(Part 2 of 4)
........ What happened next, the shareholders never anticipated. (continued from last week)
After hiring the new bookkeeper, the elected officers of the Scroungess Corporation (SC) implemented several new programs telling the shareholder/owners that the new Progressive programs would make the company better and provide more benefits to the shareholders. The new Progressive programs providing more authority and control to the officers over the finances of the company were written in language the shareholders did not understand.
In order to secure votes from shareholders, the officers did three things. First, they took some of the royalty money and hired employees to help them develop more new programs. Second, they attracted new shareholders who had businesses that were not profitable by waiving their royalty fees. To these non-paying shareholders, the officers also gave some of the royalty money collected from those who were paying. The third thing they did was to start loaning and giving money to businesses that were not shareholders. Since their Articles of Incorporation did not allow for them to lend money to businesses that were not shareholders, they circumvented the rules by finding a bank that would loan money to those businesses as long as the Scroungess Corporation guaranteed the loan.
The company started to accumulate debt and annually began raising the royalty fees causing many of the shareholders to look for new officers at the next election. When the election came around, the shareholders whose royalty fees had been waived by SC voted as a group and kept the officers who eliminated their royalty fees and had given them money. After the election, those same officers campaigned to allow non-shareholders to be able to vote in the upcoming elections knowing that most non-shareholders would vote to keep them in office because of the money they would received.
The Progressive Bookkeeper was called in to help the president and board of directors for the Scroungess Corporation (SC) develop a new Progressive method of accounting. The primary goal of the new accounting system was to provide accounting reports that would to keep the shareholders in the dark regarding the realities of the company's finances.
The elected officials exercised authorities that were not necessarily granted to them in the original Articles of Incorporation, actions misunderstood or hidden from those who voted. The officials wished to spend more money than they had so they started borrowing from the shareholders. Once they met with resistance from the shareholders, in order to borrow more, they borrowed from other website companies who were in the same business they were. Loans were obtained and IOU's were issued and one day the shareholders became concerned and wanted an accounting of the financial condition of their company. The Bookkeeper presented the new Progressive accounting system to the president and board of directors and although none of them could clearly explain the accounting system, they told the shareholders that the program was something that only the smart and enlightened elite ones, like the elected officials, could understand fully. The leaders told the shareholders, "This is a new and Progressive system and you only need to 'Trust Us'". The shareholders were given a 25 volume written description of the new accounting system titled, "The Bookkeepers Tale" and there was nobody in the land who completely understood the accounting system, not even the Bookkeeper, however, the shareholders were provided a new list of terms such as; Deficit Financing, Internal Service Fund (ISF), Modified Accrual, Appropriation Account, Advance Funding, Forward Funding, and Proprietary Accounting.
Those who did research on the new Progressive system found that the company would report with "cash accounting" (this is what's happening today) and they would not show any of the obligations they needed to pay for in the future. The company would report that they had $1,000 in the bank and never tell the shareholders that they made arrangements with their mortgage holder to allow them to make two past mortgage payments six month's in the future. Many of the employees of the company as well as shareholders had opened savings accounts that the company had access to. The money the officers borrowed from their shareholders and owners to pay other bills was not accounted for as a debt because, as the officers would say, "All you need to do is "Trust Us".
The shareholders were confused and started looking into the new Progressive accounting system. Once looked into something amazing happened, the original shareholders who were concerned about the direction the Scroungess Corporation was taking formed a new business of their own called the Repay Tat Company (RTC).
Next the Repay Tat Company……..
NEXT: "Our Dream" - (Part 3)blog comments powered by Disqus