Former SRHS CEO Chris Anderson is a CPA/CEO so let’s try to think like one

Since transparency is still sorely lacking over at Singing River Health and because I rolled out my working theory why the events surrounding this man made financial disaster have unfolded in a certain way we have to take a step back and look at the big picture. And to do that we must think like former CEO Chris Anderson, the man with all the answers.

To understand how the disaster unfolded most good Certified Fraud Examiners will tell you to “think dirty” and what it meant by that term is that the “frauditor” must 1. Understand how the perpetrator thinks by attempting to walk the proverbial mile in the perp’s moccasins which leads to 2. Gaining a possible understanding the motivations which lead to the disaster. This specialty is essentially the intersection of the social sciences with the accounting and finance that was originally pioneered by legendary sociologist/criminologist Donald Cressey, a name that has been mentioned a few times previously on this website.

First up are a few requisite disclosures. Dating back to November of last year I’ve had the pleasure of meeting many fine folks from over in Jackson County with connections to either the hospital system or County Government and the resultant communications with this group have a painted a picture of CEO Anderson that I thought was rich in its depth and color that also came with some analysis that is out of this world in my opinion.  Important to note is that the totality of what I’ve been told by multiple parties (many with but some without a dog in the hunt) about Anderson is actually fair to the man, who has been the villain of choice for the media covering this disaster, Slabbed included.

The most frequent adjective mentioned to me concerning Anderson is Continue reading “Former SRHS CEO Chris Anderson is a CPA/CEO so let’s try to think like one”

If you’re not reading SRHS Trustee Scott Taylor’s blog…..

Then those of you that get part of your daily news on Slabbed are really missing out. First off I want to give Taylor a WordPress platform tip so that the posts and comment time stamps are expressed in local time. From your dashboard go to “settings”, then click “general” on the sub-menu. On your general settings tab change the timezone to “UTC-5” from the drop down menu. You can thank me later.

On Sunday, Taylor posted his take on the Board of Supervisor’s recent Public Relations push with legal consultant Billy Guice on the point for the Sups. The post was good but the comments to Taylor’s post, as is often the case on an interactive website, are out of this world and I think are a must read.

My personal opinion is most everyone on the outside looking in at the Singing River financial disaster without a financial dog in the hunt, especially informed financial observers spot the self-serving duplicity in how both the Supervisors and the SRHS Board of Trustees are trying to frame the management perpetrated accounting fraud which lays at the heart of financial crisis that grips the hospital.

At its most basic, both the Sups and the SHRS Trustees are trying to scapegoat the former auditors and the retirees for the bad business practices and fraudulent  financial reporting which occurred under former CEO Chris Anderson’s and CFO Mike Crews’ watch at the helm of SRHS. It is a shame the old time practice of tarring and feathering has gone out of style because I can think of five Supervisors (Stupidvisors in RFP speak) that deserve a good tarring, feathering before being run out of town on a rail. These are strong words but I am an informed financial observer so the bullshit is easy to spot. Let’s start with April Havens over at the Mississippi Alabama Press:

Jackson County supervisors this morning announced they are suing KPMG, Singing River Health System’s former audit firm whose work led to a disastrous $88 million accounting adjustment.

Supervisors today hired attorney Billy Guice on a contingent fee basis to represent the county in its suit against the audit firm.

KPMG has been the scapegoat of choice for both the SRHS Board when the financial fraud (though it was not reported as such by the Mississippi Alabama Press) first came to light back in March, 2014 as County Comptroller Josh Eldridge, reportedly a CPA that previously worked for the State Auditor’s office took point for the Sups spinning the management perpetrated financial fraud just days after Chris Anderson abruptly left Singing River Health for Baptist in Jackson:

“It’s a large adjustment,” county Comptroller Josh Eldridge said.

Board attorney Jessica Dupont noted, however, that the county doesn’t know of a current lawsuit.

The health system is county-owned, and the county backs its debt, but county tax dollars do not fund the system’s operations. The county has five mills pledged in case the health system ever defaults on its debt, but Eldridge noted the system is “not even close” to default.

That tune has since changed with regard to the bonds being in default, such condition also present when Eldridge made those initial statements. Now back to Jackson County’s announcement that they were suing KPMG as Guice literally beclowns himself before the financial and auditing community as he lists two grounds for the suit:

Last week, Guice said the audits did not appropriately disclose the state of the pension in the annual audits. That information should have been presented in the audit highlights at the beginning of the document, he said.

Instead, the most important information was buried in the “notes” section at the end of the audit, he said.

Now at this point I’m going to put on my professional hat as a CPA/Auditor but I’m going to express the concepts in the language used by an 8 year old so that maybe some of this sinks in with the Stupidvisors, who I would highly encourage to run  by their in-house financial expert Josh Eldridge.

The “front part” of the audit is called “Management Discussion and Analysis“. You see boys and girls, in an audit there are two teams. One team is called management. The boys and girls that belong to Team Management work at the hospital. These people include doctors and nurses that cure your bobos and hurts. It also includes the boys and girls that manage the hospital. The other team is called the “auditors” and that team includes the boys and girls that make sure the Hospital reports its cures of bobos and hurts accurately for everyone most everyone for just a few people to see.

Now back to grownup talk for the professionals that read this website. Continue reading “If you’re not reading SRHS Trustee Scott Taylor’s blog…..”

