A financial audit, or more accurately, an audit of financial statements, is the examination by an independent third party of the financial statements of a legal entity resulting in the publication of an independent opinion as to whether or not those financial statements are relevant, accurate, complete, and fairly presented. Financial audits exist to add credibility to the implied assertion by an organization’s management that its financial statements fairly represent the organization’s position and performance. It also serves to reveal essential information to all parties who may have an interest in ensuring that the financial statements for a particular legal entity are accurate. An audit is designed to reduce the possibility of a material misstatement, including false or missing information, whether caused by fraud or error.
For years 1999 through and including 2005, compilation reports are on record for each year. A compilation report is a presentation of financial statements prepared by management as the representation of the financial condition of a legal entity. Though the compilation reports were issued by the accounting firm of Konsen & Hostelley, LLP, such reports do not express any opinion or any form of assurance by the independent accountants as to the accuracy of the information included in the report.
It is also important to note that, prior to the fourth quarter of 2005, any two of three authorized signatures were required to complete all financial transactions. From mid-November 2005 to the present, only two authorized signatures were used—that of the Metropolitan and the Acting Treasurer.
At the Metropolitan Council meeting held in November 2005, Metropolitan Herman announced his intention to arrange for financial audits for the years 2004 and 2005. At the same meeting, he accepted the suggestion to adopt “Best Practices” to assist in the governance of The Orthodox Church in America. In both instances, the members of the Metropolitan Council concurred.
In January 2006, the firm of Lambrides, Lamos and Moulthrop, LLP, was hired to conduct financial audits for the years 2004 and 2005. In March 2006, their work was expanded to include a review of all regular and special appeals between the years 2001 and 2005, as requested by the Holy Synod of Bishops.
By May 2006, because much of the documentation needed in order to do their work was unavailable to them from management for either project—neither orally or in written form—they reported their inability to complete these two engagements.
With the encouragement of Metropolitan Herman, an active Finance Committee and an active Audit Committee were subsequently established as committees of the Metropolitan Council. These committees assisted in making possible a transition whereby some of the financial activities of the OCA administration in 2006 and all activities in 2007 were conducted for the most part with oversight by members of the Metropolitan Council, as required by the “Statute of The Orthodox Church in America.” More recently, an Investment Committee has been established and is beginning to actively oversee that aspect of the Church’s finances.
Presented here is The Orthodox Church in America Financial Statements and Auditor’s Report for Year Ended December 31, 2006. This accomplishment represents the cooperative and laborious efforts of many people inside and outside the community of our Church, who, for nearly a year and a half have worked to bring our financial activities into conformity with generally accepted accounting principles. This 2006 report is a significant, giant step forward. Yet, everyone whose involvement led to its finalization understands that, while the audit serves as a solid benchmark for future audits, many issues identified by the 2006 audit require additional attention. These items will be prioritized and addressed, one by one, as quickly and efficiently as possible. Everyone involved in the area of OCA finance is committed to such a process as we prepare for the 2007 Audit.
The 2006 Financial Statements are available for download in PDF format.