Following the publication in late July of an Open Letter to the AES Executive Committee by LA Section Treasurer Richard Wollrich, responses have now been made by AES President Jim Kaiser and made to the AES Board of Governors by Executive Director Roger Furness, addressing allegations of financial mismanagement.

The Open Letter appeared breifly on the website of one pro audio magazine but was quickly removed. It was then posted on a LinkedIn discussion forum where its contents prompted considerable feedback but no official comment from the Audio Engineering Society officials or Roger Furness.

‘The first indication something was very wrong, was when we heard of the termination of the controller in March,’ Wollrich told Fast-and-Wide. ‘At first we could not believe what we were hearing. With all the highly intelligent people we have around us in our respective fields, it just could not be true. When we uncovered documents revealing the true nature of what was going on, we just could not believe it.

‘We decided to contact by email and telephone, some of the [AES] Board of Governors and in particular the Executive Committee. We informed them of the documentation we have been able to uncover and allow them to take immediate corrective action to prevent further erosion.’

‘On 12 May, the Executive Committee held a meeting, but took no action. We tried again and contacted some of the Board of Governor and the Executive Committee in particular. On 20 June, the Executive Committee held another meeting and we were told they had taken action, but we would have to wait for a public announcement on 15 July. So we waited. The public announcement came on 21 July. We believe you don’t ignore the facts in front of you and reward misdeeds of this magnitude. The governing body left us with no choice, but to make the serious issues public.’

Dated 12 August, the following statements come as comment continues on the LinkedIn discussion group that first made Wollrich’s letter public:

Jim Kaiser:

Thank you for the opportunity to share this message. I apologize to all that it has taken this time to respond.

Our group (the Audio Engineering Society), a 501-c3 non-profit organization, has a small paid staff, led by an Executive Director, and an elected Board of Governors. Legal counsel is retained by the AES for appropriate opinion when requested to help us relate our practices to our Bylaws. In response to recent concerns, an AES Laws & Resolutions Working Group has reviewed our current Bylaws in order to suggest possible revisions for consideration by the BoG, and subsequently to be presented for consideration by the membership.

The AES, being an international organization, has activities in many countries. This represents a fairly complex financial picture, so all AES accounts are subject to an annual external audit. While no irregularities have been reported by these auditors, we understand the need to be diligent and mindful of our members’ interests. Again, The Laws & Resolutions Working Group was asked to suggest improvements in our operation and financial practices. In addition, we are considering changes in the firms that provide accounting and auditing services, and to make more complete financial information, such as these annual audits, available to the Board. We are also looking at ways to improve the information available to all members in addition to the summary financial statement already presented in the December Journal. Our goal is to maintain a transparent operation that is appropriate to our mission.

I want you each to know that I share your concern for our Society, and wish to be made aware when something may have been overlooked. As we all realize, even with the best of intentions it is possible to make an incorrect decision. I will, in turn, share your concerns with the Board of Governors, so that we may properly address them. In this way, I hope that we can resolve and ameliorate any error or misunderstanding that may have occurred.

Since early this summer, the Board of Governors has been able to discuss important issues and their possible solutions via a recently introduced AES BoG Forum, in addition to the various email reflectors. This is an effective and timely way to include these elected officers in on-going AES decision processes. Current Executive Director, Roger Furness, recently used this Forum to answer some specific financial complaints that have been made (see full text below).

As the day-to-day head of business for AES, the Executive Director position is multi-faceted and complex. In order to make the most of the planned hiring of the next Executive Director, the AES BoG is beginning the process of defining criteria to be used in recruiting this new person. We intend to begin accepting applications for this position starting the week of August 15, and hope to announce the successful candidate sometime following our upcoming international convention.

I look for your support in helping to continue the AES in its long-standing position as an authoritative and pivotal force in the exchange and dissemination of technical information for the professional audio industry.

Best regards,
Jim Kaiser

President, Audio Engineering Society

Roger Furness:

The Open Letter from Richard Wollrich contains information that is inaccurate, misleading or lacks complete information. I comment on some issues below.

Following the termination of the Controller, Mr. Furness directed the auditors to make journal entries into the AES accounting system without any supporting documentation, allowing the British section to keep $15,150.00 for office space. The British section has no office on record and does not lease space. Who got this money? Who’s in control?

This is not true.

The information about many journal entries that needed to be made was given by the auditor to the Controller on October 29, 2010 in an email, which was copied to me.

When the British Section was originally set up in 1970, AES Headquarters would only do it on the basis that they would not provide any financial support to the section. The section should seek supporting companies who would be listed as Sustaining Members of the Society, but the section would keep this money to defray the costs of a secretariat and office to service the growing number of members and audio businesses in Britain and some other countries.

