1993 Audit Committee Memo Revealed
An August 1993 internal OCA memo concerning the 1992 Financial Statement of the OCA warned that shortcomings in the OCA financial procedures, including inaccurate data, untimely reports, problems in the documentation of disbursements, and a failure to separate duties threatened the “financial integrity of the Church.”
The memo, addressed to Fr. Robert Kondratick, Chancellor, Treasurer Fr. Paul Kucynda, and Secretary to the Metropolitan Deacon Eric Wheeler, from the three-man OCA Audit Committee, notes that some of these failings had been known since 1990, and that this “...lack of accounting policies cannot continue.”
The memo, sent this week to OCANews.org, focused on eight areas in which the OCA finances were seen in need of significant reform. At the top of the list was the call for a “separation of duties”. The Committee wished to end the long-standing practice at Syosset for senior church figures not only to disburse funds, but also to record those own disbursements. The OCA Auditors were clear that “..no single employee should have access to both the physical assets and the related accounting records, or to all phases of a transaction.” Such a “separation of duties” is needed, the memo states in the most tactful manner possible, because “...of the danger of intentional or unintentional errors being made and not detected.” In short, with the system in place in 1993, it would be too easy for someone to divert funds, knowingly or unknowingly. The Committee noted, in large bold print in the original, that the Church’s outside auditors, Lambrides, Mendler, Lamos & Co, had requested that such a separation be instituted three years earlier, in 1990.
The Committee’s second recommendation is even more telling: “ The documentation of disbursements should be in accordance with standard accounting procedures.” The clear inference of the Committee is that the documentation of expenditures by senior members of the church administration were not.
The additional six recommendations concern the need for an accounting manual, the need for an organizational chart to define who was responsible for monies, reform of Accounts Payable reporting (which was decried as “inadequate”), reform of Financial Reports in general (“which were neither timely nor contain fully accurate data”), reforms to the Changes in Fund Balances reporting, and concerns related to facility videos for insurance purposes.
In its summary, the OCA Auditors, composed of Chairman John Kozey, William Dreisbach and Peter Junda, elected by the 1990 All American Council, warned that the two major points mentioned above are “important to the financial integrity (emphasis in original) of the OCA”. The separation of duties is specifically noted as being a question of stewardship, not a challenge to hierarchical principles, as some would later assert.
The question of stewardship echoes in the Committee’s final paragraph which noted: “In order to make proper financial decisions as the central church administration, you need timely and accurate data. (emphasis in original). Without these reforms being adopted, the Committee warns the OCA’s finances “...will continue to be bogged down in uncertainty and ambiguity, thereby constraining everyone.“
More prophetic words were never written. Despite the Audit Committee’s plea that: “IT IS IMPORTANT (emphasis in original) to understand that (this change) be accomplished, in our opinion as quickly as possible,” Document (8) in the OCAnew.org archives, a memo from Rob Taylor CPA to Acting Treasurer Archbishop Herman in 1999, makes clear that neither the separation of duties, the documentation of disbursements (especially regarding senior church administration’s Amex card expenditures), the recording of financial transactions, or the suggested Accounting Manual, etc., had been introduced in the intervening six years.
But why did no one do anything? The information about the need for change was simply kept from most of the Hierarchs, Metropolitan Council members and All American Council delegates. In his November 2005 essay to Metropolitan Herman entitled “ A Call to Accountability” ( Document (34)), the former Treasurer of the OCA, Protodeacon Eric Wheeler explains on page : “I was further forbidden to include in my reports to the Holy Synod and Metropolitan Council any mention of the managerial comments made by the auditors during this period of time.” It is no surprise, therefore, that Fr. Kondratick’s report to the 1992 Miami All American Council, entitled “ Unity, Communication and Mutual Accountability” (available at: http://www.oca.org/Docs.asp?ID=149&SID=12), which proudly listed numerous financial and management solutions undertaken at Syosset between 1989-1992, makes no mention of these critical recommendations, first made in 1990.
- Read the full text of the 1993 Audit Committee memo here