Financial update released
An update on the finances of the Orthodox Church in America was released by the Very Rev. Paul Kucynda, acting treasurer, on Friday, June 29, 2007.
The text of the update reads as follows.
“Recently, we provided a draft of the 2006 audited financial statements. The financial statements and accounting records of the Orthodox Church in America (“the Church”) had not been audited by a certified public accounting firm with nonprofit expertise for several years.
“In July 2005, at the joint meeting that followed the 14th All-American Council, the Holy Synod and the Metropolitan Council appointed the Very Rev. Paul Kucynda as acting treasurer. Based on his assessment of the lack of financial policies and procedures, he established financial guidelines in the fourth quarter of 2005. Although these were not complete and comprehensive, they were a starting point to improve the financial practices of the Church. The guidelines were consistently enforced since that time and have shown positive results. During the year 2006, with the direction and assistance of the Metropolitan Council Finance Committee and the advice of the Reorganizational Task Force and the transition officer, we have maintained a balance between our income and expenses.
“Early in 2006, the accounting firm, Lambrides, Lamos, Moulthrop, LLP (“Lambrides”) was engaged to audit the 2004 and 2005 financial statements. The auditors determined that the Church financial statements and records could not be audited because the documentation to support many of the disbursements recorded in the general ledger was inadequate.
“Lambrides was also engaged to review the supporting documentation for disbursements of restricted funds for the six-year period from January 1999 through December 2005. The supporting documentation for many, many disbursements from 1999 through the third quarter of 2005 was discovered to be inadequate. It has been difficult to determine whether the funds were used in every case for the exempt purpose of the Church and for the purpose intended by the donors.
“The Church will use due diligence to determine the amount of restricted and other funds not used for their intended purpose. This process is tedious and time consuming, but we will be thorough. This work will continue until the auditors determine otherwise. If you have personal knowledge of any contribution that may not have been used for their intended purpose, please contact the acting treasurer or the chair of the Metropolitan Council Ethics Committee. We welcome your assistance and specific information. Once we have determined the amount of funds that were not used in accordance with non-profit principles or law, we will consult with legal and accounting experts with non-profit experience to determine the best options to resolve this situation. We intend to honor donor restrictions on contributions.
“As a result of the written financial procedures instituted in the fourth quarter of 2005, the supporting documentation for all general fund activities in 2006 was available to the auditors. However, they had to qualify the audit opinion because the Church was unable to provide verifiable opening balances at January 1, 2006 for the restricted funds.
“What does this mean?
- “Revenues and expenditures for 2006 including restricted funds have been audited.
- “Balance sheet accounts as of 1/1/06 and 12/31/06 have been audited except for the carry forward balances from 12/31/05 in the restricted funds.
- “There are significant open matters regarding the carry forward balances including the utilization of unrestricted and restricted funds in prior years. The Church will continue to work diligently to resolve this.
“Subsequent releases are being prepared to provide information on the use of the Honesdale loan proceeds, and details on the restricted funds/designated appeals for 2006. We will also provide quarterly financials beginning with the first quarter of 2007. Our goal is to be able to report within 30 days of the end of the quarter. Additional information and financial statements will be provided as available and appropriate.
“We entered the path to resolution almost two years ago with the intent to bring the income and the expenses of the Church into balance. However, the complexity of task ahead was not obvious at first. As an attempt was made to complete audits for years 2004 and 2005, what was to be a simple task was found to be an extremely tedious and complicated one. Unfortunately, we errorred when we did not communicate this situation publicly, effectively and in a timely manner. For this, we apologize.
“With the full support of the Metropolitan Council Finance Committee, the Metropolitan Council Audit Committee, the members of the Reorganization Task Force and the transition officer, the policies and practices established in late 2005 are continuing to be improved in 2007. Our compliance with the financial management principles incorporated in the Best Practices document recently adopted by the Metropolitan Council, will ensure greater accountability for the resources of the Church as we go forward.
“The Treasurer Search Committee of the Reorganization Task Force is in the process of reviewing the applications of two persons who have applied for the treasurer’s position since the Metropolitan Council met earlier this month. Hopefully, a suitable candidate will be identified before the end of July. If this happens, all major positions anticipated by the Reorganization Task Force proposal as accepted by the Holy Synod and Metropolitan Council, will be filled.
“Their talents, in addition to those of numerous volunteers within the membership of our Church who have come forward to be a part of the solution, together with accounting and legal experts engaged by the Church, will continue to direct us along the path to resolution.
“If you have any questions regarding this report, please contact me at .(JavaScript must be enabled to view this email address).”