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	Study Finds Embezzlement to Be Common in Dioceses By David O'Reilly Philadelphia Inquirer January 5, 2007 http://www.philly.com/mld/inquirer/living/religion/16386792.htm A new study by Villanova University has found that 85 percent of Roman Catholic dioceses in the United States have discovered embezzlement during the last five years, with 11 percent having been embezzled out of more than a half-million dollars each. Twenty-nine percent of dioceses answering the survey reported embezzlements of less than $50,000, according to authors Robert West and Charles Zech. "As with any crime statistics, you can view the news in two ways," Zech said in an interview yesterday. "You can say it's bad news there's a lot of embezzlement, or you can say we're catching the crimes. But still, I think it's bad news. There's far more of this than there should be." The study said the high rate of embezzlement reflected a lack of professionalism in financial oversight, as well as a sometimes-too-trusting attitude toward those handling money. The study focussed only on Catholic dioceses, an area of expertise of the authors. Zech said he and West, experts in church management and accounting, launched their survey after many lay Catholics complained that the church's clergy sexual-abuse crisis might have been discovered long ago if the nation's 175 dioceses had made public financial statements showing payouts to abuse victims. Their report provided no details about any of the 78 dioceses that responded, but it cited recent news reports of a pastor in Bridgeport , Conn. , who was investigated last year on charges of misspending $1.4 million in parish donations, and four purchasing agents in the New York Archdiocese who allegedly extorted more than $2 million in a kickback scheme. In November, Holy Cross High School in Delran, Burlington County , reported it had suspended its principal, Joseph Lemme, while it investigated his apparent misuse of school funds. Officials of the Philadelphia Archdiocese and the Diocese of Camden could not be reached for comment last night. Leaders at the U.S. Conference of Catholic Bishops said they had seen the study and wanted to improve local control of money. Bishop Dennis M. Schnurr, treasurer of the bishops' conference and head of the Duluth , Minn. , diocese, told the New York Times that top church officials had been looking for ways to "assist parishes in accountability and transparency." Found by church officials Zech and West found that church officials, rather than independent auditors, typically found most instances of theft. As in many other religious institutions, Zech said, Catholic parishes and dioceses typically fail to impose necessary financial controls because they trust the volunteer or employee or cleric who handles money, or because they fear offending that person. "We just say, 'Gee, Bob or Mary or Father would never do something wrong,' " Zech said, "but sometimes the temptation is too strong if one person is counting the collection, depositing the checks, and keeping the books." Close financial scrutiny also finds honest mistakes, according to Zech, who cited the case of a parish financial officer who failed to file thousands of dollars in Social Security contributions for parish workers, supposing them to be exempt. Internal audits are typically triggered when there is a change in pastor or bookkeeper, the survey found. Embezzlement was only a part of West and Zech's survey, which also queried dioceses on such matters as deficits, oversight and reporting. Of the responding dioceses, 46 percent reported more than one annual deficit during the last five years. Large city dioceses reported the highest incident of annual deficits - an average of 2.8 in five years, well above the national average of 1.7 for the same period. Only 3 percent of dioceses reported that they conducted annual internal audits of their parishes, and 21 percent said they "seldom or never" audited parishes. Recommendations Based on the findings, the authors issued a list of recommendations for all Catholic dioceses. Among them: Conduct annual internal audits of parishes, supplemented by external audits, at least every three years. Implement the policies prescribed in the Diocesan Financial Issues handbook issued by the U.S. Conference of Catholic Bishops. Establish fraud policies. Disclose the names and professions of every member of each diocesan finance council, along with conflict-of-interest guidelines. Require annual - preferably more frequent - financial reports from all parishes and high schools. Establish a uniform budgeting process and standardized software for diocesan entities. Establish communications channels that would allow reporting of suspected fraud or irregularity, while protecting the anonymity of the person reporting. The survey was funded by the Louisville Institute, a foundation in Kentucky . West teaches accounting. Zech, who heads Villanova's Center for the Study of Church Management, is now preparing a financial survey of 3,000 Catholic parishes. Contact staff writer David O'Reilly at 215-854-5723 or doreilly@phillynews.com.
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