Litigation ain’t easy: A Heather Hilliard / SRHS v KPMG update

Ramon Antonio Vargas tells the story behind the story of a determined litigant in former Jefferson Parish CAO Heather Hilliard and her two and a half year journey to justice for the New Orleans Advocate that is good reading as another news story originally broke by Slabbed New Media (here and here) completes its cycle through the news. Looks like I’ll need to shake the tree to see what is happening these days up on 10 at Yenni.  😉

Moving right along in other litigation news, it does not appear KPMG is very scared of the lawsuit that Kevin Holland and company at SRHS filed against the audit firm late last week per April Havens.  I really don’t want to throw any wet blankets on this legal matter but based on the wording in the complaint, I think the only people that will make any money from the endeavor will be the lawyers.  I strongly suspect we’ll be seeing a 12(b)(6) motion asking for dismissal from KPMG and the reason such a motion stands a good chance is actually found in the 2013 Audit Report prepared by Horne CPAs in several places but I will highlight two places, the first on pdf page three of the report.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.

You would assume someone that has been in a senior management role at SRHS for as long as CEO Kevin Holland would understand these things but my experience is when the shit hits the fan, the stuffed suits typically pretend they don’t know jack while trying to cover things up and this is indeed the route senior management at SRHS has been taking since last March. Preserving talking points seems to be the paramount concern at SRHS these days and the public money being thrown at the KPMG lawsuit endeavor will be both copious in amount and represent a good example of the wasting of assets, all while management at SRHS tries putting the screws to its own retirees.

Here is the second place that I mentioned and it is on the very last page of the audit: Continue reading “Litigation ain’t easy: A Heather Hilliard / SRHS v KPMG update”

More dominoes fall: SRHS Outside Counsel Roy Williams retires plus two masters = bad news (Updated)

Let’s start off with April Haven’s latest for the Mississippi Press via RFP in comments:

SRHS attorney Roy Williams retires, effective immediately

Boy the way Glen Miller played
Songs that made the hit parade.
Guys like us we had it made,
Those were the days.

Sorry folks wrong story. Roy Williams is gone and ostensibly passes the SRHS account along genealogically to his son Brett.

Here at Slabbed we’re blessed. I’m talking with several people with detailed knowledge of both the Jackson County political landscape and the SRHS executive suites and that does not count accounting stopping in with us yesterday. Some of these nice people use charitable language saying things like “ethical lines were blurred”, which is a polite of way of saying that certain people are fixing to get into some deep trouble. Anita Lee set things up very nicely:

As it would happen, I know a thing or two about the proper administration of pension plans. The lawsuit at the heart of Anita’s second story should have the desired effect because of the clear cut breaches of fiduciary duty that were created by clear cut conflicts of interest. For instance in this saga we learned that former SRHS Board Trustee Morris Strickland actually was charged with investing trust assets. When I saw that I gasped but then again the lawyers I know that are most knowledgeable of ERISA and trust common law all advise their clients to have an independent plan trustee and investment advisor period, especially in something like a defined benefit plan. At Singing River management and the Board of Trustees took those roles and this brings me back to Mr. Williams and in house SRHS counsel Celeste Oglesby because you wonder what in the blue hell they were thinking allowing such a setup to which mucho liability would naturally attach should things go wrong. Continue reading “More dominoes fall: SRHS Outside Counsel Roy Williams retires plus two masters = bad news (Updated)”

Feedback loop established…..

I guess my question, had I been there, is what in the heck is taking ya’ so long Kevin? After all the gang at SRHS has been yammering about this for close to a year now.

SRHS pursuing action against former auditing firm KPMG for erroneous financial reports ~ April Havens

The follow up question would have involved something about top management excluding financing arrangements that had been repo’d from the books and the general lack of financial statement disclosures (management’s responsibility for the uninitiated) regarding off balance sheet arrangements with certain area lenders to finance patient balances but since I wasn’t there all we have is Kevin’s word on this that management had no clue their own books were off by $88 million dollars.

The word that comes to mind here is infantilized.  What Holland is saying using other words is what you have at SRHS is management that is good enough to collect fat six figure paychecks but also simultaneously completely clueless about their own bookkeeping being off by $88 million dollars.  These people, like me are all CPAs to boot. One word folks:

Of course we know from published reports there was one guy a bit further down the food chain that knew the score and tried to warn them and the gang running the show at SRHS choose to ignore him.

If this is how that crisis management PR firm is earning their money God help the Jackson County taxpayers.

Additional background here.

A Cornerstone of the Singing River Financial Disaster: Management perpetrates an accounting fraud

And folks that has been the 500 pound gorilla in the room that most informed observers see but for which there has been no media reporting. Today that changes and to set things up we need to hop into the Wayback machine and set the dial for March 3, 2014:

Singing River Health System likely to collect $88 million less on bills than previously anticipated ~ April Havens

Singing River Health System leaders went before the Jackson County Board of Supervisors this morning to say they will likely collect $88 million less on patients’ bills than they expected.

System representatives met with the board during an executive session under “potential litigation” and spoke to the media afterward.

The county’s legal team said the system discussed its bond status with supervisors in the meeting.

For a five-year period ending in 2012, the hospital can expect to collect $61 million less than previously anticipated, CEO Kevin Holland said after the executive session meeting. For 2013, that figure is $27 million.

“We have a substantial amount of patient balances in our system … on past services rendered,” Holland said.

And of course this was mostly discussed in a secret, out of the taxpaying public’s eye under the guise of an executive session to discuss potential litigation. To the extent SRHS hasn’t sued the former audit firm KPMG and crystal balls foretelling the coming retiree suits against the system are the stuff of fantasy, I’m struggling, with the benefit of hindsight, to understand why this discussion was held in an executive session. As I’ve previously opined, KPMG was not sued because there was too much dirty laundry potential. Before I explain why it helps to understand why the above story is nothing more than SRHS/Jackson County Supervisor political spin: Continue reading “A Cornerstone of the Singing River Financial Disaster: Management perpetrates an accounting fraud”