OCA Treasurer offers remarks on current financial status of the Church

On November 13, 2007, the newly-appointed OCA Treasurer, Priest Michael Tassos, issued a memorandum to the Holy Synod of Bishops and Metropolitan Council offering his initial remarks on the Church’s current financial status. The text of Fr. Michael’s memorandum is as follows.

“I would like to introduce myself and to give you a fairly brief but realistic update on the financial picture of the OCA as well as my more immediate goals and objectives.

“I arrived in New York this past Thursday and had the opportunity to sit with Fr. Alexander Garklavs, Fr. Andrew Jarmus, Dn. John Zarras and Mr. Paul Bodnar and receive an update on various issues.

“Of the items we discussed there were two significant issues that I would like to bring to your attention: (1) the amounts currently being paid to Mr. Paul Bodnar, and (2) the issue of “excess benefits” related to gifts and other enurements to former staff of the OCA chancery.

“With regard to payments to Mr. Bodnar, it was brought to my attention that Mr. Bodnar is still awaiting the transfer of his I-94 multiple entry permit from the Greek Orthodox Metropolis of San Francisco to the OCA and that certain monthly amounts have been advanced to him. I reviewed the signed notes for each check that Mr. Bodnar has received. As far as I can see there is nothing that is being done here that is either illegal or unethical. The only other point that remains is the subject of an appropriate amount of interest to charge. I have spoken to everyone, including Mr. Bodnar, and suggested that we charge a reasonable amount of interest as this is an IRS requirement.

“The second issue has to do with ‘Excess Benefits’ for some prior members of the chancery. The IRS requires employers to calculate the amount of “compensation” paid or given in some other fashion to employees. Examples of ‘Excess Benefits’ include perks such as vacation trips, forgiving loans or advances, club memberships, dues, payment of certain types of insurance policies, etc. This is not a simple issue to tackle because the recipient must also pay for their portion of any employment taxes related to such benefits. Furthermore, if we determine that certain amounts were not included as compensation and should have been, we will need to go back and amend the W-2’s for these individuals, the quarterly payroll tax reports, and the annual reports to both the IRS and the Social Security administration.

“On Friday I spent a large part of the day speaking with the accounts payable/staff accountant staff person. She showed me the considerable amount of correspondence that has piled up since Fr. Stavros Strikis left his position. One very important point that I would like to bring to your attention has to do with the permanently restricted funds. There is a great deal of correspondence that must be thoroughly reviewed. In a number of cases the OCA is named as the administrator and thus certain reports need to be filed with the IRS. This is not currently happening. I contacted Fr. Stavros on Friday and he has agreed to speak with me at a set time every day until I am completely up to speed with all of his files and other information.

“Another point that you should be aware of is that a consequence of the downsizing that has occurred is that the Blackbaud accounting software is not being fully utilized at this time. Prior to the purchase and implementation of the Blackbaud software package, a Microsoft Access database program was developed to keep track of donations. The staff is continuing to utilize this database program for posting cash receipts. It is not currently very efficient because it requires that the receipt information be entered into the Blauckbaud software via a journal entry. One of the first things that I hope to accomplish next week is to begin to begin the process of migrating the donations into the new program.

“The other thing that I did with our accounts payable staff person/staff accountant was to try to get a sense of the OCA’s actual current cash position. She is behind in the monthly bank reconciliation process due in part to the fact that the staff person in charge of posting cash receipts has been off of work lately as a result of a very serious fracture in her wrist, and is not expected to be back for several weeks. Nonetheless I reviewed the bank balances and the file of invoices to be paid as well as the payroll to be paid next week. I’m sorry to have to say this but there is very little left in the financial tank.

“On Monday, His Beatitude and I both signed new signature cards for the three Commerce Bank accounts, unrestricted, temporarily restricted, and payroll. I also placed a call to the our representative for the Honesdale National Bank and our representative from Wachovia Securities in order to get the signatories changed for these as well.

“I am very sorry to bombard you with so much detail about the current financial affairs however I feel that it is imperative that you understand what is actually going on and what are we doing. In the near future it is my intention to focus on four main issues: (1) meet with the accountants that have been providing ongoing assistance and determine their future involvement, and with the accounting firm that performed the audit for 2006, (b) meet with the Proskauer, Rose law firm that we still owe money to and try to work out some sort of payment plan, (c) begin to make some sense of the current financial reporting, and (d) thoroughly review the financial report that was prepared for the period ending June 30, 2007.

“I would also like to add a remark about the June 30th report and state why I asked that it not be released on the OCA website until I arrived. Based on the preliminary report that I received there is still confusion as to what should be done monthly to convert the books from a cash basis to an accrual basis as well as how much information needs to be provided when it is presenting its financial statements, even on an interim basis. Since the OCA has decided to present its financials on the accrual basis and to follow Generally Accepted Accounting Principles (GAAP), it is only logical that all interim financial reports also be on the accrual basis. A cash basis report is basically like your checkbook. However, to put the books on an accrual basis, means that all invoices and expenses, whether paid in the current period or not need to be reflected in the books and records. The same is true for revenue. Given the withholding of funds from the Diocese of the Midwest, I suspect that we will simply have to put a reserve against the receipts for now in order to make the reports meaningful.

“Dear brothers and sisters in Christ, I ask for your patience. There is a tremendous amount of clean up work that needs to take place before I can tell you that everything is as it should be. I will endeavor to keep you very informed about the financial operations at the chancery and to answer any questions you may have. Please also keep in mind that I am coming in completely from the outside. It is not my intention to pick sides, nor is it to either praise or malign any individuals. At this point I simply want to get us back on course.”