Sunday, July 2, 2017

College of New Rochelle failed to pay federal payroll taxes for about two years: Will anyone be held accountable?

College of New Rochelle, a Catholic college located in Westchester County, New York, announced last fall that it had failed to pay federal payroll taxes for about two years and that it owed approximately $20 million in unpaid taxes. A close examination of the college's financial picture also revealed that the college owed an additional $11.2 million to other creditors.

Paying federal payroll taxes is required by federal law; and failure to do so can lead to big trouble. The Internal Revenue Service can impose fines and even jail time for wilful failure to pay those taxes.

The college released a statement in November suggesting that the college's former controller, Keith Borge, was responsible for the error. Borge retired as controller of the college in May 2016. Without identifying Borge by name, college leaders said that the financial irregularity came to light only after the controller retired at the end of the 2015-2016 academic year.

Apparently, the college's auditor did not discover this mammoth financial problem for some time, which is curious. The College of New Rochelle's auditing firm was KPMG, a highly reputable global auditing firm with an reputation for competence and integrity.

CNR's president, Judith Huntington, stepped down shortly after the college announced its financial crisis. Huntington said she relied on the controller to manage the college's financial affairs, which is reasonable. But Huntington is herself a CPA and was employed for 15 years at KPMG as a senior audit manager. She's also the director of a major bank. According to Bloomberg, Huntington served as a bank director at Signature Bank during the same time she was president of CNR. Apparently being a college president is only a part-time job.

At least one more senior administrator departed CNR after the financial scandal broke. Betty Roberts, Vice President of Finance, terminated her employment at the college sometime in late 2016. According to a news story, Roberts came to CNR after serving in a similar position at Alcorn State University, a Mississippi HBCU that was under investigation by the Mississippi state auditor's office.

Will anyone be sued over this massive scandal? I doubt it. Little can be gained by suing individuals, who do not likely have the resources to pay any judgment that might result. And anyone who gets sued for the big screw up at the College of New Rochelle will likely implicate others.

How about KPMG? Can KPMG be sued for failing to pick up CNR's massive tax liability more quickly?

Perhaps, but Huntington and KPMG undoubtedly have close ties stemming from her 15 years as a senior audit manager for the firm.  And there may be lots of good reasons why the college might demur from suing a very powerful  global firm.

So let's just rack this incident up as an unfortunate episode in the institutional life of the College of New Rochelle. "Least said, soonest mended," as the old saying goes.

But then there is the matter of a mysterious $5 million donation to CNR, which was made anonymously after the scandal broke. This quick cash will buy CNR some time to get its financial house back in order. What party would make a $5 million anonymous gift to a college that may not survive this huge financial crisis?

Perhaps the money is not completely a  gift. Perhaps the donation was an exchange by some interested party for a covenant not to sue. We will never know.

We can take comfort, however, in a pledge made by KPMG, which was neck deep in CNR's travails, that appears on its web site:
At KPMG, our promise of professionalism to each other, our clients and the capital markets we serve compels us to align our culture of integrity with our values, words and actions.
This is the same KPMG that was auditor for Wells Fargo when the bank created two million bogus accounts. Robert Earl Keen is right: "The road goes on forever and the party never ends."

Judith Huntington, former president of College of New Rochelle
(photo credit: College of New Rochelle)

References

Judith Huntington. Executive Profile. Bloomberg.com (last visited July 2, 2017).


Associated Press. Alcorn State President Christopher Brown Resigns Amid Investigation. Gulflive.com, December 19, 2013.

Sarah N. Lynch. Lawmakers question quality of KPMG's Wells Fargo audits. Reuters, April 25, 2017.

Vani Murthy. The consequences of wilful failure to pay payroll taxes. Journal of Accountancy, June 1, 2014.

Jonathan Ortiz. College of New Rochelle Financial Probe Finds Millions in Unpaid Taxes. Westchester, Magazine, November 2, 2016.

Colleen Wilson. $5 million boost for struggling College of New Rochelle. USA Today, December 16, 2016.

Colleen Wilson and Mark Lungariello. Another finance official out at College of New Rochelle. Lohud.com, November 22, 2016.













The consequences of willful failure to pay payroll taxes

The penalties for failing to pay over trust fund taxes can be severe and sometimes include prison time.
BY VANI MURTHY,

The consequences of willful failure to pay payroll taxes

The penalties for failing to pay over trust fund taxes can be severe and sometimes include prison time.
BY VANI MURTHY,

17 comments:

  1. You fully match our expectation and the selection of our data.
    Wix website

    ReplyDelete
  2. Hmmmm…. The most widely innovative information at your site has impressed lots of the people including me and my friends.
    Yola homepage

    ReplyDelete
  3. The blog is unique that’s providing the nice material. Please post more interesting articles here.
    Wordpress homepage

    ReplyDelete
  4. It's not my very first time to visit this blog; I’m visiting this daily and acquire superb info from here day by day. Google Home Page

    ReplyDelete
  5. You people have actually provided the best blogs that are easy to understand for the folks.
    Yola home page

    ReplyDelete
  6. A debt of gratitude is in order for another magnificent post.
    inkasso

    ReplyDelete
  7. I wish more authors of this type of content would take the time you did to research and write so well. I am very impressed with your vision and insight. energy healing.

    ReplyDelete
  8. first of all i wanna say to all bloggers.
    and u aslo should visit on
    education is the eye of man

    ReplyDelete
  9. When you are engaging with your prospects and customers in your social networks, your ultimate goal to gain the sale, is to send them to your business destination.https://edkentmedia.com/ppc-management-toronto/

    ReplyDelete
  10. The shirt is exceptional at keeping the wearer cool, due to the lightweight and breathable fabric, while keeping the wearer as dry as possible throughout a long periods class of 2019 t shirts.

    ReplyDelete
  11. This comment has been removed by a blog administrator.

    ReplyDelete
  12. A large number of the more specific private colleges and colleges have a religious alliance. The degree of profound impact shifts.תביעה ייצוגית

    ReplyDelete
  13. Wonderful blog! I found it while surfing around on Yahoo News. Do you have any suggestions on how to get listed in Yahoo News? I’ve been trying for a while but I never seem to get there! Appreciate it. happy new year 2019 quotes and sayings

    ReplyDelete
  14. This comment has been removed by the author.

    ReplyDelete
  15. This is my first time i visit here. I found so many interesting stuff in your blog especially its discussion. From the tons of comments on your articles, I guess I am not the only one having all the enjoyment here keep up the good work writing paper

    ReplyDelete
  16. You made such an interesting piece to read, giving every subject enlightenment for us to gain knowledge. Thanks for sharing the such information with us to read this... 소액결제현금화

    ReplyDelete
  17. well if you failed to pay you cannot get your papers after you graduated.

    ReplyDelete