Testimony Concerning Mismanagement Of Funds At Cai Case Study Example

It is my pleasure to present this testimony hoping that it may prove useful. I wish to express my sincere gratitude to the organizers for providing me with this platform to share the information I have on the pressing matter. A non-profit organization is a sensitive type of organization and running it is no easy job. To lead an organization of this kind to success is not something that can be swept under the carpet and ignored. The thing is that a non-profit organization is out to help rather than maximize profits. Therefore, it is dependent on the public for it to run effectively. This brings in the factor of effective fiscal management of the company. A Sound fiscal policy is the key for a smooth running company because of the many effects it has on the company. Firstly, it will boost the organization’s image promoting its ability to get funds from the public and grants from the government. It enables the company to plan adequately to ensure that the company does not lack funds. This is a testimony of how Mortenson mismanaged the funds of the company.

Discussion

Steps Taken Prior To the Success of the Books
Before the success of the book, the company had in place steps to ensure that fiscal management in the company was sound. First was the debt management in the company to ensure the company had fewer balances in terms of debts. The death of the benefactor of the company came at a time when his contribution was dwindling down, and the effects of this were that the company was on its way to losing the ability to manage its operations. The company could have easily sought loans from other companies, but that would have increased the level of debt the company was facing at the time. Therefore, as a means to manage debt, Greg Mortenson chose to write a book to promote the achievement of the company’s mission and objective through fundraising. The book was intended to spread awareness to the public concerning the targets the company meant to achieve in the Middle East. It provided the company with a new source of funding: fundraising from the public (Vaughan and Arsneault, 2014, pp. 260).
The director also utilized a policy that involved fiscal risks. The company, facing a crisis where it was likely to lack funds for operations in that financial year, could have lost all its resources trying to find a donor like their initial benefactor. Therefore, to avoid this, the executive director, Greg Mortenson, chose to risk the funds of the company after notifying the board of directors. He, therefore, decided to write a book about the company and its mission and objectives concerning building the schools in India. Writing the books was meant to sensitize the public to donate money to the organization through fundraising to enable it successfully achieve its targets. The company was able to acquire funds through this act (Vaughan and Arsneault, 2014, pp. 250).

Were The Steps Successful?

This move was successful because it enabled the company obtain a new source of funds other than relying on donations. Since the benefactor who provided the funds of the company passed on, getting another benefactor for the company who believed in the work the company was doing and its mission the same way the initial benefactor did was close to impossible. Therefore, other than wasting funds trying to advertise on major sound waves the search for a patron, the executive director chose to advise his board of directors to invest these funds in seeking audience from the public and request fundraising. This shows just how effective this was as a tool for exercising a proper level of fiscal management in the company. Greg Mortenson opened a new chapter for the company as we can see the company run successfully for a long time without problems.

Steps Taken After the Success of the Book to Enhance Fiscal Control

A step that was taken to ensure that fiscal policies were in place to govern how the company utilized its funds includes auditing. The auditing was meant to determine how the company used the money it acquired so that should the company lack resources, details are known as to why. It was also intended to increase the level of accountability in the company from the top most position in the company to the lowest. In addition, it also sought to strengthen the financial integrity of the company. These factors, accountability, and financial integrity, are crucial to the success of a non-profit organization because it enhances the image of the company projected to the public. A bad image will make the public distrust the company and will not contribute to the fundraising because they feel the money is not used in the manner promised to them (Vaughan and Arsneault, 2014, pp. 261).

Were The Steps Successful?

This action was unsuccessful because it was not given the seriousness it deserved. The CFO of the company resigned in 2004 because he felt that the company is not taking her serious despite her devotion to the mission of the company. Being the chief financial officer of the organization, she was witness to the misuse of the funds as the CEO used the funds to his personal gain rather than furthering the goal of the company. The personal expenses of Greg Mortenson were charged to the company instead of his account, and no documentation was provided to show even that a transaction of the sort took place. Instead, Greg used the company’s credit card to further his personal goals, and no one could do anything about it. The accountability in the company at the time was wanting because the fiscal measures put forth were not utilized to their maximum potential.

What the Organization Could Have Done To Compel Reimbursement from Greg Mortenson

A policy that would have denied direct access of the executive director to the company’s account could have been put in place in order to avoid such an incident. Greg Mortenson had the company’s credit card in his wallet which meant that these transactions were not sanctioned by the company. This meant that the director was above the law in the organization, and his expenditures were no one’s but his own. Therefore, the fact that he had the entire company’s account at his disposal, he preferred to empty that account rather than empty his own. To prevent this, all the things that required money should have gone through the board of directors for approval so that the board can address the accounts department to give him the money and the funds recorded. In this way, the company cannot lack because the money that would have been used would have been accounted for and plans to bring it back would have been set in motion. This would also increase the level of accountability within the company; from the top-most employees to the junior-most.
Fiscal controls put in place should have been given priority in the company because it is these measures that will go out of their way to ensure that the future of the company is secure. Proper utilization of funds will enable the company account for each and every penny in their possession and ensure that all of it is spent well to ensure the company meets its objectives. The fact that the CFO resigned is not a good show. In fact, it is more heartbreaking that she resigned because she was not being taken seriously. She was hired there as a professional yet while attending to her duties of enforcing the fiscal policy, she is blown off. Such is a showing sign of poor practice in the company that resulted in the room that Greg had to mismanage the funds of the company.

Why Did The Company Not Go To Great Length To Enforce Compliance?

The company did not go to a great length to enforce the compliance because Greg Mortenson was the icon of the company. What propelled the company to have a long time of success despite the death of their sole benefactor were his ideas and skill. His idea of writing books about the organization earned the company enough funds to ensure that its operations were smooth. Another factor is that despite all the mismanagement of funds he did, he was able to meet most of the targets of the mission of the company. The schools the company sought to build were built exactly as planned. Therefore, the public gave him respect concerning the same as the success was confirmed by a journalist from Pakistani, which solidified his popularity with the public. Therefore, enforcing compliance proved more difficult for the organization owing to the belief that he was an asset to the organization.

Recommendation to Prevent Fraud

In order to avoid fraud cases in future, the company can implement a number of measures. More importantly, the company should ensure timely consolidation of transactions carried out such as purchases. In addition, the company should always assure that subscription bills are scrutinized to assure that charges implemented on such subscriptions belong to the company.

Reference

Vaughan, S., & Arsneault, M. (2014). Managing nonprofit organizations in a policy world. Thousand Oaks, Calif.: CQ Press.
Appendix
1. Introduction- greeting and gratitude to the organizers for giving you the platform.
2. Testimonies concerning the steps taken by the organization before the books were a success. They are debt management and fiscal risks. Debt management reduced the company’s debts by not going out to search for a new patron whereas fiscal risks ensured that the company got a new source of funds (fundraising).
3. The success of the steps: the steps were successful because the books become a success and the company gets funds through fundraising.
4. Steps taken after the success of the book to enhance fiscal control: auditing is the step. Its function was to increase accountability and financial integrity of the company.
5. Were these steps successful? : No, it was not. Because we see the CFO resign voluntarily. She claims her fiscal control measures are not taken seriously in the company.
6. What the organization could have done to enhance compliance by Greg Mortenson:
• Deny him direct access to the company credit card. Ensure that the funds he needs are approved by the board.
• Ensuring that the fiscal policies set are given priority in the organization.
7. Why the company failed to enforce compliance on Greg Mortenson: he was the icon of the company and his ideas is what propelled the company to see a long time of success. In addition, the missions of the company were achieved (building the schools in Asia). A journalist was sent to confirm and he proved that the schools are in place.