Queen’s Law Community, Part II – Club Financing
Clubs need money to host events. And event organizers need certainty that their funding requests will be honoured. But at the same time, some measure of accountability must be maintained over how clubs funding is spent.
Over the past year clubs have faced the additional hurdles of convoluted financial requirements. The LSS, in a bid for more fiscal transparency, decided to audit all clubs and student groups – including Juris Diction.
But the audit’s lack of notice and the stringent – and sometimes unreasonable requirements – have left some frustrated. The question this asks is: where is the right balance of accountability and certainty?
Many club members have expressed concern about the requirement to provide bank statements encompassing the last twelve months. Many of these members took over in September 2016, and found that records before that date were unavailable to them as the previous executives had graduated, making it difficult to find receipts and other transactional records.
In one particularly jarring case, the LSS requested that a club executive present their personal bank statement, so that it may be checked for any impropriety. They was taken aback by not only the invasive nature of the demand, but also the seemingly arbitrary manner in which it was made.
“I support transparency, and agree with the implementation of club audits”, they said. “I want people to know that they can trust this club, which is why I ultimately agreed to provide my personal bank statements. However, I’m still not aware of any authority that the LSS has to audit personal bank accounts, in particular for non-sanctioned private events. I wasn’t allowed to advertise on the listserv, I didn’t have any insurance coverage [from Queen’s], and I did not have any financial safety net for costs incurred through these private events, so I do not understand how the demand for personal bank information can be justified. This is one aspect of the auditing process that could be improved and clarified in the future.”
The club president ultimately negotiated a compromise and submitted a redacted version of their personal bank statement for review by the VP Finance and the Clubs Governance Committee (CGC), which was later approved.
LSS Vice President Finance Max Xiao notes that this was the only club that was asked to provide personal bank statements. This was because the club was running unsanctioned events with alcohol, collecting money from Tilt, and even though they claimed to be running events independent of the LSS, the club name was still being used on Facebook posts.
But this example should not be taken to mean that LSS’s auditing procedures are stringent — they are not. Speaking to informed sources, Juris Diction has learned that accountability in clubs funding has been lacking. There has been a particular problem with the transparency of Tilt sales, an increasingly common means of selling tickets for Queen’s Law events. This is exacerbated by the fact that funds raised from Tilt are usually directly deposited into the personal bank account of a club member, who then returns it to the club. Funds raised through Smokers are also completely unregulated, raising accountability concerns.
As Xiao says: “Money which clubs earn from Smokers traditionally has not been tracked by the LSS Council. This was another motivation for conducting these audits. It is the hope of the CGC that club auditing will encourage future clubs to be more diligent in keeping their accounts.”
Tigra Bailey, a 3L student with a background in accounting, notes that some requests made by the VP Finance were not explicitly supported by the Club Auditing Procedures (the “Procedures”) outlined in Article IX of the LSS Club Regulations Document (the “Regulations”). In particular, the refusal to accept audit documents (an Excel spreadsheet accompanied by accounts and receipts) as they were not a recognized form of bookkeeping and requesting personal banking information were both actions that were not in the listed Procedures.
Bailey noted that the word “personal” is absent from the Procedures. “It is unclear whether “personal” banking information can be captured under the “current bank account” or “outside sources” terms. I would argue that an Executive could comply with the Procedures without producing personal banking information. Furthermore, the Procedures refer simply to “accounts”, “receipts” and “lists” when addressing information that must be provided. There is no prescribed bookkeeping method.”
“If an executive refuses an audit request, the refusal will be documented in the audit report. Given the novelty of audits, it is unclear whether an audit refusal will lead to repercussions or not. Suppose an audit request is refused on a principled basis, will the particulars be recorded in the audit report or will the club simply be listed as non-compliant? This also begs the question, is the Clubs Governance Committee limited to requesting the documents contemplated in the Procedures or is the audit scope wider?”
Clubs may be asked to produce documents that are not contemplated in the current Procedures. To improve accountability, clubs must be aware of what documents they are expected to keep and to subsequently produce at audit. Audit challenges will ensue if clubs are unaware that the CGC requires certain records, especially if the records are difficult to obtain after-the-fact.
Bailey noted that for example, the Procedures should be amended to reflect that certain information from Tilt (or other online payment services) will need to kept. “It seems to me that, in most cases, the flow of club monies can no longer be verified with the current documents contemplated by the Regulations namely: club bank account statements, receipts, and a list of assets purchased by the club.”
“Further, if the audit documents produced by clubs can be refused on the basis that they are not a recognized form of bookkeeping I would argue that some sort of guideline should be produced. Having a visual aid or example of accounts available to clubs would reduce the risk of document refusals.”
With respect to the request for personal documents, LSS VP Finance Max Xiao said that it was an unique case. The request was made because the ratified club did not have a club account and used Tilt for ticket sales for an unsanctioned event. Typically, monies raised through Tilt are confirmed for audit purposes by examining Tilt information and corresponding deposits into the club account.
In spite of her concerns, Bailey does welcome the significant revamp of the Regulations that was proposed by the Clubs Governance Committee and later ratified at the Bi-Annual General Meeting on March 29, 2017. “I am glad to see that a proposal was submitted by the CGC for the BAGM to amend the Regulations. In my opinion, the current regulations are out of touch with the realities of club operations and require revision. This is a step towards improved audit procedures and club accountability.”
Xiao notes, “The club audits were motivated by two central considerations. First, the CGC wanted to encourage clubs to keep better books from year to year. Second, the CGC wanted to ensure that all money solicited from students by clubs was being spent appropriately.” Among the approved changes made at the BAGM was that future audit reports would be available on the Queen’s Law Portal for students to access.
As the LSS starts to enforce better financing procedures, fairness and certainty should be a key concern. There have been definite missteps, but the CGC’s new regulations promise future improvements. Let us hope that these changes will contribute to a more accountable and transparent environment at Queen’s Law.
Jason Liang (3L) is Managing Editor of Juris Diction. Adnan Subzwari (3L) is Co-Editor-in-Chief of Juris Diction.