Audit Request Leads to Friends Fight

Las Vegas–Clark County Library District has sued the Friends of Southern Nevada Libraries to prevent the Friends from disbanding and disbursing their assets to non-library groups. The action has cost both sides a total of $44,000 in legal fees so far, the Las Vegas Sun reported May 22.

Library Director Dan Walters told American Libraries that the library asked the Friends for an audit of its finances due to issues that came up in the library’s statutorily required annual audit. “It’s a matter that the amount of money [donated by the Friends] had increased over the years to where it was substantial,” he said. “It came up that we did not have a contract or audit trail for several hundred thousand dollars of cash going through our books.”

Friends board member Teri Reynolds told AL that Walters asked for a contract at a meeting with the Friends in January, but that “the audit didn’t come up for another month.” By that time, she added, accountants were busy with tax season and couldn’t take on the job. The Friends have now hired an auditor, whose work is expected to be finished in June.

Reynolds said the dispute stems from a discrepancy between the revenue the Friends generated in FY2007 and the amount it donated to the library. According to the lawsuit, Friends sales generated $253,000 but the Friends contributed $180,000 to the district. Reynolds said that whenever the library asked for funds for a project, the Friends donated that sum, and that the difference was due to the library not making enough requests to exhaust the money.

The lawsuit alleges that the library made multiple requests for an audit that the Friends refused. In response, the library cut off the flow of discarded books to the Friends in December. Friends Vice President Tom Matava attended the February 14 library board meeting and warned that the Friends might disband if book supplies weren’t replenished, according to the board meeting minutes. Matava informed the board at its March 13 meeting that the Friends had retained an attorney who was drafting contingency plans to dissolve the group and disburse its funds to nonprofits around the city.

Walters said that the library’s legal counsel advised seeking an injunction against the Friends to prevent that from happening. “We weren’t litigating over the audit; we went to court to prevent the disbursement of the funds,” he said.

In April, the Friends’ lawyer proposed a contract between the Friends and the library that the library’s counsel advised against signing. “The Friends had named the district as a recipient [of their donations], but not the sole recipient,” Walters said, adding, “It’s just unreasonable for them to have insinuated that they can donate to other entities” money raised from selling library discards.

Reynolds said that the proposed contract named the library as “primary” recipient. “We didn’t want to put it as sole recipient because once a year we have a luncheon for volunteers,” and didn’t want that event threatened by the contract, she added.

Friends stopped volunteering in March, and the sales have been operated by library staff since then, the Sun reported.

Posted on May 30, 2008. Discuss.

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