Eric A. Korff
Auditors! Who needs them?
This question is sometimes asked seriously, and sometimes cynically.
Intrinsically cynics really know the answer to their make-believe ignorance,
and their lampooning is accepted in good humor. Some members, however, truly
do not understand the need for auditors in the church. After all, aren't we
all Christians? Aren't we all honest?
The General Conference in session and in Annual Council meetings--the
church at its highest administrative levels--has developed a policy that requires
all denominational entities to be audited. The terms of reference for the audit
of organizations above the local congregation have been codified in the General
Conference Working Policy (see section SA 05, 2004-2005 edition).
Does that mean that the General Conference thinks that church
administrators are un-Christian, dishonest, and suspect? A careful reading of
the Working Policy will reveal that an administrator's Christianity and
honesty have nothing to do with the need for auditing.
Denominational auditors (220 worldwide) are required to (1)
express an opinion on the fairness with which financial statements represent
the financial position and operating results of the entity being audited; (2)
report on the entity's compliance with denominational policies; and (3) where
applicable, report on the trust operations of the entity. The denomination requires
all organizations (approximately 2,500 worldwide) to comply with an international
body of accounting principles known as Generally Accepted Accounting Principles.
Thus denominational auditors focus on whether financial statements comply with
predetermined principles and are in compliance with denominational policies
and trust agreements.
This assures the church that every audit has been performed
under the same rigorous standards. These standards have undergone significant
revision during the past five years, which has placed additional responsibilities
on both administrators and auditors.
The explanation so far may lead to an even more searching inquiry:
Why does the church require denominational financial statements from all over
the world to be prepared using similar principles? Why do church auditors need
to comply with international auditing standards? In fact, why does the church
require its organizations to prepare financial statements that have to be audited?
As a member of a local congregation, do you not look forward
to the periodic church business meeting at which the church treasurer reports
on the finances of the church? Are you not interested in knowing how church
funds have been disbursed, how your congregation is doing financially, and how
much money is available for the different projects on which the church has embarked?
Take it one step higher: as a delegate to the conference or mission constituency
meeting, do you not wait in interested anticipation for the treasurer's report
on the financial standing of the conference or mission?
It is impractical for every church or board member to peruse
the financial records of the organizations they serve. That is what gave rise
to the auditing profession! Auditors represent you and perform audits on your
behalf. Further, many denominational entities and their accounting rules have
become so complex that it requires a specialist to ensure that financial reporting
is done correctly. Many church and board members do not have the inclination
or time to devote to becoming such specialists. Auditors, with training and
experience, are able to study those complexities and assist you through their
Financial reports are therefore a necessity to enable interested
parties (including in some cases organizations outside of the church) to know
how these organizations are faring. If those various financial statements were
not prepared in accordance with specified generally accepted principles, how
would you know that they are a fair presentation of the entity's affairs?
Auditors! Who needs them? You as a church member, every denominational
administrator, and the church at large need auditors! In addition to giving
you assurance about the veracity of financial reports, audits serve to give
those responsible for generating them credibility on their financial reporting