Animal shelter deserves our support
Thom Cole’s recent series on “insider deals” at the Santa Fe Animal Shelter & Human Society (“ ‘Due diligence’, then turmoil,” Sept. 23, and “Three insider deals draw scrutiny,” Sept. 24) is provocative and disconcerting.
As a retired accounting educator, seasoned corporate and nonprofit board member, and co-editor of the American Institute of Certified Public Accountants’ definitive Not-For-Profit Entities: Audit and Accounting Guide, I applaud Cole’s efforts to shed light on these transactions and on the shelter board’s responsibility for effective oversight and governance. However, a more informed and neutral analysis of the facts reveals to me that nothing is amiss.
For example, let’s take a closer look at one of the “insider deals” mentioned in Cole’s articles: providing rent-free housing to the shelter’s former executive director. Here’s what seems to have transpired. First, the shelter board authorized rent-free housing as part of the executive director’s compensation package. As someone who recently moved to Santa Fe, I can attest that Santa Fe’s housing market is economically challenging. The board apparently felt this pay package component was essential to successfully recruiting qualified and experienced out-of-state executive talent.
The shelter’s accountant then determined the arm’s-length fair value of the rental arrangement based on prevailing Santa Fe rental rates for comparable residential property. This fair-value amount was recorded as compensation expense, reviewed by the outside auditor and included as part of the executive director’s taxable compensation reported to the Internal Revenue Service. The shelter’s audited annual financial statements and Form 990 filings (both available on the Santa Fe Humane Society & Animal Shelter website) fully disclose the rent-free arrangement to any interested reader.
The actions taken by the board, accountant and outside auditor comply with governance best practices and with applicable accounting and auditing standards. So-called “insider deals” of this sort are routinely subjected to thorough review by accountants and auditors to ensure the organization’s books reflect arm’s-length fair values and that the transactions are properly disclosed.
How did the shelter board respond when then-newly appointed board member Glenn Levant first questioned the economics and ethics of this “insider deal?” Exactly as it should. A committee of independent board members was appointed to investigate the origin of the transaction, its accounting treatment and disclosure adequacy. The committee’s conclusion: Nothing was then or is now amiss.
Santa Fe animal lovers should be quite proud of the shelter’s past accomplishments and future direction under the leadership of its executive team and board. The organization’s contribution to animal health and welfare is invaluable. It is indeed unfortunate that the shelter’s otherwise sterling reputation, as reflected in Executive Director Jennifer Steketee’s New Mexican commentary (“Santa Fe animal shelter is ‘crown jewel’ in New Mexico,” Sept. 30), might be tainted by Cole’s pseudo exposé.
Bruce Johnson lives in Santa Fe and is an emeritus professor of accounting at the University of Iowa and former member of the Accounting Standards Executive Committee of the AICPA.