The Presbyterian Church (U.S.A.) is facing more unwelcome news – this time involving financial mismanagement of the 2013 Youth Triennium, which was held in July 2013. An audit review has discovered that costs for the 2013 Youth Triennium exceeded the budget by nearly $600,000 (more than 29 percent over the $2 million budget), even though the attendance of more than 5,000 was the highest ever for a triennium.
In investigating what happened, the Audit Committee of the Presbyterian Mission Agency Board determined that some Presbyterian Mission Agency policies were “ignored, partially observed or outsourced to non-PCUSA entities, resulting in inadequate and therefore unacceptable financial administration of the program.”
The Audit Committee investigation also found that “the financial administration and oversight was found to be lacking, evidencing a failure to comply with PC(USA) standards of stewardship, transparency, and accountability.”
The investigation does not specify which staff members made the errors or whether any disciplinary action has been taken. The Audit Committee is recommending changes involving the Evangelism and Church Growth ministry area – the same area in which another investigation already is underway involving the 1,001 New Worshipping Communities initiative.
In that earlier investigation, four staff members were placed on paid administrative leave in November at the request of the Presbyterian Mission Agency Board Executive Committee while a lawyer from Charlotte investigates how $100,000 in Presbyterian Mission Agency funding was sent to an unauthorized independent corporation that employees set up in California. All of the money was returned to the PC(USA) after denominational officials discovered the corporation’s existence.
Word of the Audit Committee’s findings regarding the 2013 Youth Triennium was made public Jan. 27 in a news release, following a series of closed-door committee discussions. That’s become a standard way for denominational officials to release controversial information in recent months.
Also posted was a comment from Linda Valentine, executive director of the Presbyterian Mission Agency, responding to the Audit Committee report. That comment states that it “seeks to provide a preliminary description” of work begun, particularly by the Evangelism and Church Growth ministry area and the PC(USA)’s youth ministries office, to address financial and compliance issues. According to the comment, in March 2014 directed the PC(USA)’s internal audit department to investigate the $287,213 net loss for the 2013 triennium. That began the process. This comment also states that a more detailed response will be provided by March 31, 2015.
The staff planning for the 2016 Youth Triennium “is working diligently to address the specific compliance issues identified in the audit,” the comment further states. Among the changes: the planners for the 2016 triennium will use the PC(USA)’s in-house registration and accounting systems, rather than out-sourcing those functions. In October 2014, the Presbyterian Mission Agency contracted with a consultant, Simon Park, to help set up systems to ensure compliance, and plans are being made to hire a financial manager within Evangelism and Church Growth (a coordinator of “mission effectiveness”) later this year to succeed Park.
The news release revealing the Audit Committee findings links to an online report of the minutes of a closed-session Audit Committee meeting by conference call on Sept. 4, 2014. That report states that:
- On April 23, 2014, the Audit Committee “was informed of material unbudgeted expenditures associated with the 2013 Youth Triennium. It reported this information to PC(USA)’s external auditors, and (without noting the amount or program) to the PMA Executive Committee on April 23 and in a closed session to the PMA Board on April 24.”
- The Audit Committee then instructed the Presbyterian Mission Agency’s internal audit department to conduct a review.
- A report of that audit department review, dated Aug. 29, 2014, found that the 2013 Youth Triennium expenses exceeded the approved budget by $598,901.
Another report provides the minutes of a Dec. 15, 2014 closed-session meeting of an Audit Committee conference call.
That report states that the 2013 Triennium incurred a net deficit of $287,213 – with funds to cover the deficit being taken from Presbyterian Mission Program Fund unrestricted operating reserves. In a financial discussion at the Presbyterian Mission Agency Board’s September 2014 meeting, board members acknowledged that the PC(USA)’s budget over the next few years may draw those reserves down very close to the minimum legal requirement by the beginning of 2017.
The Audit Committee concluded that, in planning the 2013 Youth Triennium, Presbyterian Mission Agency policies were sometimes “ignored, partially observed or outsourced, resulting in inadequate and therefore unacceptable financial administration of the program.”
