Sunday, May 24, 2009
Violating "internal controls" at the New York Times
Clark Hoyt is the "public editor" of the New York Times, and it is his job to look in to questions raised by readers and others about editorial decisions and other matters of professionalism and propriety. His column this morning deals with various minor transgressions of columnists, including the circumstances under which they take speaking fees. Toward the end we learn that the Times actually has a policy on the subject that has gone essentially unenforced:
But the incident highlighted a larger issue: The Times has not been abiding by all its rules on speaking fees for years. For example, the paper requires any staffer making $5,000 or more a year from speaking fees to file an itemized annual accounting of the appearances. Almost no one has been doing so.
Rosenthal and Bill Keller, the executive editor, sent a memo last week reminding everyone of the rule and acknowledging that they had been lax in enforcing it. I think the rules are vague and need a fresh look. They seem, for example, to be less stringent for staffers on book tours, even if they accept fees.
At a public company -- which the New York Times Company most certainly is even if the public stockholders are second-class citizens -- this is a violation of "internal controls" and ought to have been picked up by the accounting department or, failing that, internal audit. If I sat on the corporation's audit committee, I would want to know why it was not. If I were the auditor of the corporation (that means you, Ernst & Young) I would want to know why this was not picked up.
If you say that this is an "immaterial" control I might agree with you, except that it seems rather important to the production of the corporation's product -- credible news and commentary free of hidden conflicts -- and the protection of its brand equity, which is immensely valuable even in these difficult times. And, of course, there is the ceaseless editorializing in support of Sarbanes-Oxley Section 404, the law that requires public companies to maintain a system of "internal controls" lest, well, they fail to follow their own rules.
It really is very embarrassing, if you think about it. The question is whether any of the New York Times Company directors read Clark Hoyt's column, or are smart enough to spot the issue when they do.
6 Comments:
By 
, at
Sun May 24, 09:49:00 AM:
This may not be a small thing. There was an earlier post here about the divide between "poor" journalists and the "rich" they report on ... but if you develop a big enough name to be a paid for speaker that could greatly supplement your income. Maybe this is what keeps Maureen Dowd and Peggy Noonan in Prada. It can be a subtle bribe, very akin to how those in Congress are co-opted by campain contributions.
I had never heard about this before, and am actually shocked that papers like the New York Times don't take this seriously. If I was a poor but honest reporter I might even be outraged.
Link, over
By , at
Sun May 24, 10:05:00 AM:
If you think "lack of internal controls" is embarrassing, just wait 'til you see the names on the list of those who have paid the NYT presstitutes to speak. In fact, the list may also prove that certain NYT propagandists aren't really anti-American, pro-Obama socialists, they were just paid to say those things.
By , at
Sun May 24, 11:05:00 AM:
Gee whiz, have any recent investors relied upon the CEO representation that internal controls had no material deficiencies? Yes, Carlos Slim, we're talking to you. It seems to me that the Times has got itself into a Sarbox.
By 
directorblue, at
Sun May 24, 06:48:00 PM:
This is not a small matter.
Continuous and obvious violations of internal controls would seem to indicate an ineffective or hobbled audit process.
The implications of that weakness should be obvious, even to a Times reporter.
By Georg Felis, at
Sun May 24, 08:00:00 PM:
Rules for thee, but not for me. I presume we will be seeing an itemized list of these speaking fees our "neutral" guardians of Truth and Liberty have been collecting Real Soon Now?
50 bucks says "Never". (which by then will buy you one beer, domestic, generic)
By , at
Mon May 25, 02:54:00 PM:
After the Dowd plagiarism and dealing with the embarrassments raised by Megan McCardle, it's been an interesting week for Clark. Happily, since hypocrisy is the norm over there, he's been able to get through it without evident discomfort.
