South Africans have been privy to the devastating scandals of state-capture and the massive mismanagement of corporate finances frequently uncovered in our country. Paulina French, Chartered Accountant and knowledgeable in financial matters with corporate experience, asks whether the South African Church is anywhere near meeting the standards expected, particularly as set out by the King Code of Corporate Governance. It's time South African churchgoers call for financial reckoning from those to whom they entrust their weekly offering, she suggests.
In the present economic climate, we have all had to become more aware of what we spend our hard-earned money on. Alongside this, we have seen financial scandals of epic proportions. The Steinhoff saga and the obscene revelations of state capture, as the commission led by Justice Zondo is revealing, are just a few shocking examples of the financial crimes of our time that are likely a sneak peek into grand scale theft committed by those with access to corporate and national purse strings.
In view of these, some Catholics have also started asking questions about the finances in their own parishes and in the Catholic church as a whole.
The Annual report of the Vatican Bank, known as Istituto per le Opere di Religione, is easily accessible for 2017. It includes a detailed report back on the Bank’s activities during the year, including reports on its Risk, Compliance and Corporate Governance standards.
Interestingly, the United States Conference of Catholic Bishops has also published their latest audited financial statements. In addition to these financial reports, there is an inclusion of various Financial Management reports providing information on how the Church’s resources are being used.
However, this information is seemingly not readily available publically in the South African Church. The Bishop’s Conference has information about its finance department on their website but no financial statements or related reports are published. Attempts to contact the person listed as being responsible for finances were in vain. This shouldn’t be necessary, as financial reports should be available to any of the Church's stakeholders at a moment's notice – from parishes, dioceses and from the Conference.
In fact, on at least one SA diocesan website that I consulted, a policy on 'Access to Information' was provided. The policy made clear mention of the duty the diocese has to make financials public and readily available. Nonetheless, in spite of this very important and necessary declaration, the actual reports were not available on the website.
The King Code of Corporate Governance is a system of rules, practices and processes by which an organisation is directed and controlled.
The latest update, known as King IV was released on 1 November 2016 and came into effect on 1 April 2017. The Code now applies to all companies listed on the Johannesburg Stock Exchange (JSE). These companies are required to apply all of the King Code Principles.
The King Code was first published in November 1994 in South Africa, after the formation of the King Committee in 1992. The Code has evolved as a result of the many financial crises over the years; especially those in 2008 which highlighted the importance of Corporate Governance. The King IV report applies to all entities; and although it is not a legislative requirement, it is considered best practice for all entities to meet the standards it sets.
You may think that Corporate Governance has no relevance to the Church or even to your parish.
However, King IV now includes sector supplements to provide guidance to various types of different entities such as Public Benefit Organisations – like the Church. The aim of these additional supplements is to make the principles of Corporate Governance more accessible to all forms of entities and not only to companies or for-profit entities.
As a regular user of financial statements I find it frustrating that the Church (to which I belong and am a contributing member) makes it difficult for me to get my hands on information. Information which in my view should be easily accessible. As a layperson I am a stakeholder in the Church. Is it not the people it serves who make up the Church?
The recent scandals of sexual and financial abuse in the Church have not helped to strengthen people’s trust in the structures of governance, which includes things like financial accountability.
I would expect the Church to be focussed on and driven by an ethical culture, sound and transparent management of its financial affairs and effective control of its resources. I trust that it is all of these things, but the fact that I, as a member and stakeholder of the Church and my local parish, am not able to easily access financial reports, raises my suspicion that all is not as it should be.
In many instances the accounting role in Church structures is not given the priority it should be given. As a result, accounting principles are not always correctly applied. This raises serious concerns about the reliability and correctness of such reporting, which may impact on overall decision making and the ethico-legal allocation of the resources at the Church's disposal.
Corporate Governance is very relevant to the Church. Transparency to its stakeholders on all levels, not least of all financial, may just be the basis for rooting out the elitism and unaccountability shamefully present and identifiable in the Church of late.
The lack of good corporate governance and the principles thereof has been illustrated in the many corporate failures across the global financial markets.
Just as the directors of corporate organisations are accountable to shareholders and stakeholders, so bishops and priests are accountable to the stakeholders in the Church.
The stakeholders are you and I, the people who make up the Church community, the ordinary folks who sit in the pews and help to provide the financial resources that the Church needs. The trust of its faithful and the indisputably proven integrity and public accountability of its ministers, are key components for the success and future sustainability of our Church.