Are the USCF's accountants qualified?

Stan Booz, who is apparently no friend of mine but who is a real CPA and was recently appointed to the Life Membership Assets Committee, had raised the issue of the technical qualifications of the CPA firm retained by the USCF.

Stan Booz seems finally to agree with something I have been saying for the past five years, which is that the USCF uses Voodoo accounting.

On Thu, 12 Oct 2000 02:42:03 GMT, "StanB" wrote:

"I have privately expressed my opinion on the technical qualifications of the Audit firm to Pechac and others."

At the USCF delegates meeting in Concord, California in 1995, one of the most hotly contested issues concerned the appointment of the accountants. Al Lawrence spoke strongly in favor of removing the same small CPA firm the USCF had been using for several years. Tom Dorsch, who was at that time a strong opponent of Al Lawrence but is now his close friend, said that this small CPA firm was on the verge of revealing Lawrence's boondoggles. Lawrence demanded that a recognized firm, Ernst and Young, be appointed.

This issue was hotly contested and many close votes were taken. On every vote, the Dorsch group won, except for the last vote when a few voters changed their minds and voted with the Lawrence group.

As a result, the delegates voted to retain Ernst and Young as the USCF's accountants.

However, Ernst and Young only served one year. Ever since, some small no-name accounting firm has been the CPA for the USCF.

I would like to know why Ernst and Young only served oner year. I have a theory.

As Stan Booz correctly points out, the so-called LMA Fund is not a fund at all. It is not a segregated asset. It is so named to give the Life Members a false sense of security.

I have raised this issue again and again in my postings. I also tried to raise it at the USCF Financial Workshop in Reno in 1999. Every time I raised this issue, Dorsch (who by then had switched sides) would say "That's a rhetorical question" or "It's an accounting thing." Dorsch, who was the chair of the meeting, refused to answer my questions. When other members of the audience objected, Dorsch said: "I am the chair of this meeting and I will conduct it as I see fit."

Dorsch called on Doyle, Lawrence and Peterson again and again to make long speeches. Each of them spoke several times at length, while most others present never had the opportunity to speak at all.

In April, 2000, I raised this issue again. Here is one of my posts:

Re: Are Life Members "subsidized"?
Date: 04/11/2000
Author: Sam Sloan

On Mon, 10 Apr 2000 15:41:01 -0700, Cavemanchess wrote:

>No. Carrying the liability on the books is mandated by GAAP.
>Having a reserve to match that liability is prudent, not mandated.

Again I ask, on what page and line number does GAAP say this?

Do you have an answer, or are you just talking through your hat?

Sam Sloan

Funny thing is, at that time, Stan Booz was on the opposite side from me. Stan agreed with Caveman.

On Thu, 13 Apr 2000 02:28:04 GMT, "stan" wrote:

>Sam Sloan wrote in message
>> Again I ask, on what page and line number does GAAP say this?
>>

>Accounting is based on simple algebra: A = L + C. To have a liability and
>not to state it is not generally accepted. Should you like to document it
>why not drag your ass down to the library and look at any accounting manual
>and find it yourself. To say what page and line is nonsense. Go look it up
>yourself. If you believe a certain liability does not have to be recorded
>then isn't the burden of proof on you?

However, it is now obvious that Stan Booz has since then dragged his own ass down to the library and must have realized that I have been right all along.

What has been clear to me for the past several years is that the entire LMA system is bogus bullshit. The LMA assets are not segregated. A creditor can seize them just as quickly as he can seize operations assets. However, there is benefit to having an LMA, because the Executive Director cannot write a check on the LMA account. He has no access to those funds.

Here is what Stan wrote today, 10/11/2000: "The current presentation of the cash and securities as assets separate from 'operations' cash is not GAAP. It is a departure from GAAP that the auditors incorrectly permit."

Stan later adds:

"Keep it in this bogus asset called LMA along with the building and tell everyone the LMA is adequately funded. This is called pumping up the balance sheet. Also known as voodoo accounting, smoke and mirrors, ahhh why bother."

My question is: If the LMA system is a departure from GAAP (as Stan Booz finally agrees), why have the accountants allowed it?

The answer is clear. The USCF always hires small no-name accounting firms. The USCF tells them, "You do things our way, or else you don't get our business."

Will somebody please answer these questions: Who are the accountants for the USCF and what are their qualifications?

Sam Sloan


Here are links:
Sam Sloan's Chess Page

My Home Page


Contact address - please send e-mail to the following address: Sloan@ishipress.com