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April 4, 2000
PERSONAL ATTENTION [name withheld], CPA Office of the General Secretary National Conference of Catholic Bishops 3211 Fourth Street NE Washington, DC 20017-1194
Dear [name withheld]:
I received your letter of March 27 in response to my March 10 letter to Bishop Fiorenza. While the fact that any bishops would gather for the specific purpose of discussing accountability is encouraging, I remain only cautiously optimistic regarding the likelihood of a positive outcome. Nevertheless, I offer the following additional references and information and respectfully request that it be included in the participants’ informational packets.
In addition to the canons cited in my letter of December 12, I respectfully suggest the bishops include the following canon in their deliberations: Book V, Title II, Canon 1284, §1 and §2, 1° and 4° which read in pertinent part as follows: All administrators are to perform their duties with the diligence of a good householder. Therefore they must: 1° be vigilant that no goods placed in their care in any way perish or suffer damage ..... 4° .... guard them securely ... [emphasis added]
Canon law also emphasizes the need to comply with applicable civil laws. In that regard, my Webster’s unabridged Second Edition defines nonfeasance as follows: “in law, a failure to perform a duty”:. In light of the Canon 1284, I respectfully suggest the bishops’ ongoing and willful refusal to implement detailed, genuinely secure procedures oriented toward the protection of undeposited Sunday collection funds appears to meet that definition. In support of that, I refer to the following standards promulgated by your own professional society, the American Institute of Certified Public Accountants.
In 1972 the AICPA issued an authoritative guideline entitled Statement on Auditing Standards - Codification of Auditing Standards and Procedures. Of particular note for churches is Section 320.44 which states, in pertinent part: "..... agreement of a cash count with the recorded balance does not provide evidence that all cash received has been properly recorded. This illustrates an unavoidable distinction between fiduciary and recorded accountability: the former arises immediately upon acquisition of an asset; the latter arises only when the initial record of the transaction is prepared." [emphasis added]
In the case of a church's Sunday collection, fiduciary accountability begins when members of the congregation place their offerings in the collection basket. In a typical parish, however, the number of people (clergy, employees and volunteers) having lone, unobserved access to the collection or a portion thereof prior to its tabulation and deposit (recorded accountability) would leave even the greenest of auditors aghast. Section 320.42 of the AICPA statement addresses that critical interval, declaring: "The objective of safeguarding assets requires that access be limited to authorized personnel. The number and caliber of personnel to whom access is authorized should be influenced by the nature of the assets and the related susceptibility to loss through errors and irregularities. Limitation of direct access to assets requires appropriate physical segregation and protective equipment or devices." [emphasis added]
The terms errors and irregularities are employed to differentiate between accidental and intentional wrongdoing, respectively. When one considers "the nature of the assets" involved, i.e., significant amounts of uncounted currency, their "related susceptibility to loss" as a result of intentional wrongdoing should be glaringly evident to any knowledgeable and objective reviewer.
Many churches have good or perhaps even excellent control over their cash disbursements and thus might conclude that their revenue is secure. Section 320.67 of the AICPA statement addresses that misconception, in pertinent part, as follows: “Controls and weaknesses affecting different classes of transactions are not offsetting in their effect. For example, weaknesses in cash receipts procedures are not mitigated by controls in cash disbursements procedures; ....” [emphasis added] For a church, of course, the “cash receipts procedures” are represented by all stages of the Sunday collection process up to and including the bank deposit.
It is also relevant to note that, for those organizations whose continued existence depends upon their ability to show a financial profit, new technology and more efficient procedures are quickly adopted whenever such action is seen as a way to improve the so-called bottom line. But churches and other nonprofit organizations lack the for profit motive, and that absence can serve to strengthen, even institutionalize, that old rationale which usually concludes with the expression "because this is the way we've always done it." Any church officials who recognize they might fit into that category would be well advised to heed the AICPA’s overview of management’s fiscal responsibilities as stated in Section 110.02: “Management has the responsibility for adopting sound accounting policies, for maintaining an adequate and effective system of accounts, for safeguarding assets, and for devising a system of internal control that will, among other things, help assure the production of proper financial statements.”
Finally, and at the risk of antagonizing the participants, I respectfully direct your attention to two of Jesus’ admonitions. I believe both of them bear directly upon this matter. Matthew 18:7 - “Things that make people fall into sin are bound to happen, but how terrible for the one who makes them happen.” Luke 12:2-3 - “Whatever is covered up will be uncovered, and every secret will be made known. So then, whatever you have said in the dark will be heard in broad daylight, and whatever you have whispered in private in a closed room will be shouted from the housetops.”
While the bishops did not cause this temptation to sin, its elimination is totally within their power. In my opinion, their steadfast refusal to do so renders them subject to the spirit of Matthew 18:7. Insofar as Luke and Sunday collection security are concerned, I have no doubt that, over the past decade, many thoughts have been expressed in the dark and many opinions have been whispered in private, thoughts and opinions which the participants would never wish to be shouted from the housetops. I pray your meeting will be conducted as though our Lord were present in body as well as in spirit. In that circumstance, I am hopeful the extraneous considerations which affected past deliberations will dissipate in the face of logic, common sense and an overwhelming desire to do what is best for Christ’s faithful.
After ten years, [name withheld], it should go without saying but I once again wish to declare my readiness to assist the bishops in any way they may deem appropriate. In that regard, my Website ( http://www.gis.net/~pss ) contains a great deal of information, including a synopsis of the elements of a genuinely secure collection system as well as detailed guidelines for establishing that condition. I would appreciate being informed of the outcome of your meeting at such time as the results become available.
Sincerely,
[signed] M. W. Ryan
cc: Bishop Fiorenza
RESPONSE SUMMARY
As anticipated, no response was forthcoming. A follow-up letter was directed to the AGS on June 15, 2000 and can be viewed by clicking on the menu bar button entitled Assoc. Gen. Secy. 3. |
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