By Patrick Downes Hawaii Catholic Herald
There are dozens of policies, procedures, protocols and guidelines dealing with financial, legal and personnel matters that Catholic parishes and schools in Hawaii have to follow to comply with federal, state and county regulations, as well as canon law. How does the Diocese of Honolulu ensure that its parishes and schools are in compliance and consequently protecting their assets?
The diocesan Finance Office is entrusted to help the bishop oversee the church’s financial matters and to guide parishes and schools in the proper stewardship of resources. This past year, the office developed an intensive review process to do just that.
It’s pretty rigorous. Each parish and each school must complete a 56-page, 170-question survey which is evaluated by an outside auditing firm who then gives the parish or school a “report card” with one of three possible grades: low risk, medium risk or high risk.
The “risk rating” indicates the parish or school’s score when it comes to “minimizing financial loss and accomplishing business objectives.”
The whole process, overseen by Alicia Nakamoto, the parish and school accounting manager of the diocesan Finance Office, takes about 10 months to complete.
“It’s a lot of work for everyone,” said diocesan finance officer Lisa Sakamoto, who heads the Finance Office.
She said the office “worked hard to provide the most efficient tool to get the job done.”
The five-member Diocesan Audit Committee provided the governance and advised the bishop during the process.
The first round of reports — for the fiscal year 2015-2016 — were completed by May 31. Forty-three parishes (out of 66) and 24 parochial schools (out of 27) were reviewed by KMH LLP, a Honolulu-based accounting and consulting firm.
Of the parishes, 11 were rated low risk, 17 were medium risk and 15 were high risk.
Of the schools, six were rated low risk, 11 were medium risk and seven were high risk.
The reviews are made “in the context of stewardship,” Sakamoto said, to make sure parishes and schools are in the practice of “safeguarding our precious resources.”
She said she considers the review “an educational process, a learning tool.”
“The reports are prepared to help our parishes and schools implement changes that will improve their compliance with the law,” she said.
The policies, procedures, protocols of the diocese come from a number of sources including the “Diocese of Honolulu Parish, School and Associations Finance Manual,” “Manual of Policies and Regulations for Catholic Schools in the Diocese of Honolulu,” “Personnel Policies for Lay Employees,” in addition to federal, state, county and canon laws.
The review process begins with the questionnaire completed on Survey Monkey, a computerized form. The questions are divided into about 20 “component areas,” such as governance, bank accounts, insurance, taxes, safe environment and fundraisers. KMH grades each area individually by how close a parish or school adheres to the policies and procedures.
Representatives from KMH discuss the questionnaire results with the parish or school before preparing a “summary report” to present to the pastor, principal, finance council, school board and other “key stakeholders.” The report identifies the parish or school as a low, medium or high risk organization and gives detailed recommendations of how to improve each area it has judged high risk.
The results are also shared with the bishop, vicar general, vicar for clergy, school superintendent (for schools), the Diocesan Audit Committee and the Diocesan Finance Council.
A parish or school is judged “high risk” if significant non-compliance is found, especially in critical areas such as governance. Corrective action is a high priority.
A medium risk parish or school has a “moderate number of findings” that need correcting or improving to bring it to low risk status.
A low risk parish or school has few findings that need improvement. Compliance is considered “adequate.”
In the first set of reviews, some of the “high risk” findings included the following:
- The parish finance council did not meet at least quarterly.
- Meeting minutes were not kept for the various council and committee meetings.
- Annual financial reports were not provided to parishioners.
- Insurance certificates were not obtained for contract labor on parish or school property.
- Tax forms were not filed on time
- Invoices were not submitted to the pastor for approval prior to payment.
- Personnel files were missing required documents
Those parishes and schools rated “high risk,” or with budgets of $500,000 and up, are required to do the review annually. Those with budgets from $250,000 to $499,999 are reviewed every two years. All other parishes are reviewed every three years.
The second year of reviews, for the fiscal year 2016-2017, starts Aug. 21. KMH will assess 43 parishes, two chaplaincies and 21 parochial schools. The reviews are expected to be completed by the end of February.
