W hat could go wrong if Seventh-day Adventist Church entities and organizations do not adhere to working policies currently in force?
Many things, said General Conference Auditing Services (GCAS) director Paul Douglas on April 14, 2020. For one, noncompliance often pushes church leaders to make uninformed decisions, which can ultimately put the noncompliant church organization in jeopardy, he explained.
Douglas’s remarks were part of his presentation to dozens of leaders attending the first day of Spring Meeting, one of the two annual business meetings of the world church. The meetings usually take place at the Adventist Church headquarters building in Silver Spring, Maryland, United States. Due to the COVID-19 pandemic, however, this year’s sessions were held entirely online.
In discussing the current state of compliance, Douglas referred specifically to the S90 core policy from the General Conference Working Policy (GCWP) handbook. According to Adventist Church treasurer Juan Prestol-Puesán, the S90 lists 26 denominational policies that have been selected to define good governance.
“Good governance, true stewardship, and showing transparency; integrity … following better business practices, [and] demonstrating accountability — that’s what the S90 policy is all about,” Prestol-Puesán said in introducing the agenda item and Douglas’s presentation. “In that regard, we are making a significant effort and commitment.”
According to Prestol-Puesán, he and Adventist Church president Ted N. C. Wilson have been spearheading the effort to address governance and financial compliance, providing the foundation and framework for engaging with entities around the world. Prestol-Puesán emphasized that the current process to specifically address noncompliance in these areas is directly related to past votes and ongoing efforts of the Adventist Church to increase transparency and integrity in governance.
“It is important that Adventist members know that the Church has policies in place and that Church leaders consider these governance policies both crucial and best practices,” explained Prestol-Puesán following the meeting. “The problem is not that we don’t have the policies, but that we’re not adhering to all of them.”
Douglas explained that based on findings in various church entities and organizations, church leaders expect every region, including the General Conference, to review and adjust their compliance to core policies as needed. Previous reporting on compliance with core polices tested in 2018 indicated that overall 79% of church organizations had at least one violation enumerated in the GCWP.
Looking at compliance to core policies from another perspective showed that 34 percent of those church organizations had a violation related to their financial reports; 32 percent to audit committees; and 31 percent to insurance coverage. It also showed that 31 percent had a violation pertaining to the signing and collecting of conflict of interest forms; 14 percent to updating and signing of service records; and 11 percent to operating deficits.
“If we were to address these top-six violations, overall noncompliance could decrease from 79 to just 8 percent,” Douglas said. Decreasing to 8 percent and below is something church leaders say they are committed to happening soon.
In an interview, Prestol-Puesán emphasized that “many of these matters of governance that have been skipped are routine tasks.”
What Could Go Wrong?
Douglas provided some examples to show that noncompliance with church policies for good governance is much more than a theoretical or philosophical proposition. It may have, he said, concrete effects and consequences on church entities and organizations.
“For instance, if financial reports are not compliant, management decisions may be irrelevant, uninformed, and tardy in correcting problems,” Douglas explained. In the area of insurance coverages, he added, “an organization could experience significant uncovered losses, could become bankrupt, and affect higher organizations.”
Conflicts of interest is another area that should not be overlooked, according to Douglas. Noncompliance in that field may push the organization to “experience an increased risk of fraudulent activity because governance is not aware of potential conflicts,” he said.
Also, accuracy in service records will provide an organization with defense and protection from employees’ claims in the future, Douglas said. Finally, it is essential that church entities and organizations comply with policies on operating deficits. Otherwise “the organization could go bankrupt due to inadequate planning and impact higher organizations,” he said.
Divisions Committed to Act
In the second part of his presentation, Douglas shared what the General Conference and church regions around the world have pledged to do to work toward compliance with core church policies. Given that the focus and scope may differ from region to region, church divisions shared concrete actions they are planning to introduce in their territory.
Suggestions were as varied as the regions themselves. From creating greater awareness and strengthening compliance across all levels to creating steps for addressing noncompliance and providing quarterly progress reports, church region leaders showed they understand it is time to act.
Adventist Church president Ted N. C. Wilson agreed. “We have had very, very strong support from the divisions,” he said.
Some regions suggested utilizing a checklist to review the implementation of core policies and incorporating technology into routine processes to minimize errors leading to noncompliance. Other church regions said they plan to discuss substandard audit results and even impose financial penalties for noncompliance.
According to Wilson, these suggestions show an increased burden by leaders of church entities and organizations to comply with core policies. He thanked division leaders for their commitment to reducing noncompliance in their territories.
“I have to express … deep appreciation to the divisions,” Wilson said. “They have done remarkably well.”
A Comprehensive Work in Progress
Wilson emphasized that this process toward higher compliance transcends geographical or church organizational borders.
“Every region and heads of every institution and entity must take a direct interest in making sure we comply with these … processes. If we do not, we are derelict in our responsibility.”
Prestol-Puesán agreed, explaining that the move toward greater compliance includes every church entity and organization, including the General Conference, which oversees the work of the church around the world.
“We will do everything we need to do to comply with the policies as they are stated, and we are encouraging every division and institution to comply as well,” he said.
Wilson also emphasized the scope and importance of working toward greater compliance.
“It does not involve only financial aspects but spiritual accountability as well,” he said. And it’s comprehensive because, according to Wilson, “it involves the integrity of our financial system and our spiritual system.”
At the same time, when answering a comment from lay committee member Neil Nedley about differences in suggestions between one church region and another, Wilson pointed out that this is just an initial step of many.
“This is a work in progress … [but] I can guarantee we will not let this item go,” Wilson said.
The report subsequently passed by a vote of 84 to 3.