[BigJohn043]

I think the professor is correct is questioning how do you make a $240 million mistake and still have a job?

FWIW, I can't imagine it was a $240 million "mistake". Either the financial people weren't reporting the truth to "management" (i.e. lying) or they were telling the sad truth and management elected to hold off reporting it, hoping it would somehow "go away". There are financial forecasts on at least a monthly basis, if not more. When things stop going according to projections, it needs to be dealt with. They knew. Who knew what when is an issue, but it wasn't a surprise. RR is, to this point, Teflon man. This one will be "interesting".

Bookkeeping ain’t that hard. I smell fraud.

Bookkeeping is pretty hard.  Big businesses have big well paid organizations to make sure it is done well.

10% misses happen all of the time.  This doesn't indicate fraud at all.

The miss here seems to be in the cash forecast.  It is much easier to miss a cash forecast than a budget.  Lots of things make cash move up and down that will work themselves out in future months.  Even experienced business people often don't focus enough on cash until the miss becomes really big.

Blaming the auditors for a miss in the cash forecast is bizarre.  Auditors look at the historical financial statements.  They don't look at cash flow forecasts at all.  They confirm that the cash on the balance sheet was actually true on the date of the balance sheet.  But there is no indication here that the financial statements were wrong.  This doesn't seem to be an auditor issue at all.

Of course the CFO is responsible for cash forecasting and rightly was fired.  Not sure who else in the department should be fired but this wasn't a one person issue.

Finally, part of the problem here is the leaders of these universities.  The President of UofA is a doctor.  He has lots of training in being a doctor.  He has no MBA or any training in managing an organization of any size.  I am not sure he has ever taken even a basic introduction to accounting course much less has the type of experience to manage a multi-billion dollar budget.  A person with this type of background is going to be completely reliant on the CFO and will have almost no ability to detect an issue before it becomes a real problem.

As we look for our next President we should think carefully about what background we are looking for....

[BigJohn043]

I think the professor is correct is questioning how do you make a $240 million mistake and still have a job?

FWIW, I can't imagine it was a $240 million "mistake". Either the financial people weren't reporting the truth to "management" (i.e. lying) or they were telling the sad truth and management elected to hold off reporting it, hoping it would somehow "go away". There are financial forecasts on at least a monthly basis, if not more. When things stop going according to projections, it needs to be dealt with. They knew. Who knew what when is an issue, but it wasn't a surprise. RR is, to this point, Teflon man. This one will be "interesting".

Bookkeeping ain’t that hard. I smell fraud.

Bookkeeping is pretty hard.  Big businesses have big well paid organizations to make sure it is done well.

10% misses happen all of the time.  This doesn't indicate fraud at all.

The miss here seems to be in the cash forecast.  It is much easier to miss a cash forecast than a budget.  Lots of things make cash move up and down that will work themselves out in future months.  Even experienced business people often don't focus enough on cash until the miss becomes really big.

Blaming the auditors for a miss in the cash forecast is bizarre.  Auditors look at the historical financial statements.  They don't look at cash flow forecasts at all.  They confirm that the cash on the balance sheet was actually true on the date of the balance sheet.  But there is no indication here that the financial statements were wrong.  This doesn't seem to be an auditor issue at all.

Of course the CFO is responsible for cash forecasting and rightly was fired.  Not sure who else in the department should be fired but this wasn't a one person issue.

Finally, part of the problem here is the leaders of these universities.  The President of UofA is a doctor.  He has lots of training in being a doctor.  He has no MBA or any training in managing an organization of any size.  I am not sure he has ever taken even a basic introduction to accounting course much less has the type of experience to manage a multi-billion dollar budget.  A person with this type of background is going to be completely reliant on the CFO and will have almost no ability to detect an issue before it becomes a real problem.

As we look for our next President we should think carefully about what background we are looking for....