The National Republican Congressional Committee (NRCC) embezzlement scandal winds down. The NRCC agreed to a $10,000 settlement with the Federal Election Committee for filing false reports. Embezzler Chris Ward coped a plea deal, with sentencing scheduled for December.
CPA Magazine cited superhero Rep. Mike Conaway's role in outing Ward. Conaway became chair of the NRCC's audit committee in January 2007. Mike smelled something fishy and confronted Ward. The embezzler failed to appear at their showdown in late January 2008. Ward sent an e-mail, admitting audits were faked.
The Superhero analogy seems strained, at best. Conaway stated "no past auditors had been on the review board", in defense for the NRCC's letting the scheme run for five years. Recognizing this, what might a CPA do in January 2007 as the new audit chair? Might he look at internal controls?
The essence of Ward’s apparent scheme was that he used his authority to order wire transfers to direct funds through various committees and ultimately to his own accounts.
The investigative report recommended:
The NRCC should adopt a written compliance program, and should consider amending its bylaws, to formalize its accounting practices and procedures, including oversight of accounting [ongoing]. Those practices should include a requirement of two signatures for all wire transfers and a requirement that the NRCC’s Oversight Committee meet with the NRCC’s outside auditors annually [adopted].The NRCC allowed Ward to move money with only his signature, a huge accounting no-no for any nonprofit, but a fatal move for a political fundraiser moving millions around. CPA Mike Conaway didn't discover this lack of basic internal controls.
NRCC Executive Committee members should enter the management hall of shame. They failed to meet basic governance standards. Any nonprofit board member (worth their salt) knows partners from the accounting firm present the audit/management letter. If it's handout, someone has their hand in.
Mike Conaway should give that shirt away and responsible NRCC leaders should spend a day in a stockade on the Capital steps. How far would Chris Ward have to travel to watch?
CPA Mike did not defend his profession, when under attack by West Texas Congressman Randy Neugebauer. Congress bullied FASB's chief accountant into changing fair value accounting. If Mike Conaway is a hero, the leadership bar is abysmally low. Duck like Mike.
Update 2-5-13: Conaway is now chair of the House Ethics Committee. As one commenter noted, "Irony at it's best."