}

Friday, April 28, 2017

GRAND TRAVERSE ACADEMY BOARD MEETING: Fortunate Son-In-Law Brian Lynch Makes Pitch For Mark Noss

“Your review of the historical context, however, misses the point. FSM bailed the Academy out when it was in trouble to the Academy's benefit, not FSM's. Dr. Noss, through his entity FSM, look over a difficult situation when the prior service provider failed. We are open to discussing the viability of any reduction of the fee paid to FSM based on the contractual options.” 



Last evening's GTA board meeting reportedly took on the fervor of an old-time tent revival when Brian Lynch, head of Mitten Educational Management, went front-and-center with a full-throated defense of his father-in-law, Mark Noss.

Reading from page 13 of the GTA's 2016 financial audit (and not 1 Corinthians 6:10) Lynch, whose familial association to Noss went unannounced, proceeded to rail against those who might take away his matrimonial birthright to some day inherit the GTA management crown while sermonizing about Noss' purported $211,000 reduction of FSM's 2016 management fee.

However, the true story of FSM's reduction is much cloudier, and far less altruistic.

According to a September 14, 2016 email sent by Rebecca Clawson, a CPA and Finance Specialist in the Charter School Office at Lake Superior State University, to GTA board members Lesley Werth, Samer Bourdkani and Charter Office head Chris Oshelski, Noss did not actually refund $209,789.34 to the Grand Traverse Academy, he merely booked it as a Prepaid Expense for the next fiscal year.

By shifting the contribution into the next year, FYE June 30, 2017, Noss was able to record his “reduction” in the FYE June 30, 2016, craftily engineering a financial balance sheet maneuver that ultimately paid off with positive PR—while maintaining a tight grip on his $852,341 management fee payment for 2016.

In her email (shown below), Clawson advises GTA board president Werth about the proper method of accounting for the $209,789.34 fee reduction.

Referencing a conversation she'd had with FSM accountant, Angela Bush, Clawson detailed appropriate guidelines for handling the transaction: 

“Ms. Bush explained that the Prepaid Management Fee was recorded because GTA over expended their budget and Mr. Noss decided to “forgive” the Management Fee for the last quarter of FY 2016 (Apr-June 2016). 

I questioned Angela about the proper accounting treatment of the Prepaid and if it was GAAP; she stated that is was upon GTA’s auditor’s recommendation that the item be recorded as a Prepaid Asset. I asked if she would confirm with the auditor (Mr. Sweeney) about the treatment of this item regarding the Annual Audit; she included me in an email to Mr. Sweeney, which I have not yet seen a response confirming this item. 

In the event that the Prepaid Management Fee is displayed in GTA’s Annual Audit Report, then the Academy Board needs to be aware that there should be no cash (or check) paid to FSM during 1st Quarter of FY 2017 (Jul-Sep 2016) for FSM’s Management Fee. There should be no payment because, in effect the Academy has already paid for the service in the last quarter of FY 2016 (Apr-Jun 2016) even though Mr. Noss forgave the fee. In the Academy’s accounting records for the first quarter of FY 2017 the Prepaid Management Fee should be reduced and applied towards the Management Fee expense. However, there should not be a cash (or check) transaction in relation to FSM’s Management Fee

It is incumbent upon the CSO to inform the Board that the forgiveness of fees should be confirmed in writing, ideally, prior to the execution of the transaction, in order to protect the Academy from recourse (if any). I did not see that the Management Contract between the Academy and FSM addressed forgiveness of fees.” 

So was there a cash payment made to FSM during the 1st quarter of 2016/2017? 

You'll have to address that question to the GTA board.










2 comments:

  1. Seems like Noss is following Ingersoll's financial example with the overpayment/whatever-you-call-it-payment/prepaid expense: IVL Math (I Value Loot Math).

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    Replies
    1. Hey, it worked for Ingersoll! He got away with millions in taxpayer dollars.

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