Analysis Tools Unit 5 IP - Research Paper Example

Educational Housing Services: A Non-Profit Case Study December 11, [Type the Educational Housing Services: A Non-Profit Case Study Many non-profit organizations handle large volumes of cash while conducting a business to benefit society. Every now and then, the accounting portion of the business misses the mark. The temptation to misappropriate funds is forever present. In a world of economic recession contrasted with the glory of successful entrepreneurship, the temptation chase after a profit can be overwhelming.

George Scott, founder of the Educational Housing Services non-profit organization, was unable to resist the temptation. Educational Housing Services rented affordable apartments to New York City college students. George Scott founded the non-profit in 1987 and it became the area’s largest provider of student housing; second only to the college dormitories (Dominick, 2012).Scott and his wife obtained a $13 million lease purchase on a building in New York and opened its doors to college students.

In 2002, Scott formed a second company, Student Services Inc. which expanded support services to students to include cable, phone and Internet services. Student Services became an outlet to transfer funds from Educational Services through excessive invoices. The non-profit’s board of directors was responsible for reviewing the financials for Educational Housing Services; however, somewhere along the way the checks and balances ceased to happen. EHS Financials, 2010Annual Revenue & Expenses Financial information on GuideStar is either digitized from Form 990 images we receive from the IRS or submitted by the nonprofits themselves through the GuideStar Exchange (990 filers cannot override Form 990 financial data).

If your organization does not file a Form 990, 990-EZ, or 990-PF and you would like to have your financial data displayed in this section, join the GuideStar Exchange today!Fiscal Year Starting: Jan 01, 2010Fiscal Year Ending: Dec 31, 2010RevenueTotal Revenue$45,407,269ExpensesTotal Expenses$51,192,192The attorney general found major accounting discrepancies and the agency was fined $1 Million in a restitution settlement. “Siphoning millions of dollars at the expense of college students is deplorable,” Attorney General Eric T.

Schneiderman said in a statement. “We have no tolerance for officers and directors who treat a nonprofit organization as a vehicle for personal enrichment” (Dolnick, 2012). The Board of Directors was also cited for excessive salaries and negligent accounting methods. Educational Housing Services is now a private company with 24 years in the business. Scott could have kept a separate private corporation for his personal ambitions. Since the original venture became such a helpful success to himself and to so many others, it would have been wise to keep the books the way they were.

There was nothing to prevent him from pursuing cable contracts for profit as a separate entity.ConclusionGeorge Scott saw a need for discounted housing for college students who opted not to live on the college campuses, and provided an ample solution by the formation of the non-profit. “During the academic year Educational Housing Services rents 60 percent of its units directly to schools under contract (40 percent in the summer). The remainders of the beds are rented to students directly” (Dolnick, 2012).

His idea proved he possessed entrepreunuerial merit; however, he and his staff could have landed a prison sentence for his variance.Scott’s salary of ‘$1.4 million in 2007 and $718,382 in 2010’ apparently was not profitable to him (Dolnick, 2012). Scott was charged with ‘siphoning millions of dollars from Educational Housing Services through a shell company, using the group’s money to fly back and forth to a second home in Aspen, Colo., and to pay for a luxury penthouse in Brooklyn’ (Dolnick, 2012).

He started out with the potential to make a difference and good intentions. However, profit has been proven to try men’s souls. ReferencesDolnick, S. (2012). Major Renter to Students to Pay Millions for Civil Fraud. New York Times. Retrieved December 11, 2012 from http://www.nytimes.com/2012/12/10/nyregion/george-scott-renter-to-nyc-students-settles-fraud-case.html?ref=nonprofitorganizations