# LCMS Convention Proceedings_St. Louis Missouri_1995_S164
# Machine transcription, uncorrected — CHI Digital Archive (demonstration)

164 LATE REPORTS AND OVERTURES

Task Force Recommendation 11

That an investment policy bé adopted which directs that
a significantly higher percentage of both the fixed income
and growth asset funds be managed by outside money man-
agers (INVESTMENT PRACTICES, p. 6)

The Board is pleased the Task Force reported “The re-
view of the Foundation’s current investment practices by
the task force has revealed no apparent abuses, specifically
with regard to inappropriate commissions or to the ‘churn-
ing’ of accounts. Audit and reporting procedures are in
place to provide a regular assessment of the performance
of the account managers and the individual funds.” The
Board receives quarterly reports from the Foundation and
concurs with its decisions over the last several years to fol-
low the example of the Concordia Retirement Plan and en-
gage outside money managers to manage certain distinct
portions of the portfolios. The Foundation has reported that
presently six outside money managers manage investments
under Foundation policies and the trustees are moving to-
ward an overall goal of 25% of all funds being managed by
outside managers. It is noted that an outside investment
consultant, J. H. Ellwood & Associates, reviews the portfo-
lio structure and performance of both the internal and out-
side money managers and makes appropriate recommen-
dations to the Foundation Board, which is responsible for
its structure and operations. While the Board encourages
the Foundation to continue to review, and refine as appro-
priate, its operating policies regarding the use of outside
money managers, it does not advocate outsourcing for the
sake of outsourcing. If in-house investment services are
generating comparable returns at lower costs than outside
services and there is appropriate review by the Foundation
Board and outside investment consultants, it may be
- preferable to continue the use of inside services.

Task Force Recommendation 12

That an additional review of the communications de-
partment of the LCMS be assigned to an independent task
force (COMMUNICATIONS, p. 7)

Prior to receipt of the Task Force report, the retired Di-
rector of Synod’s Internal Audit Department, was asked to
assist Communications in developing an operating plan.
Based on his review of financial statements, budgets, in-
ternal memoranda, and prior communication studies, he
concluded and the Board concurs that no additional review
of the department is needed and adequate information is
available for the boards and BCS management to carry out
their responsibilities. With the rapid changes in technology
and the opportunities the Lord is placing before the church,
the Board will continue to nionitor the organization and ac-
tivities of the BCS to assure effectiveness, efficiency, and

' good stewardship of available resources. The Board notes
that the BCS, including radio station KFUO, is included in
the annual audit and when appropriate the management
letters of The Lutheran Church—Missouri Synod, Inc. The
Board believes there may have been some confusion be-
tween the broad communications efforts of all boards and
the narrower communication function of the BCS. In 1991
the Board requested an outside review (audit) of the com-
munication efforts of all boards. Since the review’s findings

were much broader than the BCS, the Board asked the
Council of Administrators to take leadership.i in imple
menting the recommendations contained therein. :'

Task Force Recommendation 13

That further differentiation and explanation: of employee
versus nonemployee expenses be included when budget and
financial reports are. prepared (COMPENSATION AND
TRAVEL COSTS, p. 8)

The Board appreciates the conclusion of the Task Force
that “the salary ranges and annual travel expenses for the
top-level employees.are considered to be reasonable” and
“where questionable practices and abuses (honoraria and
expense reimbursement) have been detected, actions have
been taken to rectify these situations and ‘measures have
been developed to improve overall control procedures in
order to reduce the likelihood of similar problems in the fu-
ture.” The Board concurs with the recommendation as ‘to
the reporting of nonemployee travel expenses, and has for
many years segregated these expenses in the Synod’s uni-
form chart of accounts and reported them on each entity's
monthly budget status report. Copies of such reports were
provided to the Task Force. The Board is asking that non-
employee expenses be included in the “natural classifica-
tion” reports in published budgets and financial statements
(see recommendation 7).

Task Force Recommendation 14

That distortion in travel cost totals be eliminated by a
change in the manner in which some monies are accounted
for, by treating reimbursable expenses as an account receiv-
able, or by showing reimbursements as a reduction in travel
expense (COMPENSATION AND TRAVEL COSTS, p. 9)

The Board does not concur with this recommendation.
These funds are not “agency funds” but belong to the
Synod. Under generally accepted accounting principles they
must be budgeted and recorded as income and expense.
They are not receivables nor should they be hidden by net-
ting. them against travel expense. A better option would be
to include them along with board travel as a separate line
item in the “natural classification” reports in published
budgets and audited financial statements (see recommen-
dation 7). Part of the perceived problem will be rectified by
a change in policy for the Youth Gathering and certain
other gatherings where hereafter participants will be di-
rectly responsible to hotels, rather than Synod, for costs of
lodging. Thus these travel costs will no longer be run
through the Synod’s accounting records. In other cases,
however, the Synod will continue to account for these costs
in order to qualify for exemption of some taxes.

Task Force Recommendation 15

That a change in legal counsel be made at this time
(LEGAL COSTS AND COUNSEL, p. 9);

A majority of the Board does not concur with this rec-
ommendation. Each of the corporations requires different
specialized counsel in such areas as trademarks and copy-
rights, employee benefits, securities registration, trusts,
and religious not-for-profit law. Each counsel has built up a
body of knowledge which is beneficial to the Synod. It