FOIA on Martin Luther King

## Lack of Interest

At the present time, widespread lack of interest in joining a cooperative is more of a problem to potential organizers than too much demand. The author contacted a number of public accounting firms about the feasibility of forming cooperatives and found that three firms who had already made such an attempt could not interest enough firms to join. Their comments were:

We tried to organize one several years ago; the firms contacted were not interested.

- We would like to explore this possibility but we can't get anyone else interested.

At present there appears to be a tragic lack of interest locally by other CPA firms.

Unquestionably, one reason for the lack of interest is a misunderstanding of the true nature of a cooperative. Interested companies must therefore be prepared to sell the idea to others. As more published material becomes available in the field, this problem should be alleviated.

## Confidential Information

A second major reason for lack of interest is that companies fear for the control and security of their confidential or sensitive information. Such a concern is certainly legitimate and underscores the need for a cooperative that is to be successful, to devise an adequate system for quality control and security. A committee responsible for such a system should be established at the outset by the sponsoring firms.

## Protection

One of its duties should be to adequately safeguard the sponsors' records and documents against fire, theft, water, and other hazards and disasters. Statistics compiled by the Safe Manufacturers National Association show that about one-half of companies whose important records and documents were destroyed through some catastrophe never resumed business or were permanently closed down within six months: an additional 13% suffered serious economic impairment and were able to remain in business only under severe operating handicaps. For this reason the quality control and security committee must see that the cooperative service bureau maintains:

protective devices

fireproof vaults

a method of reconstructing any destroyed records

adequate insurance to cover loss of important client records or documents

## Preventing Disclosure

The committee must also take measures to prevent one client's records from becoming commingled with another client's records - a not-unlikely occurrence in such an environment.

Finally, the committee should determine how to prevent disclosure of confidential information. For example, no member of any sponsoring company should be allowed in certain strategic parts of the computer center. Likewise, each company's records should be coded and the code number known only to key computer center personnel. In cases requiring almost security, the actual processing of data should be monitored by a key employee of the computer center or possibly by a representative of a

disinterested third party, such as a firm of independent public accountants.

## Sharing of Expenses: Startup Costs

With an adequate number of sponsoring firms lined up and a sound security system worked out, the third necessity in establishing a successful cooperative is to determine methods of sharing the expenses. There are two categories of costs to consider:

1. Startup costs. These include all costs incurred prior to the time that the cooperative commences operations. Startup costs are either directly traceable to a particular firm or are joint or common to all firms. An example of a direct cost would be that of analyzing, modifying, and redesigning of systems prior to conversion to the computer. An example of a joint or common cost would be the cost of computer housing, including air conditioning, engineering supervision, false floors, ducts and pipes, transformers or motor generators, cabling and wiring, and overhead racks and supports.

Each sponsoring firm should pay for its own direct costs. Joint costs should be shared equally or apportioned among the firms according to some equitable formula.

## Operating Costs

2. Operating costs. These include the monthly hardware and software costs to operate the cooperative. Hardware costs refer to the periodic rental or purchase charge for the computer equipment. As a minimum the computer equipment consists of an input unit, a central processing unit, and an output unit. Software costs include personnel costs, programming costs, testing and debugging costs, magnetic tapes, disc packs, punched cards, paper, paper tapes, repair parts, power, telecommunication lines, and so on.

Operating costs that are directly traceable should be paid by the using firm. Joint or common costs can be shared equally or can be allocated to each firm based on the number of transactions processed or the actual computer processing time used during the period. In addition, if so desired, a sponsor could be required to pay a minimum or maximum monthly charge.

## Management

Fourthly, the sponsoring companies should decide how to manage the venture. It is advisable to form a committee to oversee the management and operation of the cooperative. A decision must be made whether each member regardless of size should have one vote or whether another basis of voting should be used. This decision should assure participants that no one firm will dominate or control the cooperative.

## Common Line of Business

A factor not to be overlooked when forming a cooperative, one which will avoid frustrations, complications, and extra expenses, is to see that each member is in the same industry or business category. Thus all sponsoring firms will have similar operating problems that can be simultaneously solved by the computer personnel, resulting in the allocation of smaller costs to each firm for each problem solved. Also computer programs developed or packaged programs purchased can be shared by all sponsors with minimum modifications, thus resulting in considerable programming cost savings.