LCMS Convention Workbook St. Louis, Missouri — 1998, Page 74

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74 SYNODICAL REPORTS

The following is a summary of the activities of the Internal
Audit Department during the triennium:

1. Districts of the Synod. The Department conducted financial
audits of 16 Districts and 7 related corporate District entities during
fiscal year 1995-96, 18 Districts and 10 related corporate District
entities in fiscal years 1996-97, and 17 Districts and 9 related cor-
porate District entities in fiscal years 1997-98. In all of the above
years, the Department reviewed financial audit reports prepared by
independent auditors of the remaining Districts.

Annually, the Department prepares a standardized reporting for-
mat for District independent auditors to comply with current gen-
erally accepted accounting principles for not-for-profit organiza-
tions and to promote uniformity in District financial reporting. This
format is utilized by the Internal Audit Department and most Dis-
trict independent auditors.

To enable District and Church Extension Fund Boards and per-
sonnel to evaluate the feasibility of joining the Lutheran Church
Extension Fund, a pre-entry review of District Church Extension
Funds was performed in one District during the last three fiscal
years. The results of this review assisted in the development of
policies and procedures for the orderly combination of District and
national Church Extension Funds.

2. Seminaries, colleges, universities, and high school. The
Department and independent auditors developed a joint-audit ap-
proach to implement the Single Audit Act at each of the synodical
educational institutions. During this triennium, this audit approach
was used at each institution annually. Additional audits of state-
funded student financial assistance programs, local foundations of
various educational institutions, and other federal assistance and
guarantees were performed jointly by internal audit and indepen-
dent auditors. The joint audit approach significantly reduced exter-
nal audit fees, standardized reporting requirements, maximized
audit efficiencies, and improved the timeliness of reporting.

In each of the last three fiscal years, the Department performed
a financial audit of St. Paul’s High School in Concordia, Missouri.

3. Departments and other entities. Annually the Department
performed a financial audit of Concordia Historical Institute and
the Office of Information Systems.

The Department performed and reported on operational audits
of the Family Initiative Council, Mission Services, and four Con-
cordia Plans service providers during the triennium and analyzed
financial data of social ministry organizations.

At the request of various boards, departments, and the Audit
Committee, special operational reviews were performed of selected
functions and activities. The results of these reviews were shared
with the Audit Committee and the respective requesting entity.

The Department provided staff assistance to the independent au-
ditors in the conduct of their audits of the financial statements of
The Lutheran Church—Missouri Synod, the Lutheran Church Ex-
tension Fund, The Lutheran Church—Missouri Synod Foundation,
and Worker Benefit Plans during each of the triennium years.

Charles E. Rhodes, Director

R4-06

Financial Aid Task Force

The “Financial Aid Task Force,” was asked by the President to
look into two issues:
¢ the level of financial support currently being provided to certain
retired church workers’ or their widowed spouses; and,

* the level of indebtedness facing rostered church workers’ within
our Synod where such indebtedness, generally, is attributed to
the burden associated with the cost of education.

It was then asked to provide proposed solutions that would ad-
dress these issues currently facing our Synod.

The Parameters

The parameters within which the task was undertaken, as above
outlined, are best summarized in the following 10 statements.
First, that our Synod has as two of its obligations (1) the
“(r)ecruit(ing) and train(ing of) pastors, teachers and other professional
church workers and provid(ing for them the) opportunity for their con-

tinuing growth” and (2) “(a)id(ing) in providing for the welfare of pas-

tors, teachers and other church workers, and their families in the event

of illness, disability, retirement, special need, or death” (Constitution,

Art. IL, 3 and 10).

Second, that the Board of Directors of the Synod under the authority
of 3.191 c of the Bylaws of The Lutheran Church—Missouri Synod is
vested with the general management and supervision of the Synod’s af-
fairs which would necessitate assuring adequate assistance and support
for the church workers of our Synod whether in current service or re-
tired.

Third, that our Synod throughout its 150 years of existence, acting
under the grace of our Lord, has valued highly its professional church
workers.

Fourth, and as God’s Word directs us (e.g., Luke 10:7, Rom. 4:4
and } Tim. 5:18), that our Synod’s professional church workers are wor-
thy of their individual hire.

Fifth, that our Synod, under God’s Word as seen in Matthew
25:37-40—acting as a corporate entity, as organizations within that en-
tity and as individuals—is to be about serving those in need.

Sixth, that the issues of inadequate retirement funding and indebt-
edness of church workers are problems of the Synod as a whole.

Seventh, that in identifying these issues and preparing solutions for
them the Synod 4s being both people sensitive and people centered.

Eighth, that the recommendations of the Financial Aid Task Force
should be directed toward permanent solutions.

Ninth, that the solutions are to encompass both preventive (or pro-
active) ideas and remedial measures.

Tenth, that the solutions will necessarily involve multiple entities
within the Synod each taking ownership of a course of action within its
individual area of expertise.

The report is divided into two sections. The first will deal with
the issue of church worker indebtedness; the second will deal with
support of certain retired church workers or their widowed spouses.
In each section we first report the facts surrounding the identified
issue and then provide our recommendations (both preventive and
remedial).

The Issue: Professional Church Worker Indebtedness

The Facts

1. Total educational costs (meaning tuition, books, and room and
board) at our Synod’s colleges, universities, and seminaries are
typical and not out-of-line with such costs as seen in compara-
ble institutions. Accordingly, one can conclude that our syn-
odical educational institutions are acting responsibly in setting
realistic fees that generally reflect the cost of education today.

2. Total collegiate educational debt becomes further compounded
by four years of seminary education.

3. That added to educational debt at the college/university/semi-
nary is debt from the expenditure on legitimate living ex-
penses. It is this type of debi, i.e., expenditures on legitimate
living expenses and other needs such as medical coverage,
which is the underlying cause for the growing level of student
indebtedness.

4. That while the growth in educational indebtedness is not an in-
surmountable problem, no entity within our Synod has effec-
tively addressed the problem and no one entity can solve the
problem by itself.

5. That the average, recorded debt level (i.e., that known to the
institution), today, of graduates leaving our Synod’s colleges
and universities approaches $13,000, while at our seminaries
the figure approaches $15,000. That while such figures en-
compass direct loans they do not include either indirect bor-
rowing (e.g., through relatives) or the growing indebtedness
through credit cards. The level of “indirect” indebtedness will
likely remain unknowable due to the fact that the educational
institution is legally prohibited from inquiring about such in-
formation.

6. That reference, however, to an average debt level does not de-
pict the true situation.