The Board, The Audit and the Internet

At the risk of sounding like I am completely on the side of Metropolitan Phillip I would like to say that there is actually some wisdom in not jumping into an external audit.

External audits are extremely expensive endeavors and they should not be entered into without a complete understanding of what is required. Having read many of the posts on this subject and spoken with many people in the Antiochian Archdiocese it is clear that many people have no idea what is required.

External audits by licensed CPAs are not your average internal church audit. They are required to dig significantly deeper. While this may appear to be the right thing to do, and honestly it will ultimately be the right thing to do, it is not something that you can enter into lightly.

One of the first principles of an audit by an outside CPA is that the financial statements are the "representation of management." This simple little sentence means that everyone associated with the financial statements needs to know almost as much as the outside auditors about financial and accounting standards and that they have complied with these standards.

Judging from many of the posters on this website, it would appear that they think that the auditors show up one day and just jump and have an audit. It's just not that simple. The auditing rules and regulations are extremely complex and they are not optional. The Antiochian Archdioces has never had an audit and it will most likely take a tremendous amount of time and effort just to prepare for it. I am not being an apologist for Metropolitan Phillip but a realist.

Take a look back at what the OCA spent in audit and legal fees in 2006 if you think that my analysis is not correct. They spent hundreds of thousands of dollars with very little to show for it. When you do an audit you need to trace back to original source documents. This includes the articles of incorporation, tax filings, investment statements, donor requests, etc. How many people do you know could find their birth certificates in a day? God bless the OCA for having external audits for so many years and the wisdom to hire CPAs. Unfortunately the Antiochian Archdiocese has not done so yet (I hope that this will be corrected in the near distant future). But in the mean time I will say that I applaud the decision to at least move forward with an internal audit.

To all the detractors, you're right it's not sufficient. But it will start the unraveling of the financial knot. I know several of the people on the internal audit committee and they are neither stupid nor naive. They will do a respectable job. Just a reminder, it was Mr. John Kozey, the head of the internal audit department of the OCA that brought forth many of the financial problems in the OCA.

And one last little reminder. The OCA was mired in financial filth. Money from Archer Daniels Midland Company went missing. Money raised for 9/11 victims went missing. Money earmarked for various other charities went missing. To my knowledge there is nothing similar that has come to light within the Antiochian Archdiocese. Metropolitan Phillip has helped to grow the Antiochian Archdiocese spiritually and financially. There is simply no comparision between the OCA and the Antiochian Archdiocese financially. To raise inuendos or suggest that there is a financial scandal where none exists is simply not fair. Like everyone else, I believe that the Antiochian Archdiocese should have an external audit, but not until it can be something more than an accounting free for all.

(Editor's note: Thank you for a reasonable and thoughtful essay. There are several errors of fact, however, that should be corrected. First, an external audit of the Archdiocese, given the amounts involved, would by the best estimates, cost between $35,000-$50,000. Even the OCA can afford that, and we are by no means in the AOCA's financial league, as you point out. To claim cost as a factor is simply disingenuous.

Secondly, Mr. Kozey was not aware of secret accounts until he was informed of them by a Syosset insider. While he had many good questions as an internal auditor, he had no way of knowing the depth, scope or nature of the real financial sheninigans going on. For example, when he blew the whistle in 1999 no one had any idea about misused charity funds, or 9/11 funds, etc. He only knew about a part of the ADM monies - not even all of those. That all came later, and had to be discovered by blood, sweat and tears. And even after he blew the whistle, he was not allowed to audit the "discretionary accounts", which were a major source of the problem. So this is probably not your best example for internal auditing sufficing to expose, all - if any - of the problems that may or may not exist.

Finally, there were never "hundreds of thousands" spent on auditing in 2006, or ever, in the OCA. Hundreds of thousands were spent on Proskauer Rose, for legal fees, mainly, it seems, for the benefit of the former Metropolitan, for which the OCA footed the bill. At the most we have spent a total of of one hundred thousand on auditing bills since 2006 - which is not unreasonable or excessive given what we have achieved since then. We were, as you put it, mired in financial filth - most of which we had no idea we were when we started the process. The OCA is now out of financial filth, and operating its finances openly, honestly and transparently. While not cheap, it was certainly worth it, given that people are again contributing to the Church confident in knowing where their money is going.

Those are the facts. Now I will add an opinion: I would recommend that course - of yearly internal and external audits for every Orthodox jurisdictions. And the sooner it begins, the better off you will be. )