Local policies and procedures combat fraud and theft
Robert Delaney of The Michigan Catholic
Published January 19, 2007
Detroit – The Archdiocese of Detroit takes proper accounting for parish and school funds "very seriously" and has mandated strong financial controls to prevent embezzlement, says Dan Oliver, the archdiocese's chief finance officer.
"We have taken a number of steps over the years to put in place policies and procedures — and departments to monitor their implementation — to ensure the funds entrusted to the parishes by the people are accurately accounted for," says Oliver, director of the archdiocesan Department of Finance and Administration.
With a national survey by two Villanova researchers reporting that more than four-fifths of U.S. dioceses have experienced instances of embezzlement or other misuse of parish funds within the past five years, while only two-fifths of dioceses have formal fraud policies, (see related article from CNS) Oliver says many of the policies in the archdiocese have been in place for decades while others have been strengthened in more recent years.
"The matter of ensuring the accuracy of accounting for Church funds requires due diligence to see it is done correctly on all levels. This means at the archdiocesan level, as well as the parishes, schools and their affiliated support organizations," he continues.
For example, it is already archdiocesan policy that each parish should have in place a stewardship commission (referred to as a parish finance council in the Villanova study) made up of business and other professionals who work with and advise the pastor as to how to best utilize the time, talents and treasure within each parish.
"We encourage stewardship commissions to meet on a monthly basis to review the parish's finances, and make adjustments to the budget and corresponding operations as deemed necessary," Oliver says.
The archdiocese already has a Policies and Procedures Manual for parishes and schools, so they all follow the same accounting and managing practices in conducting their business activities.
In fact, parishes and schools are encouraged to use the same accounting software for their business activities so as to standardize the software used throughout the archdiocese. "Currently, approximately 50 percent of the parishes and schools are using the same software, which is up dramatically compared to a few years ago," Oliver says. The software a parish uses is the decision of the pastor and stewardship commission.
In addition, he says:
- The archdiocese has standardized budget and financial report forms for the parishes and schools to report their financial activities to the archdiocesan Department of Finance and Administration on an annual basis.
- The archdiocese has had an audit department in place for 31 years to review in detail the financial activities of its parishes, schools, and affiliated support organizations.
- Since 1974, an external CPA firm has conducted annual audits of financial records of archdiocesan administration and program departments. Upon completion of the audit a copy of the completed audit is mailed to each parish in the archdiocese, and is available to others upon request.
- The archdiocesan finance council meets four times a year.
- There has been a process in place for many years to deal "directly and firmly" with those who have misused or embezzled parish or school funds. The archdiocese is consulting with its attorneys to formalize a written process.
Oliver says budget constraints make it impossible for the archdiocese to audit all 299 parishes and missions on an annual basis. The archdiocese audits parishes and schools whenever there is a change of pastor, whenever an audit is requested by a regional bishop, or if the Department of Finance and Administration's analysis of financial information submitted to it determines an audit is required.
The archdiocese also helps parishes and schools comply with procedures and better manage their business affairs through its Office of Parish Support Services, Oliver continues.
The office, in operation for seven years now, works with pastors, principals, parish or school staff, parish councils and stewardship commissions, he explains.
The office assists in areas of software support, payroll, taxation, employee benefits, accounting, procedure reviews, budget and financial report preparation, and a number of others. In addition, it holds several educational workshops during the year for the benefit of those who deal with the business side of a parish or school's operations.
Oliver also notes that the archdiocese also has a certification program for bookkeepers and business managers, and is seeking to get the program accredited nationally by the U.S. Conference of Catholic Bishops.
In addition to preventing fraud and theft, Oliver says there is a concern for avoiding waste and unnecessary expenses. "The archdiocese has gone through two major reorganizations within the last five years resulting in staff reductions to cut costs, and is constantly reviewing its financial position to keep expenses in line with projected revenues," he says.
Even with its financial controls and procedures, the archdiocese has not been immune to cases of embezzlement on the parish level, but Oliver says none of them have amounted to the hundreds of thousands of dollars scale as in some other dioceses, let alone into the millions of dollars as in one recent case.
Of about a dozen cases, he says some have involved general parish finances and some have been connected to special activities such as parish festivals.
About half were discovered as a result of the archdiocese's financial controls and auditing procedures, and the rest were discovered as a result of tips from concerned parishioners who suspected something was amiss, he says.
To report suspected financial irregularities, call Dan Oliver at the archdiocesan Department of Finance and Administration, at (313) 237-5834.
2006 Annual Financial Report for the Archdiocese of Detroit
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