Pub lacked internal controls, prof says

Structure was set, but not necessarily followed

Assistant acounting professor David McConomy says student relationships make staffing hierarchies more complex.
Assistant acounting professor David McConomy says student relationships make staffing hierarchies more complex.

At the top of a flight of stairs, inside a small office across the stairwell from the locked doors of Clark Hall Pub, sit about 10 cardboard boxes stuffed with paperwork, dating from the late 1970s to 2007. The boxes, overflowing with rolls of receipts and handwritten IOUs, along with a set of Quickbooks software and some Excel spreadsheets, comprise Clark Hall Pub’s financial records.

It was those dishevelled boxes and computer records David McConomy, an assistant accounting professor with Queen’s School of Business, examined in August 2007, at Rob Macnamara’s request. McConomy said he found accounting that “left a lot to be desired” and operational practices leaving the pub with few ways to check accountability. Macnamara, EngSoc vice-president (operations), took an accounting course last summer with McConomy.

About a month after EngSoc decided to close Clark Hall Pub, Macnamara asked McConomy to take a look at the pub’s financial records, McConomy said. He came to the same conclusion as accounting firm Collins Barrow, whom EngSoc commissioned to review Clark’s finances: it would be extremely difficult, if not impossible, to ascertain the accuracy of the records.

“What an accountant would do is go through and classify every transaction in order to be able to prepare a summary statement,” he said. “If record keeping has not been accurate, the summaries are meaningless.” In Collins Barrow’s report, which the Journal obtained through a freedom of information request after EngSoc refused to release it, the accountants said they “would not be able to provide any assurance on the financial statements” because the recommendations of another financial review in 2002-03 hadn’t been implemented.

McConomy said validating the records would mean reconstructing them completely, starting by re-recording every transaction the pub made in the last year. “When I looked at the records, I determined that it would take a substantial amount of work to reconstruct the records of Clark Hall Pub,” he said. “The information is there, but validating and summarizing it would be a huge task.”

McConomy said several of Clark Hall Pub’s business practices lacked the internal controls necessary for businesses to function properly. These included listing the pub’s bank account information in a 2007 transition manual and allowing managers to borrow money from the pub’s petty cash—referred to as the “Bank of Clark”—and have it deducted from their paycheques. “It is inappropriate that the information relating to the bank account would be accessible by a large number of people,” he said.

“I think that [the Bank of Clark] practice would be frowned upon in a normal corporate structure.” McConomy said Clark’s managerial and staffing structure also caused hierarchy problems because many students working at the bar were friends. “When you have people of equal stature and status dealing with each other, sometimes you can impose your will and sometimes you can’t,” he said.

“I think it definitely is a case where many people saw themselves as equals. “If you look, as an example, at Clark Hall Pub, there was an organizational structure in place but whether it was being followed in an appropriate manner is, I think, a question everyone is asking.”

McConomy added that he was disappointed by former pub staff’s reactions to the bar’s closure. “I think it’s a very difficult situation. It is politically charged. I’m surprised and disappointed by the reactions of some people, including alumni.”

He also thinks a faster timeline for opening the pub would have lessened the politics surrounding the situation. “I’m disappointed they’ve been unable to get a handle on things as quickly as they have,” he said. “Opening Clark Hall Pub would have diffused a lot of discussion.”

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