Audit Committee

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Does anyone find it odd that the Church depends on itself for accurate auditing of its financial transactions?

28 thoughts on “Audit Committee

  1. does it really rely on itself? I always thought the church paid an outside firm to at least confirm the findings of the inside auditors.

    Having worked for the church, though, I don’t worry too much about how they’re spending their money.

  2. The audit report done every April says the Church has it’s own auditing department. If a third party confirms their findings, such information is not shared in the annual report.

  3. Ok, I just went and checked on There is no external party, it seems. But the independence of the audit committee is asserted. I don’t know enough about the auditing industry and the standards used by religious bodies to have an opinion, however.

  4. The audit committee is independent?

    Just how independent can it possibly be?

    When you audit the company signing your cheques, there’s no possible way to not be in conflict.

    Think of how much more complex it is when they can take away your temple recommend…

  5. This probably explains why some of my tithing donations don’t show up on my annual printout. Nobody is really checking at the lower levels.

  6. rick,
    Every company that has an audit committee signs that audit committee’s checks. In fact, every external auditor is paid by the company it audits (which can lead to extreme pressure on the auditors if something funny’s going on—especially if you’re a big client, why would the auditor want to lose you?).

    Basically, there’s going to be pressure from a bad audit client to find what they want whether you’re internal or external. If a company had some sort of tenure-like mechanism for its internal auditors, and the law didn’t require external auditors, there’s no per se reason why the internal auditors couldn’t do just as good, honest, and accurate a job.

  7. Sorry Sam, maybe I wasn’t clear.
    I meant to reinforce the argument that if you think the pressure is hard on an auditor who gets their cheques signed by their employer, imagine how much worse it is for an auditor who could possibly lose their temple recommend.

    The emphasis being on the fact that your literal salvation depends on your employer.

  8. Sam, you are right that having an outside audit firm doesn’t completely remove the possible conflict of interest, but you’ve got to admit that it makes it HUGE lower. Directors of KPMG, PWC, etc., have clear incentives not to let the firm’s reputations for objectivity get sullied. They don’t want to go the way of Arthur Anderson after Enron. Ultimately the big firms have a lot more to fear from a big accounting scandal than they do from losing a single client. Auditors in the church don’t face this type of situation at all, so I think you are wrong to downplay the difference.

  9. First of all, just because the auditing department is a wing of the church, doe it necessarily follow that all employees are church members. Secondly, an outside auditing department might find put about our “Hie to Kolob” space initiative and our plot to overthrow the government via Mitt Romney :). I all reality, I trust the church with my money, rgardless of who is auditing.

  10. I’m with John Scherer on this one. It’s not like I see anyone living a lavish lifestyle on the avails of church funds. I’d rather give my money to the church than any other charity I know of.

  11. Wow, I just read my last comment and I think I misspelled more words than should be legal. I sure hope there are no blog police in the vicinity. :)

  12. John, are honestly trying to say that there may be church employees working in the audit department who are not members?

    That would surprise me beyond measure, and would be completely out of character for the church.

    “It’s not like I see anyone living a lavish lifestyle on the avails of church funds.”

    Would it change your opinion if you had?

    “I’d rather give my money to the church than any other charity I know of.”

    Is that because you don’t know of many other charities, other charities have a poor track record, the church has such a spectacular track record, or more simply you don’t have any other choice?

  13. Yes Rick, that is what I’m saying, could be. As far as your questions, I think that it’s a matter of trust with the church. I’ve seen blessings in my life from tithing that are supernatural and I’ve had the privilege of handling tithing and I know whose purpose it serves and the care that is given to handling it properly.

  14. rick,
    You’re right; I missed your point. Sorry.

    I don’t know that being an outside auditor reduces the pressure significantly. Yeah, the little mom-and-pop startup, maybe, but the Fortune 500 client, for whom your Colorado office (or whatever) does 50% of its work?

    I realize that the US instituted SOX in response to Enron and the demise of Arthur Andersen (itself sad—that was like 2 bad partners), but most of the in-the-trenches accountants don’t want to lose their clients, even potentially in the face of massive sanctions for the entire firm.

    I do acknowledge that the pressure on an outside audit firm is lower than an in-house firm, but I don’t know (legally; I’m not talking spiritually) that the law gives less protection to the in-house auditor than the oustide one.

    But I’m not an accountant, and I haven’t interacted a ton with in-house or external auditors, so my opinions are just that—opinions.

  15. “I’ve seen blessings in my life from tithing that are supernatural.”

    So I suppose at some point you stopped paying tithing, in order to properly correlate your tithing paying with the supernatural blessings.

  16. Rick,

    I converted to the church four years ago. On the day that I first sent in a tithing check, my boss informed that I would be receiving an unscheduled raise, turned out to be about 10.2% of my salary. Since the day I’ve joined the church, my yearly earnings have more than doubled. You may argue that the difference is I joined the church when I was only out of school 3 years and getting my feet wet in my field, but the timing of that raise is inexplicable to me, outside of divine intervention. What’s happened to me isn’t very typical, but I know that I woudn’t have trouble finding many other converts with their own stories. Pretty correlated in my eyes anyway. :)

  17. Don’t the scriptures say something like “out of the mouth of two or three witnesses shall every word be established.” Public institutions like the Church should be duty-bound to pay for outside auditing at least every three years. Not doing so is truly irresponsible. An audit is not strictly about making sure someone is not unduly taking from the till. It’s also there to ensure that assets are properly valued, that vendors are properly paid, etc. The primary focus of an audit is to ensure management has established sufficient institutional controls to stay out of trouble with governments, to run its business efficiently, and to prevent fraud. I work in corporate finance so I have a little authority on the subject.

    My company has a charity matching policy but the charity in question must submit to some very minor attestation (something less than a full audit). I could double the first US$10K of my contributions to the Church if they’d submit to as little as a review. That’s a huge opportunity missed.

  18. To learn more about church auditing, ask your Bishop or Stake President for an opportunity to serve as an auditor. They do prefer CPA’s or other with Audit/Accounting Experience.

    Myself and several of my close relatives have all done this. The church finances are extremely well cared for.

  19. So, the Church does use an external auditor for things like CES, Deseret Management, Zion Securities, etc. That is, if you’re willing to trust wikipedia (which I am).

    See here

    The reason I’ve heard for no disclosure is that the Church started spending more money than it was bringing in tithing, which made several parties nervous. Never mind the fact that the Church has other revenue sources to fill those gaps.

  20. The reason I’ve heard for no disclosure is that the Church started spending more money than it was bringing in tithing, which made several parties nervous.

    What was the source of the information?

  21. Have you ever wondered why the church changed the fine print on your donation slip a few years ago? You agreed that they could do whatever they like with the money you donated. It really is none of your/our business what happens with the donations since you agreed to this with your donation. What they say in conference is more of a tradition than anything else.

  22. the greater outflow idea comes from both Thomas Alexander and D. Michael Quinn, and from conversations with people who work at the church (though not in finance or auditing)

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