In the Jan 3rd paper edition of the Catholic Standard appeared what is being called "Financial Report to the People of the Archdiocese of Washington, Fiscal Year 2011-2012". It does not appear in the online edition.
Ladies and gentlemen, I work in the financial/accounting world. What is published in the Standard is not a "financial report" in the professionally-understood meaning of the term. At most, this is a montage of selected snippets of disjointed information.
I noticed immediately that the balance sheet was not provided. Accountants understand that the balance sheet is "the main financial statement". It states the assets of the subject entity (in this case the Archdiocese of Washington) on one side. On the other side are the liabilities and equity: that is, who has claims on the assets. The claims of debtors (such as taxing authorities, vendors to whom money is owed, etc) take priority over those of the directors of the organization. Without this balance sheet we don't know the assets of the Archdiocese, nor do we know how much of those assets will go towards the satisfaction of just debts. We do see a tiny clue of that on the page that describes the archdiocesan retirement plans. We see that the actuarial liability of the retirement plan is underfunded by over $52 million. In recent memory, what other entity had massive pension liabilities (which no doubt far exceed those of the archdiocese)? General Motors. This is a common problem, one that will blow up as employees start drawing retirement benefits.
I for one would be interested in seeing what is called the "debt to equity" ratio: that is, how much of the assets are earmarked towards outside debtors as opposed to being available for usage in future Church needs and endeavors. I would hate to see that the debt total is greater than the total of assets. We've all seen similar scenarios with upside-down mortgages and we know what a death trap that can be. Is that the case here? We, the "people of the Archdiocese of Washington", don't know.
This report seems to gather various archdiocesan activities into various categories, then sums up the expenses into "one-liners". We see "communications", "propagation of the faith", various schools, etc - but their expenses are lumped into one number. There's no detail. I would hope for each one that there would be a list of typical expense categories, such as wages/salaries, payroll taxes, insurance, legal expenses. Well, maybe I just listed the reasons for the lack of disclosure - particularly when it comes to "insurance" and "legal costs". Have those costs skyrocketed in the past few years? I've no doubt that they have.
I've voiced questions for which I've no real expectation of answers. If they choose not to disclose the sort of information that is conventionally disclosed in typical financial reports, such is their right. In that case, though, I think they should be accurate about what they're publishing. We did not see a financial report.
Sunday, January 6, 2013
The Archdiocesan Financial Report - That Isn't
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