Board response to letter to the editor – April AR magazine

Dear Peter,
Chris Chapman raises a number of issues
concerning WIA governance and financial
practices. He also highlights potential conflicts
of interest in appointing Director Fred Swainston
as a paid contractor for a limited period, and the
rental of some warehouse space to another WIA
Director, Robert Broomhead.

Firstly, in addressing Chris’s issues, it must
be noted that Paul Simmonds, appointed as a
Director on 5 January 2016, was not part of
the events outlined and is not party to this reply.
Secondly, we must provide some background so
members can put things into context.
By mid-2015, the Directors were receiving
many adverse member comments about delays
and diffi culties in dealing with the National
Office, and the number was increasing. Directors
expressed the opinion that fundamental change
was necessary to improve customer service and
prepare for the possibility of increasing workloads
resulting from the Spectrum Review.

In May the Board commissioned a report
into office operations. Prepared by Silverdale
Training and Development, it identified some
key deficiencies. A Board meeting was then
convened at Melbourne’s Tullamarine Airport in
August 2015, and a summary of the fi ndings
was presented. The Board resolved to restructure
the WIA Office, replacing the existing Office
Manager position with a higher level Executive
Administrator. Subsequently, the existing
Office Manager position was made redundant.
Consequent on that, the Board decided to task
WIA Director Fred Swainston with improving the
offi ce processes, procedures and work-flow in
preparation for a new Executive Administrator
appointment, and to ensure continuity of service
to members.

The process of appointing Fred Swainston has
been raised as a conflict of interest in that he
was a WIA Director, and the Board did not seek
competitive quotations on the open market.
The Board viewed that, as the role was
highly specialised, required key knowledge,
and that seeking outside quotes would critically
delay action, engaging an unknown person
was potentially a higher risk. Fred had intimate
knowledge of the Office and its very specialist
work, was immediately available, and could work
for the WIA for a limited period of time at a very
reasonable rate, the cost of which was already
provisioned in the WIA accounts for the total cost
of the Office Manager.

As required of all Directors where a conflict
of interest may exist, Fred Swainston was
absent from the vote at Tullamarine when his
appointment was decided. No concerns or
objections were raised by other Board members
or the Treasurer. In September, Treasurer John
Longayroux resigned unexpectedly. Fred, assisted
by Robert Broomhead, then had to embark on
a “mission of discovery”, without benefit of any
hand-over period from the ex-Treasurer, having to
learn all the WIA’s various banking, membership
and fi nancial systems from scratch, requiring
many, many man-hours. Necessarily, there was a
short period when the accounts took a back seat
to the day-to-day business.

Regrettably, the task was found to be
more complex and took longer than expected.
Over about a five-month period, Fred was
successful in making the Office more effi cient
and responsive to members. He established
improved, written procedures for enquiries and
the general office workflow, introduced new
office security measures, and caught up with the
accounting entries. The Offi ce now works much
better from a customer service and business
systems perspective, we are now receiving much
improved feedback from members, and revenue
has increased.

The reality is that, in small volunteer
organisations like the WIA where Directors are
also doers, sometimes things need to get done
expeditiously. In retrospect, it may have been a
better ‘look’ to seek competitive quotations, but
this weighed against the greater risks identifi ed,
and it is doubtful the outcome would have been
as successful.

Fred’s work was completed at the end of
February, allowing for a two-week handover to
our new Executive Administrator, Bruce Deefholts.
Fred continues to provide support to the Office in
his capacity as a WIA Director.

Members were kept informed of the key
changes through WIA News.

Regarding the circumstances behind the
rental of factory space, Robert Broomhead
approached the Board in September 2015 with
an offer of $2200 per year to tenant a vehicle
space within the WIA factory space on a casual
basis to provide the WIA an additional income
source. The rent offered being similar to other
comparative rentals in the area. Robert stepped
back whilst the matter was discussed and
resolution passed by the Board which approved
the rental arrangement. However, in order to
avoid any possible perception of a conflict of
interest, Robert has agreed to end the rental and
relocate the vehicle, a refund will be provided for
the remaining rental period.

Chris Chapman became the new Treasurer on
5 January 2016. After a few weeks and four or
five visits to the office, Chris delivered a Report to
the Board’s February teleconference, his second
Board meeting, expressing concerns about
accounting processes and raising the various
governance issues.
Chris is unhappy that the Board only
addressed part of his report at that February
teleconference. The priority was to address the
most immediate issue – the ability of the WIA
to present accurate accounts to the Auditor at
the upcoming financial review, and those were
the items discussed from Chris’s report. Chris
also requested, and was given, authority to use
the previous Treasurer as his assistant. Chris
resigned on 23 February 2016.

Monthly Board teleconferences are time constrained
and each needs to address many
issues. The other items in Chris’ Report, not
being time-critical, were discussed at the Board
meeting on 1 March, after his resignation. The
Board views Chris’s statement that his advice
was ignored does not accurately describe what
occurred.
Other corporate governance issues Chris
raises include not removing his access to
the computer systems for four days after his
resignation, the absence of risk management
especially when key people resign, and security
of computer passwords. We did consider
removing Chris’ computer access, but, as we
are a volunteer organisation that still believes in
the concept of goodwill, we decided to maintain
Chris’ computer access for a few days in case
of unforeseen events during the handover to
the new Administrator. His access was revoked
probably around the time he wrote the letter.

Chris rightly points out that corporate
governance issues are important, and that
includes succession planning and risk
management. The Board agrees, and we
could have done better. However, volunteer
organisations constantly struggle with succession
planning and the loss of key personnel. The WIA
is no different.

The Board has resolved to instigate a full
review of WIA corporate governance and
procedures over the coming year, which would
naturally include risk assessment.

Determined to get to the bottom of the state
of the accounts following Chris’s resignation,
President Phil Wait called a meeting at the
National Offi ce with Fred Swainston, new
Executive Administrator Bruce Deefholts, our
accountant and the Auditor.

They spent several hours analysing the
accounting system and the fi nancial records,
determining that the WIA did not appear to
have any major accounting issues. Accounting
processes and record keeping has been vastly
improved and major problems with the WIA’s
upcoming annual fi nancial review are not
anticipated. On information available at the time
of writing, the WIA has no major financial issues.
We expect the Auditor’s review to go smoothly
and the financial result for 2015 will be available
after that.

The WIA’s professional accountant, Murray
Leadbetter, has agreed to act as an independent
paid Treasurer for as long as required, and
was appointed by the Board at the 1 March
teleconference. The Board considers this is the
best course of action to remove any suggestion
of bias or impropriety.

In summary, is Chris correct that the WIA
needs to improve its governance? Yes, no doubt.
The President has directed that all WIA Directors
will be required to attend a short course on
corporate governance. Remember, WIA Directors
are elected and come from diverse backgrounds.

Are there any serious issues concerning the
WIA’s finances and accounting practices? On all
the information currently available, no.

Was the travel expenditure for the August
Board meeting justified? Has the WIA achieved
the best operational outcome by the actions of
the Board? We believe, emphatically, yes.
The WIA Board of Directors

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