Whatever happened to the "deep dive" into the Club's financials?

 In early June, the Board voted to establish a "special finance subcommittee" to delve into the Club's financials to determine: (a) whether the food and beverage losses were reasonable; (b) the source of delays and possible cost overruns in the amenities projects; and (c) whether the growth in overhead is reasonable. All of the information summarized below is taken directly from the Board's published minutes.

Here are a couple of caveats. First, the Board continues to hold "executive sessions." As an initial matter, neither SC law nor our By-Laws authorize executive sessions. Since October 2021, the Board has been noting in the "regular session" minutes a summary of actions taken in executive session. So they seem to recognize that their previous practice of keeping secret actions taken in executive session was unauthorized. And second, no minutes of the Finance Committee are posted on the website. The Finance Committee--like most club committees--does not have the authority to take action and minutes are optional. I simply note that no information is available from executive sessions of the Board or the Finance Committee about the "deep dive."

During the June 2 Board Meeting, the Board established a "special finance subcommittee" ("SFS") to conduct a "deep dive." The members of the SFS were Peggy Mulligan, Dean Petracca, Mike Herzog, John Hynes, and possibly former Board member Ron Waters. The minutes indicate that the "deep dive" would take 2-3 months to complete. At the July Board meeting, the Board approved a "Terms of Reference" (whatever that means--it's heavy on corporate gibberish-speak) for the SFS.

During a special Board meeting on August 5, Peggy Mulligan was removed from the SFS and John Hynes was appointed to lead this effort. By the August 17 Board Meeting, Carl Miller had resigned from the Finance Committee for undisclosed reasons. The minutes of the August 30 Special Board meeting indicate that both Dean Petracca and Mike Herzog had resigned from the SFS, that the SFS had been disbanded and the task of performing the "deep dive" had been assigned to the Finance Committee, and that the charter of the "deep dive" would be revisited.

We're now seven months into the "deep dive" process that was expected to take 2-3 months. Perhaps I missed a communication on this topic, but I don't recall seeing any additional information. It's almost like the Board thinks this issue will just disappear if they rinse it down the memory hole.

Let me be clear. I'm not a conspiracy theorist, and I don't believe that there's any skulduggery going on in the management of the Club. But I'm curious about whether our financial results are reasonable. Mike Herzog and Dean Petracca are highly qualified accountants who can give me comfort that our results are in line with other well-managed clubs. Perhaps our results are influenced by allocations of fixed costs and overhead. I don't know why Dean and Mike resigned from the SFS, but I don't believe it's because they were given too much authority to review the Club's financials. I note that all committee members are required to sign an "agreement" agreeing to keep secret the workings of the committee--so Mike and Dean have limits on their ability to speak about the hidden work of the Finance Committee.

As time goes by, I'm moving from the "I doubt if there's anything there" camp to the "I wonder what the problem is with the Club's financials" camp. The sooner the deep dive is completed and the results are communicated to the Owners, the better.