As the Dow plummeted last fall and the so-called experts rushed to point fingers away from themselves, Kiplinger.com ran a list of names under the banner “They Called It Right.”
One expected to see the usual faces carved in stone on the media-anointed Mt. Rushmore of financial experts: Pickens (“I think you’ll see oil at $150 a barrel by end of year,” June 20, 2008); Cramer (“…which is why I’ve told you on weakness to buy Wachovia,” Sept. 15, 2008); or Madoff (“In today’s regulatory environment, it’s virtually impossible to violate rules,” Oct. 20, 2007). None was on the list.
The names on the list—Roubini; Schiff; Whitney; Tice; Grantham; Shiller; Rodriguez; Atteberry; Kiesel—were completely unknown to me.
What struck me was that, while logic suggested that someone had to see it coming, no one who did had a significant channel into America’s consciousness to penetrate the fog of fiscal inattention and contentment that had become pervasive. Predictable or not, the axe has leveled both the mighty and the weak.
Not surprisingly—and quite appropriately—AANS members have repeatedly asked me the same questions over the past few months: “What about the AANS? How are we doing?” The answer is: Considering the universal economic challenges, fairly well.
As some members may recall, the AANS hit its own “financial wall” in 2000. Annual net losses in the millions were routine, budget management and oversight were inconsistent, and proactive trend analysis was nonexistent. Spending was unchecked, the AANS infrastructure was top-heavy, and the scheduled annual turnover of its physician leadership was occurring simultaneously with the unscheduled turnover of executive directors (three in three years). That crisis was not predicted either.
A significant downsizing and recovery plan was quickly implemented, and it had a relatively immediate, positive effect. The longer term value of that process is just now coming to light, illuminated by a nerve-rattling recession.
Clearly, the AANS investment portfolio is being jolted like every portfolio in the country right now. But, calibrated to play good defense, we are weathering the storm.
The noninvestment aspects of the AANS fiscal profile are stable and intact, benefiting from the constant monitoring policies put in place after our own “downturn.”
The AANS leadership routinely receives detailed financial reports as a matter of policy. Monthly statements go out within two weeks of a month closing out. The Finance Committee meets twice a year to receive detailed reports from the AANS treasurer and senior management, and regularly scheduled conference calls provide additional accountability. The Finance Committee also receives oral reports each fall from the AANS’ investments manager and a senior partner from the accounting firm that conducts our annual audit. The AANS Board of Directors receives an oral report from management and leadership twice a year. The AANS Executive Committee receives oral financial reports a minimum of four times a year as well as the monthly and year-end financials.
The AANS budget preparation, implementation, and year-end report are mandated by written policies and protocols. Once approved, an annual budget cannot be modified without a detailed Exception to Budget procedure involving the top physician and professional leadership of the AANS. No significant change to an operative budget is exempt from this process.
Without demonstrated competency in budget development and management, no candidate for a senior level management position at AANS will be hired.
As an AANS member, to aid in understanding of the fiscal viability of your organization you receive an annual report, and you can attend the annual business meeting at which afinancial report is made by the AANS treasurer.
Overall, the finances of the AANS have never been more open to scrutiny, more frequently monitored, subjected to review and input by a larger or more diverse group of evaluators, and guarded by more rigorous early warning systems than in the past seven years.
Every crisis generates a subsequent system of safeguards. As a member of the AANS, you have benefited from our crisis in 2000 in a significant way: Today, the financial viability of the AANS is dependent on concrete, predictive data rather than merely trusting that, after the fact, someone might have “called it right.”
Thomas A. Marshall is AANS executive director. The author reported no conflicts for disclosure.