The Top 10 Reasons
Why an Independent, Big Four, Professional Audit is Essential to the “Good Estate of the Holy Churches of God”*
Accountability is central to the Orthodox Christian life. All Orthodox Christians personally avail themselves of accountability through relationships with spiritual fathers and in the sacrament of Confession. Orthodox bishops are accountable before Synods. Husbands and wives are accountable to one another. Children are accountable to their parents. Parish priests are accountable to Parish Councils. Parish Councils are accountable to General Assemblies. Everyone is accountable to God on the Last Judgment Day.
In 21st century American society charitable organizations are held to be accountable before the law and before their supporting constituencies. A key feature of public accountability is transparency and full reporting in all financial matters. Failure to do this can lead to mismanagement, malfeasance, loss of assets, ruinous lawsuits and even criminal prosecution. This results in major damage to the public image of a charitable organization. Religious institutions, claiming the moral high ground in society, should therefore be the first to fulfill this responsibility.
An independent professional audit builds “ownership” and confidence in Archdiocese communicants. The endowment becomes “my” endowment because I have been a charitable investor in it. Now that I see that it is well managed and producing excellent programmatic results from the earnings to advance the mission of the Church, I want to invest more.
The Self-Ruled Antiochian Orthodox Christian Archdiocese has never had an independent professional audit by a Big Four accounting firm. One of the Big Four is necessary because small, friendly, in-house audits can be influenced to modify their findings. The tiny accounting firm Friehling & Horowitz, Inc. has been charged with conspiring with Bernard L. Madoff to defraud investors of $65 billion.
When national charitable organizations contract for an audit, they do so at the national corporate level and do not include local chapters. The cost for this, say for example, the Red Cross or the United Way, would be prohibitive. Most Orthodox parishes in America are separately chartered 501(C)3 charitable corporations. It is the option of their General Assemblies whether or not they need an audit.
According to the casual listing of Archdiocese assets by Metropolitan Philip at the Archdiocese Convention in Palm Desert (hear this at Ancient Faith Radio) the value of these assets is somewhere between $43,000,000 and $59,000,000. This does not include a multi-million dollar annual operating budget. Organizations of this size routinely conduct professional, independent audits. In the nonprofit world this is standard operating procedure strongly recommended by charity watchdog organizations. Even at $100,000 an audit is only .2% to .1% of the announced valuation of the Archdiocese assets proper – this does not include parishes.
One key financial question is support of Bishop Demetri. Does financial support expose the Archdiocese to a lawsuit should a similar event occur? What if an opportunistic person claims or stages inappropriate sexual contact knowing the value of the Archdiocese assets, its potential legal exposure and Bishop Demetri’s prior conviction? Who authorized the payments? How much is he paid? By “sponsoring” him in a return to active service could the Archdiocese be viewed as colluding with the Patriarchate and therefore also liable in a lawsuit? Has his return to public service been explained to the Archdiocese insurer? Have premiums therefore been significantly raised or has this been shielded from the insurer thereby guaranteeing non-payment should a lawsuit arise?
An explanation was offered that it was the Patriarch who asked that he be returned to public service. How well does the Patriarch understand the present litigious climate in the United States, especially in light of billion dollar losses by the Roman Catholic Church due to the sexual misconduct of priests who were known sex offenders? In a lawsuit wouldn’t reasonable people reasonably conclude that Metropolitan Philip and the Archdiocese Board of Trustees should have known better? Are major amounts of Archdiocese assets at risk? The Roman Catholic Church has had to sell hundreds of pieces of property to pay all the settlements, fines and penalties associated with sexual misconduct.
Good stewardship means good management. Parishes, individuals and organizations are "charitable investors" in the Church. The Archdiocese holds these funds and assets in trust for the Church. No one person – especially the person who holds primary oversight responsibility – should cloak financial procedures and investment policies from transparent public view. He or she should be the very one insisting on transparency to validate trust and further enhance the credibility of the institution. The CEO of any nonprofit who avoids, or maneuvers or argues against an independent audit should raise a red flag with staff, donors, clients and especially the Board of Trustees or Directors. Recent inquiry into mismanagement and embezzlement of Church finances identifies the primary reason as inordinate personal trust in one or two key people – the financial secretary, the treasurer, the CEO. An independent professional audit ensures against this and enhances the prestige of the organization.
The religious profession has precipitously declined in public perception over the last few decades. In the 2008 annual Gallup Poll asking which professions are most respected for honesty and ethics, clergy have dropped to number six behind nurses, pharmacists, high school teachers, medical doctors and policemen. Why would any Church organization feed suspicion and distrust of clergy by refusing to open the books to public view? Suspicion and distrust are great deterrents to generous giving.
One of the reasons given for not conducting an independent professional audit at the recent Archdiocese Convention is that one of the primary assets of the Archdiocese – the Antiochian Village – is already audited. This is true. What was not mentioned is the reason why the Antiochian Village now is audited every year. Gary Geha (now fallen asleep in the Lord), formerly Archmandrite George Geha was embezzling funds (approximately $200,000) to support a woman whom he had married and was supporting in a secret life. At that time the Antiochian Village financial books were subject to review by a Board appointed by Metropolitan Philip. And yet this went on for years before discovery.
The Greek Orthodox Archdiocese, the Orthodox Church in America and the Serbian national Church have all experienced financial and managerial "irregularities" in the past and sometimes much worse than “irregularities.” Is it our arrogance, our inordinate trust, or our fear of being accused and possibly punished for disloyalty that convinces us that this cannot happen to us? Or that we shouldn’t raise painful issues or ask difficult questions?
The Archdiocese should learn from one of its very own past mistakes. Approximately twenty years ago the Archdiocese conferred the Antiochian Gold Medal upon William Aramony, praising him for his charitable work as an Antiochian and the CEO of the United Way. A short time afterward, Mr. Aramony was accused of sexual misconduct and enriching himself from the contributions of donors given to assist the poor and the needy. Following an investigation, on April 3, 1995, after a three week trial, Mr. Aramony was convicted in the U.S. District Court for the Eastern District of Virginia on 25 counts including conspiracy to defraud, mail fraud, wire fraud, transportation of fraudulently acquired property, engaging in monetary transactions in unlawful activity, filing false tax returns and aiding in the filing of false tax returns. He was sentenced to 84 months in prison and fined $300,000. All of his later appeals were denied.
Complicit and co-opted corporate boards are primary culprits in the economic meltdown of the financial and credit industries all over the world. Their failure to provide adequate oversight, ask tough questions and fulfill their fiduciary responsibilities allowed obscene CEO compensation, inordinate corporate risk-taking and wildly misrepresented financial reporting.
Of course, the Archdiocese is a nonprofit organization and there is little evidence of the above-mentioned activity. But it does raise this question: is the Archdiocese Board of Trustees fulfilling their God-given vocation and calling to lay and clerical leadership or are they also co-opted and complicit in a failure to provide adequate oversight of assets and finances entrusted to them by the faithful members of the Church?
An Anonymous Orthodox Archpriest
*From the Great Ektenia of the official Service Book of the Antiochian Orthodox Christian Archdiocese