[CCWG-ACCT] Contribution on Transparency Reforms for CCWG

[Greg Shatan]

Bruce,

My responses in-line below.

Greg

On Thu, Oct 29, 2015 at 8:16 AM, Bruce Tonkin <
Bruce.Tonkin at melbourneit.com.au> wrote:

> Hello Greg,
>
> >>  6333.  The accounting books and records and minutes of proceedings
> of the members and the board and committees of the board shall be
> open to inspection upon the written demand on the corporation of any
> member at any reasonable time, for a purpose reasonably related to
> such person's interests as a member.
>
> The minutes are basically published today.    The only minutes apparently
> that are not posted are compensation committee minutes – but even then we
> could at least note the items discussed without necessarily disclosing some
> personal information.
>

​GSS: That was my understanding as well, but thanks for confirming.​


>
> With regard to financials– we are already moving towards the same
> standards as publicly listed companies in the USA.   We now provide
> quarterly financial reporting, and a quarterly call where the community can
> question the CEO and the CFO on the income and expenditure.   It would not
> be normal to provide people with access to the raw accounting system (in
> this case Great Plains) – which would include information on payments to
> all staff etc.
>

​GSS:  First, this would be limited to the Single Designator, not "people"
generally, at least as I see it.  Also, Section 6333 has equivalents for
regular business corporations, with the right going to shareholders rather
than members; so this is "normal" under California law.  There are
limitations -- only records reasonably related to the requestor's purpose
will be provided, and the purpose needs to have a "credible basis" as I
understand it (i.e., it can't be a "fishing expedition").  Also, privacy
concerns can be considered -- as such, "payments to all staff" are
relatively unlikely to be provided (unless the request survives the hurdles
described, with regard to that information).  There is some existing
interpretation around "accounting books and records" and I would look to
our counsel to provide that, if the question is certified to them.​


>
> We do use an external auditor to validate our financials and processes
> once per year.
>
> If there is a community  concern about a particular financial matter (e.g
> concern about whether procurement policies were being followed) – then I
> think it would be more appropriate if the single legal entity that
> represents the community powers has the right to appoint an external
> auditor to validate any particular process or numbers and report back to
> the community.      Audit firms have the appropriate skills to analyse
> financial accounting records and also have appropriate procedures in place
> for confidentiality.
>
> ​GSS: As noted above, this right would only be exercised by the single
legal entity, whatever we call it (the "Central Scrutinizer"?).  I think it
should be an option to appoint an external auditor (at ICANN's expense) or
to allow representatives of the Central Scrutinizer to pore over the
accounting books and records, or allow a combination.  In part it depends
on what the issue is.  Regardless, there should be appropriate (but not
overreaching) confidentiality procedures.​



> I think we should be focussing on improving the processes we already
> have.   I advocated moving to quarterly financial reporting, and I have
> certainly been a strong advocate of making things as public as possible,
> and welcome suggestions for improving our processes.
>

​GSS: I don't think these two paths are mutually exclusive. The
"inspection" right is intended to "bridge the gap" in one important
distinction between member and designator​.  That is important in bringing
comfort to the community that the Designator is as robust a substitute for
the Member as can be.  At the same time, I applaud ICANN's improvements in
financial reporting and transparency (and thank you for your support in
that regard), and expect that they would continue under any circumstances.

>
> Regards,
> Bruce Tonkin
>
>
>
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