Proposal for the Creation of a Finance & Audit Working Group

Introduction

This proposal seeks to establish an Audit Working Group for the Jupiter community. The primary purpose of this group will be to audit other working groups, ensuring accountability, transparency, and adherence to each group’s charter and/or mission.

Responsibilities

The Audit Working Group will have the following responsibilities:

  1. Establish and Monitor Controls : The group will not only oversee the controls in place within each working group, but also help to establish controls where they are lacking, ensuring they are effective and being adhered to by each working group.
  2. Track and Record Expenses : The group will ensure that all expenses are being tracked and recorded properly by each working group. This includes verifying that funds are being spent in accordance with each working group’s charter and/or mission. During quarterly reports, the Audit Working Group will also report on each working group’s expenditures.
  3. Define and Monitor Annual Goals and KPIs : The Audit Working Group will define what are considered to be meaningful annual goals and KPIs. These must be realistic, measurable, attainable, and time-based. Each working group will be required to submit their annual goals and Key Performance Indicators (KPIs) to the Audit Working Group. These will then be made public to the community, promoting transparency.
  4. Quarterly Reports : The Audit Working Group will report quarterly on each working group’s progress towards achieving their annual goals and KPIs, as well as their expenditures.
  5. Bonus Structures : Ideally all bonus structures for each working group would be tied to their annual goals and KPIs. The Audit Working Group will independently report on each working group’s progress, further promoting accountability and transparency.

Conclusion

The creation of an Audit Working Group will provide a necessary layer of oversight within our community. By establishing controls, tracking expenses, defining meaningful goals and KPIs, and reporting on progress, we can ensure that each working group is operating effectively and transparently, and that the value proposed initially is being realized. This proposal represents a significant step towards improving the accountability and transparency of our growing list of working groups. We look forward to your support in implementing this initiative.

Note: Given the low number of working groups at the moment, an Audit group of 3 members working part-time should be sufficient to meet current needs. I propose the 3 member group donate their time for the first 6 months and if value is found in the Audit group after that, then they can be fairly compensated for their time and effort going forward. This will also allow the community time to see the value that the Audit working group will provide.

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Could you be more explicit about this notion, giving examples?

Ultimately, if this concept is relevant, we should be able to draw up a list of elements potentially applicable to the various working groups as they are, in order to make it possible to evaluate their objectives within a more general frame of reference as you advocate. But to be able to do that, we need to agree on a common definition that is sufficiently comprehensive and flexible. I see this as a difficulty, as these criteria seem to me to be innumerable… I confess that my remark is purely theoretical, but perhaps in practice we can manage to get away with it, hence my question :eyes:

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Hi Chaman, thank you for your feedback. One of the goals of the Audit working group is to provide a common framework for all to follow. So the Audit Working group would provide a framework on how goals should be crafted/created, but not what they actually are since the goals of each working group can be different. The KPI 's and goals would actually be developed by each working group. A KPI would measure the success of their goals. So as they develop a goal, they also have to measure that goal. They would present their goals to the Audit Working group and they would indicate how they plan to measure that success. It’s not the goal of the Audit Working group to be in charge of all other working groups, but rather to provide common guidelines and principles for all groups to follow, require reporting for transparency, and to present that data to the community in a consistent format on a regular basis in order to hold each working group accountable for their original mission. This will enable for the community to see if a particular group is meeting their goals and being effective, i.e. contributing to the overall growth of the community. For example, one working group could have a goal of increasing the staking pool for the Launchpad. To measure that you would measure more than just the pool value. You could also show the average amount staked per wallet and is it increasing over time or decreasing, you could show the average number of days staked per wallet and is that increasing or decreasing over time? Are the number of stakers increasing or decreasing over time? KPI’s can help to monitor performance and track progress towards specific objectives and highlight where attention needs to be given.

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I like this idea. Related to items 1, 2, and 3, I would like to see a Jupiverse Controller made up of a Chief Financial Officer leading a team of accountants. Their sole purpose is to audit and ensure that each group’s assets are properly accounted for and expended in a manner consistent with group mission. These positions would be paid from the start since I would expect professionals doing this work, not interns. The CFO also needs to have a level of authority, such as they would have the power to freeze a budget if necessary.

