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10.09.06 Latest News

 
 


Outside Auditors Confirm $1 Million in Cash Missing From Syosset Accounts

Over $1 million in cash was taken from the OCA chancery between 2001-2005, and these monies cannot be accounted for by either invoices or receipts, according to letter from the accounting firm of Lambrides, Lamos and Moulthrop LLP.

Lambrides had been hired by the OCA in November 2005 to audit the OCA's accounts for 2004 and 2005;

a charge which was expanded to include a review of all Special Appeal and Charitable disbursements from 2001-2005 as well in March 2006. The outside auditor's letter confirms what had been reported earlier to the Lesser Synod and the Metropolitan Council in oral reports last month.

Dated October 5th, 2006 the letter was posted earlier today on the Orthodox Forum internet site by Peter Zwick. OCANews.org has confirmed the authenticity of the document.

Given the absence of invoices, receipts or supporting documentation, the letter makes no claims as to who took the money, or for what purposes. The letter does make it clear, however, that such actions were not in accordance with the Section 501(c)(3) regulations that govern not-for-profit organizations.

The letter reads as follows:

[Letterhead of Lambrides, Lamos, Moulthrop LLP -- Certified Public
Accountants and Consultants]

October 5, 2006

The Metropolitan Council,

Metropolitan Herman, Chairman
Audit Committee, V. Rev. Paul Suda, Chair
Orthodox Church in America
Syosset, NY 11791

We were engaged to audit the financial statements of the Orthodox Church in America for the years 2004 and 2005. At this time, it is not possible to complete the audits of the financial statements for the following reasons:

• Inability of management and staff to provide supporting documentation for significant expenditures recorded in the general ledger.

-- A Section 501(c)(3) organization must be able to provide evidence that expenditures are for the exempt purpose of the organization.


-- Significant expenditures in the general ledger were not supported by documentation in the files such as invoices and expense receipts.


-- Management and staff were unable to provide supporting documentation when provided with lists of items.


-- Management and staff were unable to provide supporting documentation or corroborating evidence from third parties for $1,019,071 of cash withdrawals (including $575,300 of funds that appear to be subject to donor restrictions, as described below) during the years 2001 - 2005.

• Inability of management and staff to provide information on utilization of contributions in accordance with donor restrictions.

-- Section 501(c)(3) organizations may solicit contributions for specific projects or programs. If donors contribute funds for these projects or programs, the Section 501(c)(3) organization must utilize the funds in accordance with the restricted purpose. The Section 501(c)(3) organization must be able to provide evidence that the expenditures meet the appropriate criteria.


-- Significant expenditures recorded in the general ledger as expenditures of restricted funds were not supported by documentation such as invoices and expense receipts. Since there is missing or inadequate evidence that restricted contributions were utilized in accordance with donor wishes, it is not possible to determine whether the accounting for restricted funds is accurate.


-- Management and staff were unable to provide supporting documentation when provided with lists of items.


-- As noted above, funds from 2001 through 2005 that appear to be subject to donor restrictions in the amount of $575,300 were withdrawn in cash from OCA's operating account without any supporting documentation.

•Management is not able to provide financial statements in accordance with generally accepted accounting principles. The lack of adequate documentation, as noted above, supporting transactions recorded in the general ledger could lead to material misstatements in the financial statements.

We are available to discuss these matters with you.

(Signed) Lambrides, Lamos, Moulthrop LLP

Lambrides, Lamos, Moulthrop

That cash disbursements had been made was known this past Spring; that receipts were missing was made known shortly thereafter. The importance of the Lambrides letter is that it reveals the extent of the cash disbursements - over $1,000,000 – and confirms in unsparing terms that no supporting documentation, including invoices, seem to exist.

More than half the cash ($575,000) came from the Charity and Special Appeal funds, taken between 2001-2005. The remainder (some $425,000) came from the OCA's general funds, apparently in the past two years alone - 2004 and 2005. One can only ask where were the church's elected Auditors during these past five years? Did they not notice there were no receipts during their annual audits? Where were the basic internal controls in the former Administration that allowed cash withdrawals on a massive scale without any documenation? Where was the Comptroller? The Treasurer? The Chancellor? The Metropolitan? How is it that nobody is responsible for these diverted and unaccounted for funds?

The Metropolitan has assumed 'full responsibility' but claims he did 'nothing wrong'. So, who did take the money? If the auditors cannot say where it went, there must be some record of who took it out. Who was it?

The bottom line: If the OCA cannot even answer that simple a question, if such basic accounting standards are not in place to even record who is taking the Church's money, let alone for what reasons, then truly they deserve no more of our hard-earned funds. Who took the money?

Mark Stokoe

 

 

 

 

 
 

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