Post by Randall Lord on Jan 6, 2007 8:31:53 GMT -5
www.deseretnews.com/dn/view/0,1249,650220419,00.html
Deseret Morning News, Friday, January 05, 2007
Embezzlement seen in 85% of Catholic dioceses, 11% report over $500,000 stolen in the past 5 years.
By Laurie Goodstein and Stephanie Strom
New York Times News Service A survey by researchers at Villanova University
has found that a surprising 85 percent of Roman Catholic dioceses that
responded had discovered embezzlement of church funds in the past five years,
with 11
percent reporting that more than $500,000 had been stolen.
The Catholic Church has some of the most rigorous financial guidelines of any
denomination, specialists in church ethics said, but the survey found that
the guidelines are often ignored in parishes. And when no one is looking, the
cash that goes into the collection plate does not always get deposited into
the
church's bank account.
"As a faith-based organization, we place a lot of trust in our folks," said
Chuck Zech, a co-author of the study and director of the Center for the Study
of Church Management at Villanova University, in Pennsylvania.
"We think if you work for a church — you're a volunteer or a priest — the
last thing on your mind is to do something dishonest," he said. "But people
are
people, and there's a lot of temptation there, and with the cash-based aspect
of how churches operate, it's pretty easy."
Specialists in church ethics said they believe this is the first study to
assess the extent of embezzlement in a denomination.
Officials at the U.S. Conference of Catholic Bishops said they had seen the
study, which was released just before Christmas and was first reported in the
National Catholic Reporter, and were already considering ways that parishes
could tighten their financial controls.
"The Villanova study does not come as a surprise," said Bishop Dennis M.
Schnurr, treasurer of the bishops' conference. "This is something that the
bishops
in this country have been looking at for some time," said Schnurr, who heads
the Duluth, Minn., diocese. "They are aware of a need to look for mechanisms
that can assist parishes in accountability and transparency."
Zech and his co-author, Robert West, a professor of accounting at Villanova,
did not set out to look for embezzlement. They were conducting a study of
internal financial controls in Catholic dioceses and sent a battery of
questions
to chief financial officers in the nation's 174 Catholic dioceses; of them, 78
responded. Zech said he was surprised that so many dioceses had detected
embezzlement. In 93 percent of those cases, police reports were filed.
He said the survey did not ask who stole the church funds. But it did ask who
detected the theft and found that it was most often the parish priest,
followed by the bookkeeper, an internal auditor or the parish finance
council.
Some 11 percent of those responding to the survey said theft in their
dioceses during the last five years amounted to more than $500,000.
In October alone, three such cases surfaced, including one in Delray Beach,
Fla., where two priests spent $8.6 million on trips to Las Vegas, dental work,
property taxes and other expenses over four decades.
In the survey, 29 percent of the dioceses reported thefts of less than
$50,000.
Most denominations have had cases of embezzlement, sometimes by top
officials. In June, the Presbyterian Church U.S.A. fired its second-ranking
financial
officer, Judy Golliher, after she admitted stealing money that church
officials
put at more than $132,000.
Many nonprofit organizations that accept cash donations experience theft, and
churches are particularly vulnerable, said John C. Knapp, director of the
Southern Institute for Business and Professional Ethics, at Georgia State
University in Atlanta.
"Churches have a tendency to be in denial about the potential for this
conduct in their midst," Knapp said. "When ethics seminars or ethics codes are
proposed in churches, they are often met with resistance from people who say,
'Why
in the world would we need this? After all, this is the church.' Whereas in
business, people readily recognize that this sort of thing can happen."
The Salvation Army is widely considered exemplary among nonprofits in
handling cash collections. The red buckets in which bell ringers collect
donations
are covered and locked, and all buckets must be returned to a central
location,
where at least two people count the number and type of bills, coins and
checks, said Major George Hood, the charity's national spokesman.
The money must be deposited in the bank within 24 hours, and different people
reconcile the initial tallies with bank records, he said.
In the Catholic Church, parishes and high schools handle many cash
transactions, making them vulnerable to theft, the Villanova report notes.
Canon law requires each parish to have a finance council to provide
oversight. But Schnurr said there are no standards for how finance council
members are
chosen or whether they should have any expertise in accounting or finance.
Only 3 percent of the dioceses said they annually conducted an internal audit
of their parishes, and 21 percent said they seldom or never audited parishes,
the survey found.
This lack of scrutiny is at the core of the problem, said Francis J. Butler,
president of Foundations and Donors Interested in Catholic Activities.
"You're taking a lot of risk, and these days the church cannot afford to take
these kinds of risks," he said.
Schnurr said the study's findings on lack of parish oversight contradicted
his experience. But both he and Kenneth W. Korotky, chief financial officer
for
the bishops' conference, said that a committee could soon consider writing
guidelines for the composition of parish finance councils, and how often
dioceses
should audit parishes.
However, they cautioned that the bishops' conference cannot make guidelines
mandatory, because each bishop is in charge of administering his own diocese.
Jack B. Siegel, a tax lawyer and expert on nonprofit management who has
commented on church fraud on his blog, said he keeps
a tally
of church frauds and was surprised by how many occurred at Catholic churches.
"I got interested because I thought, wait, I've heard a lot about pedophilia,
why aren't I hearing about these financial problems," Siegel said.
He said he was impressed with the guidelines that the bishops' conference and
other Catholic organizations have offered. But he said, "How those standards
and guidelines get put into practice is what really matters."
