July 30, 2015

Dear Sisters and Brothers of Our Diocese:

We are attaching the final audit report, summary report, and communications letters regarding the financial statements of the Diocese of Bethlehem for the year ending December 2011. These reports represent the fourth of six (2008-2013) financial audits of the diocese that Bishop Sean and the Standing Committee hired the accounting firm of Campbell Rappold & Yurasits to undertake in March 2014.

These are the complete reports as presented to the Audit Committee. No information has been left out. These audit reports and letters indicate the firm has found no malfeasance or misuse of funds in the years that have been examined. However, as with the previous three reports, the auditors have pointed out a number of weaknesses and deficiencies to be addressed and which we began to address as of the 2014 fiscal year.

To reiterate steps that have been taken to address such deficiencies, the Bishop, Treasurer and members of the Audit Committee have already taken the following significant corrective actions.

  • The payroll function, which took up a significant amount of staff time each week, has been outsourced and changed to a bi-weekly schedule. This outsourcing is providing important internal control.
  • This spring Cindy Dougan, canon for finance and administration in the Diocese of Northwestern Pennsylvania, was asked to act as the Diocese of Bethlehem’s interim accounting manager for a year-long term beginning April 1. Having accepted the request, in her new position, Dougan handles the Diocese of Bethlehem’s day-to-day accounting and supervises Cindy Bakos, the diocese’s bookkeeper. This change permits Bruce Reiner, comptroller, to focus on audits and related financial matters.
  • Earlier in the year, accounting functions were consolidated from four different general ledgers in two different outdated accounting packages onto one ACS software package, a state-of the-art, integrated accounting system for churches, thereby allowing for greater accuracy, resulting in fewer misstatements, and making better use of staff time.
  • Under the leadership of the Bishop, Archdeacon, and Treasurer, the Diocese is continuing its work to complete an Accounting Manual to inform all employees of internal control protocols, operating procedures, and policies adopted by the Diocese. The Manual of Business Methods in Church Affairs of the Episcopal Church will serve as our guide for setting policy and our standard for ongoing work. All weaknesses and deficiencies that have been identified in these audits will be properly addressed and remedied in our Accounting Manual. In fact many of the problems have already been rectified; improved procedures and internal controls have been put into place over the previous months as the work of the auditors on site has been ongoing. It is important to note, however, that the audits of the years 2008 through 2013 reflect the practices previously in place so that deficiencies in procedures pointed out in the 2008, 2009, and 2010 audits remain in this audit.

We are distributing these materials to the people of the Diocese via the diocesan newsletter and leadership newsletter.

When the remaining two, past-due audits are completed, each time, as the final reports and letters are received by the Audit Committee, we will disseminate the information without delay.

Your Sister in Christ,

Ms. Libby House, Chair of the Audit Committee
For the Members of the Audit Committee