow Account] to finance                
                    the budget, and if required to repay such                         
                    borrowings it is doubtful the General Fund would                  
                    have the ability to make the repayments.                          
               Over a 7- to 8-month period beginning in or about July 1986,           
          petitioner discussed with W&H its concerns regarding petitioner’s           
          full recourse liability to repay the excess draws taken and                 
          petitioner’s inability to receive unqualified opinions from the             
          certified public accounting firm with respect to petitioner’s               
          future annual financial statements.  On October 23, 1986, Watson            
          sent a letter to petitioner’s executive director stating W&H’s              
          position with respect to petitioner’s repayment of the excess               
          draw liability, stating in pertinent part, as follows:                      
                    This letter is to confirm our discussion relating                 
               to program draws from the UCC escrow account.                          
                                 *  *  *  *  *  *  *                                  
                    As we understand it, UCC’s concerns surround the                  
               procedure by which this [50 percent of] net income                     
               [from housefile mailings] is transferred to your                       
               regular operating account.                                             
                    Rather than receiving the exact amount as                         
               determined by the 50% formula, UCC, with W&Hs                          
               knowledge, is taking a fixed amount each month.  When                  
               the final net income figure becomes known some months                  
               later, UCCs draw from the escrow account can be greater                
               than it should be.                                                     




Page:  Previous  27  28  29  30  31  32  33  34  35  36  37  38  39  40  41  42  43  44  45  46  Next

Last modified: May 25, 2011