Transparency, best practices remain priorities, says finance officer

| January 30, 2014 | 0 Comments

He calls media reports of ‘secret’ archdiocesan accounts inaccurate

Thomas Mertens

Thomas Mertens

When Thomas Mertens joined the Archdiocese of St. Paul and Minneapolis in December 2012 as its new chief financial officer, he was charged with helping the archdiocese to reach new levels of financial accountability, best practices in its operations, and transparency.

Those priorities are ongoing, he said, through the archdiocese’s commitment to improve financial reporting and its enforcement of strict internal controls.

Some of these efforts were questioned recently in local news reports, which alleged that the archdiocese maintained “secret accounts” to pay costs related to clergy misconduct.

The archdiocese does maintain accounts to pay for counseling for victims and clergy, legal expenses and settlements, ongoing financial support for priests as required by Church law and other related costs, Mertens said.

“There is nothing secret about the accounts,” he said. But they are confidential accounts similar to what are maintained by other organizations in order to respect privacy regarding personnel matters.

“We don’t have a secret financial system. Those accounts are part of our accounting and reporting system and part of our general ledger,” he said.

The archdiocese doesn’t maintain any “off-balance-sheet accounts” and, to the best of his knowledge, it never has, Mertens said.

The accounts have always been subject to the audit done each year by independent auditors, who have full access to all of the archdiocese’s financial records, Mertens said. Those records show that the archdiocese paid approximately $11 million from the accounts from 2002 to 2011 — about 3 percent of its overall revenues during that time.

For at least the last 15 years — the time span for which records are readily available — independent auditors have given unqualified opinions each year on the archdiocese’s financial statements, meaning the financial statements comply with generally accepted accounting standards (GAAP).

“If the auditors are told they can’t look at specific accounts or are not given access to all records, they’re not going to do the work, they’re not going to form an opinion,” Mertens said. “They can’t operate like that. . . . That would just be a red flag for the auditor, and the scope limitation would require disclosure or resignation from the work.”

Catholics who have concerns that contributions to the archdiocese’s Catholic Services Appeal may fund costs related to clergy sexual abuse allegations or any form of misconduct should know that CSA contributions are used for the benefit of designated ministries of the newly created Catholic Services Appeal Foundation and for no other purposes, as stated on the CSAF website,

Tightening controls

Another accounting firm mentioned in one of the recent news reports, Ernst & Young, was hired by the archdiocese to help it investigate the embezzlement committed by a former archdiocesan employee, Scott Domeier, who pleaded guilty last year to taking more than $670,000 from the archdiocese.

Ernst & Young focused on financial activity involving Domeier that exceeded $5,000 to help the archdiocese determine the extent of the embezzlement, Mertens said. Ernst & Young was not hired to conduct an audit of the archdiocese’s financial statements. Those auditing functions have been performed by two different firms on an annual basis over the last 15 years. In the last two years, CliftonLarsonAllen LLP has performed the audit.

Since Mertens joined the archdiocese and as a result of the work done by Ernst & Young, there have been significant efforts to tighten internal controls and promote financial transparency.

For example, the archdiocese ensures that expense reports are thoroughly reviewed by supervisors, that dual signatures are completed for large checks and that all credit card statements are signed by supervisors or Mertens himself, he said.

“I feel like I have the authority to question anything I see in my role,” he said. “I don’t feel like anything is off limits. If I have an issue with an invoice, I’ll go to whomever I need to and discuss it.”

“We continue to monitor and improve on those controls,” Mertens said.

“That’s an ongoing piece. The significant, major controls are in place, but as we review our procedures, we modify and improve those policies and procedures. We’re always making sure that we avoid having weaknesses in those internal controls.”

“We have also significantly strengthened our work in the area of budgeting to further enhance our knowledge of the costs incurred in the organization,” Mertens said.

Such measures are supported by the Archdiocesan Finance Council, which is comprised primarily of lay accounting and finance professionals, Mertens said. Last October, the council unanimously approved a recommendation at its monthly meeting to publicly release the archdiocese’s full audited financial statements.

In February, as in past years, the archdiocese will release financial information regarding the previous fiscal year. The release will include the posting of the full fiscal year 2013 financial report that has been audited by independent certified public accountants. The report will be available online on the archdiocese’s website — — and a condensed version will be published in the Feb. 13 issue of The Catholic Spirit.

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