LCMS Convention Workbook St. Louis, Missouri — 2007, Page 77

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SYNOD REPORTS 77

Certtfied Public Accountants. In lieu of opining on financial state-
ments, department personnel may assist the external auditors in the
conduct of audit work leading to the expression of an opinion by the
external auditor. All other types of audits or reviews not leading to
the expression of an opinion on financial statements are conducted by
Internal Audit in a manner that is consistent with standards published
by the Institute of Internal Auditors.
To insure that results and recommendations of Internal Audit
Department audits and reviews are effectively communicated, writ-
ten reports are prepared and submitted to the respective Synod
board, commission, service department, or agency for comment
and corrective action.
The goals of the above-listed activities are to ensure the assets
and resources of the Synod and its components are properly safe-
guarded and to obtain a more effective level of stewardship of the
resources provided to the Synod’s mission.
To promote independence and enable the auditors to maintain
objectivity to render unbiased opinions, the Internal Audit Depart-
ment is accountable to the Synod’s Board of Directors through its
Audit Committee. Administratively, the Internal Audit Department
reports to the Synod’s Vice-President-Finance—Treasurer.
Annually, the Audit Committee reviews and approves the In-
ternal Audit Department’s objectives for the upcoming fiscal year.
Once approved, the objectives are used as a basis for developing
the Department’s annual budget, determining staffing requirements,
and scheduling specific audit or operational review engagements.
During the past triennium, the Executive Director of Internal Audit
met with the Audit Committee on at least a semi-annual basis to
* review and discuss the results of all financial statement audits
and operational reviews conducted by the Internal Audit Depart-
ment or independent certified public accountants,

* provide the committee with a status report on the progress
achieved in meeting the department’s annual objectives, and

¢ discuss the coordination of the internal and external audit func-

tions, which is necessary to avoid duplication, promote effi-
ciency, and maximize audit coverage.

At each of these meetings, the committee had the opportunity
to meet privately with the auditors without the presence of man-
agement to discuss issues of mutual concern.

The activities of the Internal Audit Department during the tri-
ennium are summarized below:

1. Districts of the Synod. Upon request of district boards, the de-
partment conducted annual financial statement audits for 16, 15, and
14 districts during the fiscal years 2004-05, 2005-06, and 2006-07,

respectively. In each of these fiscal years, the department also re- -

viewed the financial audit reports of the remaining districts, which
were audited by independent auditors, to ensure they had received un-
qualified (i.e., clean) opinions on their financial statements.

Annually, the department prepared sample district audited fi-
nancial statements to help ensure a standardized reporting format in
conformity with current generally accepted accounting principles
for not-for-profit organizations. To promote uniformity in district
financial reporting, both internal auditors and a majority of the dis-
trict independent auditors utilized this sample report.

During this triennium, the department established an Internet
portal that provides the district business managers with current ac-
counting and business information and also provides those districts
utilizing our audit services with access to their individual audit files
(work papers, reports, etc.).

2. Seminaries, Colleges, and Universities. In prior years,
the department and independent auditors developed a joint audit
approach whereby the annual financial statement and federal fund

audits were performed at each of the 12 educational institutions
using a combination of internal and external auditors. During this
triennium, however, the joint audit approach was only utilized in
the 2004-05 fiscal year. In 2005-06 and 2006-07, the educational
institutions were allowed to select their own local external audi-
tors. As a result, in these two fiscal years the Internal Audit De-
partment offered to assist the 12 educational institutions with their
financial statement close processes, assist the external auditors with
interim and/or year-end audit procedures, or perform operational
reviews of selected business processes or internal controls.

In 2005-06, the department assisted two universities with their fi-
nancial statement close processes, which helped the schools get their
financial books and records audit-ready. In 2006-07, we assisted one
college with their monthly bank reconciliations and we performed a
review of internal controls over the payroll and accounts payable/
disbursement processes at one university.

3. The Synod, its Departments, and Other Entities. During
each of the triennium years, the Internal Audit Department assisted
the external auditors in conducting their financial statement audits
of The Lutheran Church—Missouri Synod, The Lutheran Church
Extension Fund, The Lutheran Church—Missouri Synod Foundation,
and Concordia Plan Services/Worker Benefit Plans (CPS/WBP).

Annually, the department performed the financial statement
audit of Concordia Historical Institute and in 2005-06 and
2006-07, performed the annual financial statement audit of Con-
cordia University System national office (CUS). The consolidated
CUS financial statements (CUS national office and its 10 affiliated
colleges/universities) were also prepared by the department in the
last two years of the triennium.

On an annual basis, the department performed and reported on
operational reviews of two or three Concordia Health Plan man-
aged-care providers, as well as claim/benefit payments that were
processed internally by CPS/WBP personnel. In 2004-05, the de-
partment performed employer audits on behalf of CPS/WBP at the
12 seminaries/colleges/universities of the Synod.

Operational reviews were conducted in 2005—06 and 2006-07
of the Synod’s payroll function, the Board for District and Congre-
gational Services, the purchasing card system, and the Human Re-
sources Department. The goal of these operational reviews is to
improve the economy, efficiency, and effectiveness of operations
and organizational structures at the Synod’s International Center.

At the request of various agencies of the Synod, special finan-
cial and operational reviews/audits were also performed of selected
functions, programs, and activities during the triennium.

Joann P. Spotanski, Executive Director

RS-01
Board for Pastoral Education
One Mission—to prepare pastors and missionaries.

One Message—to proclaim Christ crucified to the world.
One People—working with Christ’s people in the LCMS.

Board for Pastoral Education Mission Statement

The LCMS Board for Pastoral Education advocates and coor-
dinates the formation of pastors, missionaries, and other church
Servants to serve the mission and ministry of Christ’s Church.

Servants on the Board for Pastoral Education: John Behrendt,
chair; Gillian Bond; Steven Briel; Richard Cohrs; William Diekel-
man; Gerhard Freche; Donald Muchow, vice-chairman; Richard
Schaefer, secretary; Kenton Wendorf

2007 Convention Workbook