The AES Journal shows that there was a Regional Office of the Society in Britain since 1975. For the last twenty-one years, it has occupied a portion of Heather Lane’s house. In the AES Inc. accounts, income from these Sustaining Members is shown as income and then the same amount is reversed as section support and office costs to balance it.

In 2010 & 2011 for the London conventions, Mr. Furness altered or caused to be altered, the vendor registration form printed in the journal and shown on the AES website, diverting vendor payments for convention space, to an account located in a London bank that is controlled only (not by HQ) by Mr. Furness and Ms. Heather Lane. When did you know about this and why did you let this continue? Who’s in control?

It has been the usual practice since 1971 for conventions and conferences held in Europe to be operated by a European entity. Usually this has been the AES Regional Office in Brussels, but often it has been a section.

In the last decade, it has been necessary to register for VAT in each country where the convention was held. This also usually meant the appointment of a local accounting firm to handle the VAT matters according to local law.

When it was decided to hold the convention in London in 2010, the UK auditor suggested that we use the AES UK Limited’s double signature bank accounts, VAT registration and save on the extra costs of a separate accounting firm for the VAT. This was discussed with the AES Inc. auditor and approved.

The AES Inc. auditor would receive details of all transactions and bank accounts and so be able to give a full audit. Separately, the UK auditor would have to audit the accounts for VAT, so in effect there would be a double audit - more than any other AES event held.

It is better to try to keep the income and costs in the same currency if possible. As the expenses were in GBP and would be paid from the AES UK Ltd bank account, this was where the exhibitor fees were deposited. This has been the standard practice in Europe for over forty years. Again everything is audited.

Prior to 2005 Mr. Furness while being employed as the Executive Director secreted funds totaling over a million dollars, belonging to the AES, in a personal savings account in his name in Germany. In 2005, the funds were subsequently recovered through the efforts of Mr. Ron Streicher and Mr. Marshall Buck. Why wasn’t Mr. Furness terminated at that time? How can you know for certain, something similar hasn’t happened again?

The reserves held in the German accounts were included in the AES Inc. audited Financial Statements every year, so they were not secret.

Since conventions were started in Europe in 1971, there have been European bank accounts. (Please note that this was before I was even a member of the AES, let alone Executive Director.) These were opened by Europeans who gave their names for the opening of the accounts. Most of the accounts were in the name of Herman Wilms, who operated the European office and conventions for some thirty years.

Before 2002, when the Euro was born, every European country had a different currency, so Mr. Wilms would usually open a local bank account in the country of the convention in that year and the income and expenses for that convention would run through that bank. In 1992, in readiness for the Berlin convention in 1993, he opened accounts at the Berliner Sparkasse, across from the convention centre.

It became clear that this bank offered a very good rate of interest and it was decided in the following years to keep most of the money in Europe in accounts at this bank and two more long-term accounts were opened. It had long since been agreed that moving money back and forth between the US and Europe benefitted nobody but the banks and so reserves were kept on both sides of the Atlantic.

At this bank, it was necessary to have a European person’s name associated with the account, even though the account was called Audio Engineering Society. Mr. Wilms’ name was on some accounts. My name was on a couple because Wilms wanted someone from Headquarters on as well and I was the only European national at Headquarters. The large accounts needed both Wilm’s and my signatures for withdrawals.

Then-Treasurer Marshall Buck decided in 2004 that he wanted to make most of the accounts in Europe meet the Bylaws and asked that the German accounts be made into double signature, officer signed accounts.

Mr. Wilms looked into this and found that the necessary steps to achieve this were both time consuming and very expensive. (One was that all documents had to be translated into German by a translator linked to a German court.)

Mr. Buck then asked for these accounts to be closed, which was done. Some of the money was transferred to AES Brussels accounts, but most went directly to the AES Inc. accounts in the US.

Mr. Furness has allowed the British section for the past six years to retain the membership dues they have collected thus depriving HQ of a key revenue stream. How could you let this happen for so many years? Who’s in control?

This is untrue. The British section has transferred all the membership dues that it collects to an AES Inc. account every year. The auditor will not accept membership numbers or income if he cannot see proof of receipt of the money.

In short, although I am accused of all kinds of financial impropriety, I can categorically state that there has been none. I will acknowledge having sometimes worked ‘in spite of the Bylaws’ which were written sixty years ago for a very different time when there were no international activities. However, I did not start this. It had been going on for more than twenty years before I became Executive Director. My error was in not having fought harder to bring the Bylaws into the modern age.

Roger Furness

The LinkedIn discussion also raised the question of the future of the European AES show, but this has not been covered by reply or any of the AES correspondence. Additional allegations of misconduct concerning Furness and an AES Controller remain unaddressed at this time.

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