Among the failings the report cited:
- The conference planning process requires that “a designated accountant participate in planning, budgeting, and monitoring of the event. (In this case, there was no such person, resulting in poor controls and reporting.)”
- Contract policies require “that a contract signed by an authorized PMA [Presbyterian Mission Agency] signer be obtained prior to beginning significant work. (In at least one case, work was performed based on a $25,000 bid without a signed contract.)”
- Information technology policies “govern such activities as purchase of and accountability for computers and other high value electronic devices. (In this case, both purchasing and accountability requirements were contravened.)”
- Communications ministry policies cover activities such as website creation and hosting. “These policies were bypassed by outsourcing the activities.”
- Personnel policies require that a process for requesting a waiver from the Presbyterian Mission Agency executive director “be followed when the requesting party wishes to hire a PC(USA)-related party. (In this case, PYT [Presbyterian Youth Triennium] arranged for an event partner to bypass this exception process.)”
- Accounting policies “require, among other things, contemporaneous comparisons of expenditures to budgeted/authorized amounts. (This task was outsourced but was performed neither by the outside vendor nor by PMA; in addition, expenses were not coded consistently, so that such comparisons, had they been performed, would have been meaningless.) Note that we are not making any accusation of error or omission with respect to any outside entity; it was PMA’s responsibility to ensure that policies and procedures were followed.”
The report states that the actions involved “indicate an inadequate understanding of the importance of and adherence to the established policies and procedures of the PC(USA) and PMA. The PMA Board and Staff have a solemn fiduciary responsibility to their donors, who expect their gifts to be used wisely and in accordance with (and subject to the restrictions of) approved budgets and established priorities. These policies and procedures are in place to safeguard assets against the risk of misappropriation or loss, and they demand management’s diligence in fulfilling its responsibility for financial oversight. ”
Among specific areas the report cited as areas needing improvement: the need to “reinforce an organizational culture” which values and supports adherence to the internal controls of the Presbyterian Mission Agency.
Also needed, the report states, is training “on the ethics and stewardship issues surrounding the outsourcing of management responsibilities that result in bypassing PMA internal controls, policies, and procedures. Specific emphasis must be placed upon the use of corporate and personal credit cards (used extensively by the staff of the outsourced organization for PYT [Presbyterian Youth Triennium] expenses) and the purchase of gift cards for use as ‘cash,’ both bypassing controls and requirements for PMA staff expense reimbursements.”
The Audit Committee report also makes a series of recommendations for change. Among them:
- Valentine should direct the appropriate Evangelism and Church Growth ministry area staff “to restore the financial and contract administration of the Presbyterian Youth Triennium mission program to PMA staff control (from outsourcing). This action should strengthen financial and legal control, at much lower overall cost.”
- Valentine should direct the Office of Shared Services to engage a permanent staff person “with appropriate financial and business expertise to assist and monitor” the Evangelism and Church Growth ministry work area in those functions.
- Valentine should make sure that “all financial staff embedded in ministry units have a dual reporting relationship” – with the ministry unit and with the Office of Shared Services, which handles financial oversight. “This structure will help assure that financial reporting and analysis from the ministry units, while customized to each area’s management needs, conform to good financial practices and support reasonably consistent analysis across ministry areas.”
- Valentine should direct all mission areas that operate events to review their procedures to make sure that Presbyterian Mission Agency internal controls and policies are not being bypassed, either intentionally or unintentionally. “PMA Shared Services are to be utilized except in specific unusual cases,” approved by Earline Williams, the PC(USA)’s chief financial officer, the report states.
- Valentine should direct Evangelism and Church Growth to make sure there is a contract with the Cumberland Presbyterian Church and any other event partners for the 2016 Triennium, stating each party’s responsibilities, including for financial loss.
The news release quotes Valentine as saying: “We will ensure compliance with all policies regarding hiring and contracts, and financial results will be tracked much more closely, effective immediately.”