Deseret Morning News, Friday, January 05, 2007
Embezzlement seen in 85% of Catholic dioceses, 11% report over $500,000 stolen in the past 5 years.
By Laurie Goodstein and Stephanie Strom
New York Times News Service A survey by researchers at Villanova University
has found that a surprising 85 percent of Roman Catholic dioceses that
responded had discovered embezzlement of church funds in the past five years,
with 11
percent reporting that more than $500,000 had been stolen.
The Catholic Church has some of the most rigorous financial guidelines of any
denomination, specialists in church ethics said, but the survey found that
the guidelines are often ignored in parishes. And when no one is looking, the
cash that goes into the collection plate does not always get deposited into
the
church's bank account.
"As a faith-based organization, we place a lot of trust in our folks," said
Chuck Zech, a co-author of the study and director of the Center for the Study
of Church Management at Villanova University, in Pennsylvania.
"We think if you work for a church — you're a volunteer or a priest — the
last thing on your mind is to do something dishonest," he said. "But people
are
people, and there's a lot of temptation there, and with the cash-based aspect
of how churches operate, it's pretty easy."
Specialists in church ethics said they believe this is the first study to
assess the extent of embezzlement in a denomination.
Officials at the U.S. Conference of Catholic Bishops said they had seen the
study, which was released just before Christmas and was first reported in the
National Catholic Reporter, and were already considering ways that parishes
could tighten their financial controls.
"The Villanova study does not come as a surprise," said Bishop Dennis M.
Schnurr, treasurer of the bishops' conference. "This is something that the
bishops
in this country have been looking at for some time," said Schnurr, who heads
the Duluth, Minn., diocese. "They are aware of a need to look for mechanisms
that can assist parishes in accountability and transparency."
Zech and his co-author, Robert West, a professor of accounting at Villanova,
did not set out to look for embezzlement. They were conducting a study of
internal financial controls in Catholic dioceses and sent a battery of
questions
to chief financial officers in the nation's 174 Catholic dioceses; of them, 78
responded. Zech said he was surprised that so many dioceses had detected
embezzlement. In 93 percent of those cases, police reports were filed.
He said the survey did not ask who stole the church funds. But it did ask who
detected the theft and found that it was most often the parish priest,
followed by the bookkeeper, an internal auditor or the parish finance
council.
Some 11 percent of those responding to the survey said theft in their
dioceses during the last five years amounted to more than $500,000.
In October alone, three such cases surfaced, including one in Delray Beach,
Fla., where two priests spent $8.6 million on trips to Las Vegas, dental work,
property taxes and other expenses over four decades.
In the survey, 29 percent of the dioceses reported thefts of less than
$50,000.
Most denominations have had cases of embezzlement, sometimes by top
officials. In June, the Presbyterian Church U.S.A. fired its second-ranking
financial
officer, Judy Golliher, after she admitted stealing money that church
officials
put at more than $132,000.
Many nonprofit organizations that accept cash donations experience theft, and
churches are particularly vulnerable, said John C. Knapp, director of the
Southern Institute for Business and Professional Ethics, at Georgia State
University in Atlanta.
"Churches have a tendency to be in denial about the potential for this
conduct in their midst," Knapp said. "When ethics seminars or ethics codes are
proposed in churches, they are often met with resistance from people who say,
'Why
in the world would we need this? After all, this is the church.' Whereas in
business, people readily recognize that this sort of thing can happen."
The Salvation Army is widely considered exemplary among nonprofits in
handling cash collections. The red buckets in which bell ringers collect
donations
are covered and locked, and all buckets must be returned to a central
location,
where at least two people count the number and type of bills, coins and
checks, said Major George Hood, the charity's national spokesman.
The money must be deposited in the bank within 24 hours, and different people
reconcile the initial tallies with bank records, he said.
In the Catholic Church, parishes and high schools handle many cash
transactions, making them vulnerable to theft, the Villanova report notes.
Canon law requires each parish to have a finance council to provide
oversight. But Schnurr said there are no standards for how finance council
members are
chosen or whether they should have any expertise in accounting or finance.
Only 3 percent of the dioceses said they annually conducted an internal audit
of their parishes, and 21 percent said they seldom or never audited parishes,
the survey found.
This lack of scrutiny is at the core of the problem, said Francis J. Butler,
president of Foundations and Donors Interested in Catholic Activities.
"You're taking a lot of risk, and these days the church cannot afford to take
these kinds of risks," he said.
Schnurr said the study's findings on lack of parish oversight contradicted
his experience. But both he and Kenneth W. Korotky, chief financial officer
for
the bishops' conference, said that a committee could soon consider writing
guidelines for the composition of parish finance councils, and how often
dioceses
should audit parishes.
However, they cautioned that the bishops' conference cannot make guidelines
mandatory, because each bishop is in charge of administering his own diocese.
Jack B. Siegel, a tax lawyer and expert on nonprofit management who has
commented on church fraud on his blog, said he keeps
a tally
of church frauds and was surprised by how many occurred at Catholic churches.
"I got interested because I thought, wait, I've heard a lot about pedophilia,
why aren't I hearing about these financial problems," Siegel said.
He said he was impressed with the guidelines that the bishops' conference and
other Catholic organizations have offered. But he said, "How those standards
and guidelines get put into practice is what really matters."