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What will be nice to find out is if the other existing structures which this proposal aim to audit haven’t already got auditing mechanisms within them. If that’s the case then this although interesting might not be necessary. But well thought thru proposal in general👍🏿

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I agree, we need a better understanding of the existing structures. Right now I’m not aware of any auditing mechanisms and I feel there are many questions that people have. I’m hoping an Audit Working Group can provide more transparency into what’s happening behind the scenes so that the community can continue to maintain its confidence in our direction. A lack of transparency makes people suspicious and 1 bad step, even if no ill will intended, can ruin a community. I’m hoping an independent Audit Working Group can give the community the confidence it needs to continue to grow. We have a good thing right now that is the life blood of any project, a community. I want to make sure that the community continues to thrive.

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Sounds like a solid plan

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I would hope that since this is crypto and everything is on-chain, we dont really need a centralized audit group.

But its a good start to solving a problem that will undoubtedly occur.

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Hello Mike,

First of all thank you for creating this proposal. I have couple of suggestion/opinion to be numerated below:

  • Might be good to change the name to Finance & Audit Working Group for a more broader scope.
  • We might need to establish first the Global Expense Policy to have a specific guideline on expenses, what are the limits and needs of approval, how to get reimbursed, policy review and update. Etc.
  • I agree with defining the Annual goals & Quarterly reports, but I disagree with establishing KPI, since it will limit the potential capabilities WG.
  • Track and record expenses is good too, we might wanna ensure that the budget is being correctly used & allocated, cashflows reports are available for each WG, ensure they have salary payouts and do an audit on purchases.
  • With this proposal, we can have a control placed on each WG and have more protection in place for the DAO budget. It’ll be a lot easier to approve and propose budget by looking at historical value of previous budgets, is it reasonable?

Thank you,
Opacks

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Hi Opacks, thank you for the feedback. I agree with you about the name change for the group. It was my intention to have the working group cover some aspects of Finance, so a great idea. However, I’m not sure how far down the rabbit hole we would go with Finance. For example Treasury Services or Tax and Compliance? Honestly, that was not my vision out of the gate. Not even sure what might already exist. To me, that’s part of the issue. We don’t know what we don’t know. I see the Finance & Audit Working Group (thanks again by the way) first just looking under the hood to understand what controls are in place when it comes to expenses, budgets, approvals etc. and making recommendations and reporting findings back to the community. I feel very strongly about transparency. For example, does separation of duties exist? How are budgets determined and approved? Are we grabbing arbitrary numbers for budgets, or were expenses planned and estimated based on future goals? And like you said, how are expenses paid for? Do members use out-of-pocket funds first and get reimbursed? If reimbursed for out-of-pocket funds, what evidence is required to substantiate the expense? Are receipts required for all expenses or just those above a certain limit? If submitting an expense for reimbursement, who is approving the disbursement? Are JUP tokens first liquidated and converted to fiat to pay for airfare for travel? What account will that fiat go into and who controls that account? Do we write checks from that account, have corporate credit cards? Many questions exist and I see this working group taking a deep dive into the workings of all groups and identifying potential issues to mitigate risk and to ensure we are all operating in a similar fashion. I could go on and on, but this post is already probably too long. :slight_smile:

Hello Mike,

I’m an accountant with 5years experience currently handling purchase audit, expense reports and policies. I think I can help with 1, 2 & 4 points and my partner she’s not that active here but she works with KPI, dashboards & data analytics. Interested working with you if you are open for collaboration. I raised this to Kemosabe and he will be replying soon to our thread.

Thank you,
Opacks

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I’m very open to the idea. It will be interesting to see how he responds. Even if certain levels of control are already in place, I still think a collaboration of an independent working group would be beneficial, even if it is just to validate information, controls, etc. I have a similar background as you and your partner. I have been in a corporate setting for over 20 years reporting up through Finance and currently oversee a dept of 14 with operations in the US and Canada. Looking forward to the opportunity.

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An external audit of an internal audit should be better than just an internal audit without any external audit but adding another admin layer is so un-crypto.

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