A Letter to the ACA Staff & Board of Directors

July 23, 2007

TO:      Fran Summerhill, President, American Cycling Association (ACA)
FROM: Joe DePaemelaere and members of the ACA
CC        ACA Executive Committee (Dan DePaemelaere; Scott Mares; Tim Madden; Ann Trombley; Brad Tucker)

During the review of documents in the public domain, many questions have arisen regarding the structure and governance of ACA. As we explore the issues with select individuals involved, there is no resolution but simply additional layers to review. It is the responsibility of the Executive Committee to not only answer these questions, but quickly and efficiently resolve the issues at hand.

At no point, is this an attack on any one person nor is it to slight or devalue the tremendous work of the staff and the organization. With a small staff, it is easy to use them as the target, and certainly, it is clear there are some staffing issues, however, under the By-laws of ACA, it is the responsibility of the Executive Committee to govern the organization.

It is clear that now is time for you and the Executive Committee to take control, so that the ACA can grow, become a stronger organization and serve its mission with organizational and fiscal efficiency.

Here are some of my questions and concerns. As I continue to talk with people and look at the information that is given to me, I will continue to pose more questions and concerns.

1.Governance of ACA

1. Why is the Executive Director functioning as Treasurer?

a. Does this fall in line with the ACA By-Laws?

i. The Treasurer, along with the Executive Director, will oversee the maintenance of the corporate financial records. He shall monitor the monthly statements prepared by the Executive Director to the Executive Committee and shall review with the Executive Director and the Association%u2019s accountant the yearly financial report to the Annual Club Council. He shall, along with the President, supervise the Executive Director in the day to day financial affairs of the Racing Association. They shall oversee the keeping of the Association books and records, which is the physical duty of the Executive Director and insure that all records and accounts are correct. The Treasurer will attend all monthly meetings of the Executive Committee and will deliver the financial report to the Board in the absence of the Executive Director. The day-to-day duties of the Treasurer will be undertaken by the Executive Director.

Since the Executive Director and the Treasurer are the same person, the check and balance system set forth by the ACA By-laws does not function.

Since the President is the only other person within the ACA with bank signature power, is the President then performing these checks? Who else has knowledge of the day-to-day financial activities of the ACA?

When I spoke with the ACA%u2019s CPA, Gary Dickinson, he stated that he does not see any detailed information regarding the finances of the ACA and does not audit the ACA. He receives cash receipts and disbursement records, from which he will reconcile against the bank statements. The financial information he starts with is exactly what is published in the newsletter by the Treasurer and works from those numbers.

Although the ACA policy manual states that there will be two people to oversee the finances of the ACA, it appears to me that there is only one person that is performing this function. Is there a review process set up for the Executive Committee to review the day-to-day finances since there are not at least two individuals who oversee the finances?

b. Why is the Treasurer not listed as a member of the Executive Committee?

c. No apparent Internal controls

i. Internal controls protect the staff, the board and the organizations

ii. From Board Source (http://www.boardsource.org/)

Internal controls exist to eliminate vulnerability, suspicion, errors, mismanagement, and fraud within the organization. In essence, they act as deterrent and detection mechanisms. This kind of proactive thinking recognizes internal controls as good business practices, effective administrative processes, and simply as smart management and governance. Besides defining the parameters and authority levels within which staff and board members operate, internal controls stand for a team effort and integration of all the processes and procedures. Eliminating unnecessary, ineffective or duplicate steps during task implementation can result in increased operating efficiency for the organization. Internal controls help advance accountability by focusing on productivity and cost-effective outcomes to guide decision making.

* A key concept defining internal controls relates to segregation of duties. One person alone should not be in a position to handle a financial transaction from beginning to end.

Can this situation happen within the current structure of the ACA?

d. Results Coordinator

RESULTS COORDINATOR (CO) The Competition Results Coordinator will be considered a part-time, paid , employee of the Association. The Executive Director will assign a salary amount to the Coordinator and all job responsibilities in December of every year.

i. Who currently holds this position?

ii. Who has held this position in the past?

