Fall River Diocese still in dark ages of financial disclosure

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Page Category: 2007 January

http://www.southcoasttoday.com/daily/01-07/01-14-07/01local.htm

Fall River Diocese still in dark ages of financial disclosure

 By STEVE URBON, Standard-Times senior correspondent

NEWBEDFORD — The Diocese of Fall River may have been a decade ahead ofmost of the nation in dealing with sexual abuse by priests, but it lagswell behind many others nationally — and all of the others statewide —in making its financial statements accessible to parishioners and thepublic.
TheArchdiocese of Boston, under Cardinal Sean P. O'Malley, former bishopof Fall River, as well as the dioceses of Springfield and Worcester,post their annual audit reports on their Web sites in the spirit offull disclosure.
Butthe Diocese of Fall River, led by Bishop George Coleman, does not.Asked to provide a copy of its audit report, the diocese refused.
Theissue of financial accountability dovetails with the massive legalsettlements many dioceses, including Fall River, have made with thevictims of sexual abuse by priests. (As of 2004, the Diocese of FallRiver reported it had paid $16 million to settle 216 claims, mostly tovictims of the late former priest James Porter.)
Transparencyabout where the money comes from and goes is one of the main objectivesof Voice of the Faithful, a controversial lay group organized in thewake of the scandals.
"TheArchdiocese of Boston has been the example for everybody to follow,"said George Perkins, Ph.D., of Yarmouth, a retired banker, economistand Voice of the Faithful member.
Yetrather than make public its annual audits, the Diocese of Fall Riverinstead publishes an annual report on the contributions and spending inthe Catholic Charities Appeal.
"It'snot an audited statement. It's an income statement. It's not a balancesheet. And I don't know who produces it," Dr. Perkins said.
JohnKearns, the spokesman for the Diocese of Fall River, refused aStandard-Times request for the annual audit. And he said that while thebishop is "looking at" the idea of making it public, the diocese hasnever done so.
Alack of accountability and transparency can lead to real trouble, abusesettlements aside, according to researchers at Villanova University'sCenter for the Study of Church Management led by Dr. Charles Zech.
Ina survey published at year's end, he revealed that 85 percent of thedioceses in America who answered his questionnaire (78 in all, about 45percent of the 174 queried) admitted that embezzlements had occurredsomewhere in its jurisdiction within the last five years.
Auditsdon't typically uncover such crimes, which surface in other ways, thestudy concluded. But a culture of financial transparency and monitoringserves to prevent and detect fraud and theft, Dr. Zech told TheStandard-Times.
Embezzlementstruck in the Fall River Diocese several years ago; the Rev. BernardKelly admitted stealing large sums from St. Joseph's Parish in WoodsHole and Our Lady of Lourdes Parish in Wellfleet, using some of it toimprove his $3.5 million Cape Cod estate and horse farm.
Rev. Kelly, who still faces criminal charges. reached a $1.45 million settlement with the diocese last year.
But most parishes in the diocese still are not routinely audited, although Mr. Kearns said that may soon change.
Mr.Kearns said he did not know whether Fall River answered the Villanovasurvey, and Dr. Zech said that he didn't either, since respondents werekept strictly anonymous.
Theroot of the problem is that "unlike corporations which providequarterly financial statements to the SEC and hold quarterly conferencecalls with outside analysts, the church is subject to almost norecurring outside financial scrutiny."
While"many dioceses provide parishioners with an annual financial aid andadministrative newsletter, which provides a highly summarized view ofcash flows for the year and the results of social and spiritualprograms offered by the diocese, many dioceses do neither."
"Thisis not an attempt to deceive, misrepresent or hide something," saidVoice of the Faithful's Dr. Perkins. "It simply reflects on theclergy's lack of financial sophistication. They think when they issuethis report they're doing what's necessary, but anyone with training infiduciary responsibility would deem it inadequate."
Mr.Kearns pointed out that Fall River stands apart from most otherdioceses because "we don't tax the parishes." That means the annualbishop's appeal, held in the spring, provides all the money for thework of the diocese administration, including Catholic Charities, hesaid. And the May statement, published in The Anchor, the diocesannewspaper, summarizes those finances.
Told of the no-tax system, Dr. Zech was surprised, and added that he knows of no other diocese that operates that way.
Thediocese — if not the individual parishes — does employ an outsideauditor, which Dr. Zech and Dr. Perkins view as essential, although thereports are kept private, which frustrates those such as Voice of theFaithful.
AndFall River has in place many of the things recommended by Dr. Zech,such as frequent meetings of the Diocesan Financial Council, staffingthe DLC with financial experts and standardizing much (but not all) ofthe accounting software used throughout the diocese. (Making the auditreports public is not among Dr. Zech's recommendations.)
ButDr. Perkins pointed out that the parishes don't yet have that level ofscrutiny. "I have never met anybody" who has seen a parish audit, hesaid. "They say the audit is too expensive."
Hesaid he inquired and found that the average parish audit would cost$3,000 to $5,000; Mr. Kearns said that should mandatory audits becomethe norm every couple of years, who will pay is still unresolved.
Theexpense of such requirements was one reason the Massachusetts bishopsopposed a bill last year that would have required churches of alldenominations to make detailed financial reports to the attorneygeneral as a check on their settlement activity, among other concernsvoiced by reformers.
Dr. Perkins said he agrees that such a law would "be an intrusion on religious freedom."
Buthe said that doesn't mean more disclosure isn't needed for those makingthe donations. Some parishes supply a budget, he said, "but a budget isuseless information" compared to an audit. Sunday collections are oftenreported in weekly church bulletins, "but again, that doesn't tell youvery much."
In his parish, financial reports don't include school finances. "Whoa! What else isn't in there?" he asked.
Diocesesin other parts of the country are already doing full parish audits andmaking them public. Dr. Perkins spent many years in the Archdiocese ofMilwaukee, where "those goals are already met."
"It's probably one reason that Voice of the Faithful is not active there," he said. "This stuff is second nature."
InFall River, parishes make monthly financial reports to the diocese, Mr.Kearns said; but those are not public. And the diocese is accountableto no one but the Vatican.
Detailedrecommendations for financial controls that go beyond canon law havebeen published by the U.S. Conference of Catholic Bishops, but they arevoluntary and not universally followed, Dr. Perkins and Dr. Zech noted."If every diocese did what the U.S. Conference of Catholic Bishopssuggests, Voice of the Faithful would have no agenda for the financialaccountability campaign," Dr. Perkins said.
Pastorsat local parishes, Dr. Zech said, often make the mistake of recruitinga parishioner who, say, happens to be a bookkeeper to manage thefinances. That well-meaning person may have no idea about currentaccounting requirements. "We hear all kinds of horror stories withbookkeeper errors," he said.
Infact, no suggestion appears too basic. The bishops themselves posed theproblem of one person collecting money on Sunday, logging it anddepositing it in the bank. Yet parishes still do that.
It's like asking for trouble, Dr. Zech said.
"Wedidn't bother about that recommendation," he told The Standard-Times."To me, that's so obvious. I guess we're too trusting. We think, well,gee, the guy's a priest, he would never embezzle money. We don't needany controls."
Aboutthe local bishops, Dr. Perkins said, "These are not people trying todeceive anyone or misrepresent anything. They just don't understandthis notion of accountability."
Contact Steve Urbon at
surbon@s-t.com

 

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