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July 15, 2011

PRSA Responds to O'Dwyer's Regarding Society's Financial Reporting and Auditing

The Public Relations Society of America (PRSA) has responded to a July 13 blog post on O’Dwyer’s Blog in which its publisher, Jack O’Dwyer, makes false allegations regarding PRSA's financial reporting and auditing. PRSA’s full response can be read here.

Statement from Arthur Yann, APR, PRSA vice president of public relations:
Mr. O'Dwyer, while a free press is essential to our country, principles and profession, not everything—or everyone—wrapped in the mantle of "journalism" is right or ethical, as the News of the World scandal demonstrates. But then again, it would appear that your organization condones such practices, given that records from our teleconferencing vendor show that telephone numbers registered to the J.R. O'Dwyer Company connected to PRSA teleconference calls without PRSA's permission five times between May 22, 2007, and May 12, 2009.

You've now repeated the lie that PRSA's auditors "quit" so often that you've clearly come to believe it's true. Yet, when Gary McCormick and Bill Murray met with you last Spring, they answered this allegation. They explained to you that PRSA routinely seeks competitive bids for professional services, including audit services, to manage costs. They also explained that it's common for organizations to change auditors periodically as a way of maintaining the auditor’s independence.

Moreover, you should realize that the very nature of an independent audit does not permit the auditor to follow "orders" (e.g., Arthur Andersen and Enron), so your allegation that Deloitte & Touche "wouldn't go along with … not deferring dues income" is patently false. In the event that an auditor deems an accounting policy or practice unusual or unorthodox, it will qualify its opinion with an exception. You'll note that PRSA's financial statements are "unqualified"; in other words, the auditor takes no exception to our accounting policies or practices and certifies that our financial statements are presented fairly.

You've also propagated the falsehood that none of the "big four" accounting firms are willing to work with PRSA. Mr. McCormick and Mr. Murray answered this allegation as well. Given the size of our business, PRSA prefers to work with midsize firms that want our business. Still, our current auditor, PKF, is a well-respected firm working in 125 countries and with $2.4 billion in aggregate fee income.

Over the years, PKF and other independent auditors—as well as the Internal Revenue Service—have reviewed our finances. All have concluded that PRSA gives proper value to deferred dues on its balance sheet, in keeping with Generally Accepted Accounting Principles (GAAP). Dues payments to PRSA are nonrefundable, and accounting standards state it is acceptable to book nonrefundable revenues upon receipt. Certainly, the IRS is a better and more scrupulous judge of what constitutes proper accounting than you.

Detailed PRSA financial statements are also reviewed internally by our Finance Committee, Audit Committee and Board of Directors, and are made available to our members. Despite this complete transparency and full disclosure of our financial information in accordance with all applicable deadlines and legal requirements, you continue to pursue your vendetta against PRSA through baseless allegations of financial impropriety, just as you personally attack the individuals who have fiduciary responsibility for the Society.

Though certain our requests will continue to be ignored, we again ask that you stop publishing false and defamatory information about PRSA and relentlessly interfering in the employment and educational relationships of our volunteers. In the meantime, as you continue to demand recompense for perceived past wrongs, your readers will decide your true motivations and intentions for themselves.

You expect PRSA to engage with you as if you were a professional journalist, to which we say, comport yourself as one, and then we'll talk.
Arthur Yann, APR
Vice President, Public Relations
Public Relations Society of America
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