2. Private Inurement

Private inurement is prohibited in all nonprofits. It happens when an insider %u2014 an individual who has significant influence over the organization %u2014 enters into an arrangement with the nonprofit and receives benefits greater than she or he provides in return. The most common example is excessive compensation, which the IRS condemns through intermediate sanctions (significant excise taxes). Insiders %u2014 referred to in IRS parlance as %u201Cdisqualified persons%u201D %u2014 can be high-level managers, board members, founders, major donors, highest paid employees, family members of any of the above, and a business where the listed persons own more than 35 percent of an interest.

1. Has anyone within the ACA (Executive Committee or staff) received personal compensation, either monetarily or via services, through any program setup and governed by the ACA?

3. Open Vendor Competition

When the ACA needs to outsource work, services, etc, what process is in place to secure this help?

1. Are all business opportunities presented to the public?

a. How does the ACA go about securing the services of a business entity for a given need? For example, purchasing state championship jackets, medals, trophies, photographs used for advertising/newsletter, etc.

2. Are these business relationships reviewed by the Executive Committee?

3. Are these business relationships disclosed to the public, and how are they disclosed?

4. Disclosure of support of 5280/TIAA-CREF U23 Team

1. How was the U23 team conceived and structured?

a. Was there a contract between all parties involved, clearly stating duties, responsibilities and compensation?

2. How were the restricted public donations given to the ACA for the U23 team used?

a. How did ACA benefit?

i. Public Awareness? Without any disclosure there was no public awareness benefit.

ii. Administrative Fee?

a. Did the ACA receive any payments in return for handling the finances of the U23 team?

iii. Are there other benefits for the ACA that I am not aware of?

3. Who within the ACA, and acting solely as a member of the ACA, was involved in providing help and services for the U23 team?

4. Why was it not disclosed to the members especially due to the large sums involved?

a. Why was the U23 team financial information not disclosed on the year-end financial statement published in the ACA newsletters?

5. Have all potential conflicts of interest been disclosed?

6. How was the team roster selected? How was the U23 staff selected?

7. Can I receive disclosure of the expense reports for the U23 development team under ACA for 2003, 2004, 2005 and 2006.

8. What are the plans for U23 development moving forward? Are there any programs set in place, or about to be set in place, within the ACA that haven%u2019t been disclosed yet? If so, what is the ACA%u2019s involvement in those programs and how are they structured?

5. Conflict Resolution

I am finding that there are personal conflicts within the ACA. I think this was demonstrated and brought to everyone%u2019s attention by the resignation letters of both Andy Rosen and Jon Tarkington. How members, so closely tied to an organization, interact amongst themselves has the most positive and negative effect on the efficiency and success of an organization. Recent conflicts between very important people within the ACA must be addressed.

1. Does the Executive Committee undertake annual assessments of the Executive Committee and Executive Director? If not the Executive Committee, who is responsible for evaluating the performance of the ACA, both as an organization and as individuals?

2. If a member of the ACA conducts themselves in a manner that does not fulfill their duties to the ACA, or acts in a way that is inappropriate, or does not add value to the ACA, how is this situation addressed and corrected?

3. If a conflict should arise between any Executive Committee member, staff member and/or individual member, how are the parties involved held accountable for their actions and what steps are taken to resolve the conflict?

6. Financial Questions

1. The FY 2003 financial statement does a good job of listing the expenses and revenue in detail. By FY 2006, this level of detail was missing. Can I see more detailed income and expense reports for 2004, 2005 and 2006?

7. Meeting Minutes

1. Not all Executive Meeting minutes are posted on the ACA website. There should be a minimum of 8 EC meetings each year. The ACA website only shows the minutes for 5 meetings. Are the other meeting minutes available to the public? If so, how can I get them? Is it possible to get the minutes for all meetings from years 2003 through 2006?

Thank you for your timely response.  We look forward to positive and productive dialogue