By Patric Hedlund, TME
The Pine Mountain Club Property Owners Association fired Kim Ryan, its chief financial officer, on Friday, Nov. 2, in the midst of the POA’s annual audit. According to a member who witnessed it, Ryan was escorted out the door by PMC Patrol.
Just short of a year earlier, Ryan’s hiring had been embraced by PMC homeowners as a sign of new General Manager Karin Shulman’s seriousness about improving the professionalism of the operation. Shulman was promoted by the board from her post as confidential administrative assistant. Her former boss, general manager Rory Worster, had suddenly resigned in August 2017 amid unexplained quarter-million-dollar-a-year Bistro losses and a corporate culture many found steeped in excessive secrecy.
Within weeks, finance director Todd Draa (a six-year employee) was dismissed. His staff, except one, were transferred to different departments. Two food and beverage managers left amid questions about the unexplained million dollars in red ink over 10 years in the PMC Bistro and lounge.
Homeowners were so worried in 2017 that they petitioned to put bylaws on the ballot to require greater transparency. They also elected Bryan Skelly, a reform board member who promised greater oversight.
Kim Ryan brought four decades of accounting expertise to her new job, including experience with Price Waterhouse (now Price Waterhouse Cooper). According to her resume when she ran for the Mil Potrero Mutual Water Company Board, Ryan had 22 year’s experience conducting financial accounting audits for Wall Street firms and did forensic accounting for litigation.
Ryan told members she was eagerly analyzing the club’s financial department. As a 21-year PMC homeowner herself, her reports in board meetings helped build confidence among members that new manager Shulman was sincere in her desire for greater transparency.
During the budget process in the spring of 2018, Ryan told the board and membership that PMC’s accounting office had been in disarray, using handwritten entries that did not follow generally accepted accounting principles (known in the trade as GAAP). It was clear the association needed to implement stricter fiscal controls. Her straight-talking professional style reassured concerned homeowners during the 2018 recall effort to remove PMC Board Chair William Gurtner, (former) Vice Chair John Cantley and Secretary Sandy Browne.
Meanwhile, Jack Throckmorton, a former PMCPOA board treasurer, director and chairman, circulated reports alleging that the nonprofit homeowners association had defied California’s Davis-Stirling Act guidelines by inflating assessments and retaining excess earnings, which a nonprofit is not allowed to do.
These reports were brushed aside in public meetings by Chairman Gurtner, amid a rising tide of homeowner distrust. The board recall effort headed toward a vote.
During that time, Ryan did not report discovery of fraud or theft to PMC members. She reported she found a confused accounting system. Members understood that the finance department under Worster’s management had been plagued by incompetence and inadequate training, leading to misappropriations and unreliable financial reporting. She told the board and members she was working hard to change that—lending credibility to the new manager and the board who had hired her.
It appears that, perhaps privately, Ryan also showed the board that Jack Throckmorton’s concerns had some merit—though his numbers were not precise. On July 21, 2018 PMC Chair William Gurtner reported to members that the board had “made mistakes,” and that over a million dollars in “carry forward” funds had indeed been retained by the association. The funds were floating, unallocated, in the operating fund.
The recall vote results on October 13 showed members trusted that the board, with Ryan’s help, was turning over a new leaf. Gurtner, Cantley and Browne were not recalled. But a job listing to replace Kim Ryan as chief financial officer was approved by Chairman Gurtner that very same month, in October, The Mountain Enterprise has confirmed. A job description for a less qualified candidate appears on the PMCPOA website and on the online job site, Monster.com.
Nothing was reported to the members about Ryan’s firing during presentations by Chairman Gurtner and General Manager Shulman at the Saturday, Nov. 18 PMC board meeting. After the meeting, Gurtner confirmed privately to The Mountain Enterprise that Ryan’s oversight role to protect homeowners from exposure to fraud is being given to a temporary junior staffer, Elizabeth “Beth” Blackmon, who is married to PMC’s lead accountant, Jason Blackmon. He will be reporting to his wife, who would be supervising the department. The couple is rumored to be family friends with General Manager Karin Shulman.
The Mountain Enterprise sought clarification from the headquarters of The American Institute of Certified Public Accountants (AICPA) in New York City about structuring a prudent financial management department. AICPA’s Jeffrey May referred us to the AICPA Code of Professional Conduct. Their published guidelines refer to the need for strict “segregation of duties” and avoidance of conflict of interest. Such mandatory standards in designing internal controls for sustainable risk management are designed to ensure—in this case, for instance—that PMCPOA homeowners are secure from being exposed to the potential for fraud and loss.
Shulman did not answer requests for comment. She is on vacation during Thanksgiving week. Kim Ryan did not return a call for comment before press time.
—Gary Meyer contributed reporting to this story.
An updated story was inserted on November 22, 2018 at 4 a.m. to this file. It includes more detail about AICPA’s Code of Professional Conduct.—Patric Hedlund, TME
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This is part of the November 23, 2018 online edition of The Mountain Enterprise.
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