At a shareholder meeting of the Multiple Listing Service of Northern Illinois, accounting firm PriceWaterHouseCoopers presented the results from a controversial forensic audit to a gaggle of association members, executives and their lawyers. The group officially received the report and agreed to act on findings at a meeting next Monday.
Prior to the meeting getting underway, MLSNI CEO Jay Huffman and his general counsel were asked to leave the meeting. He was not given a copy of the report until first signing a non-disclosure agreement.
In April, one of the largest MLSs in the country voted to conduct a forensic audit of the operation and Huffman. The MLS has about 37,000 members in more than 6,000 realty offices in the Chicago area.
A forensic audit is different from most audits in that it involves auditing, accounting and investigating. Forensic accountants engage in “factual economic transactional analysis that requires a level of detail and precision sustainable in an adversarial legal proceeding,” according to the Journal of Forensic Accounting.
Steve Bochenek, attorney for the Illinois Association of Realtors, oversaw the process.
Terry Penza, president of the Northshore-Barrington Association of Realtors, initiated the motion for the audit at a special shareholders meeting on April 6. At that time, the release to shareholders of the MLS’ financial statements had been delayed for several months.
“On April 6, when the shareholder meeting took place, no one had seen a financial (statement) since June 30, 2003. That was the issue,” Penza said at the time.
Two days after the shareholder meeting, Huffman produced the delayed financial statements. He said the MLS’ annual audit is what caused a delay in the production of financial statements.
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