🔎 Audits¶
Estimated time to read: 6 minutes
Financial Audits¶
Based upon audits performed, the Church Auditing Department is of the opinion that, in all material respects, contributions received, expenditures made, and assets of the Church for the year [2008] have been recorded and administered in accordance with appropriate accounting practices, approved budgets, and Church policies and procedures.
— Last paragraph found in and after 2004's Auditing Department Reports
"We examined ourselves, and found ourselves to be following our own rules."
Internal audits are not a waste of time, I don't mean to suggest that they are useless... But if an organization wants to gain public trust, that organization ought to be able to manage an external audit.
Why worry?¶
If it's unfamiliar to you, audits are "a formal examination of an organization's or individual's accounts or financial situation", or "a methodical examination and review."
They're used to determine if whatever enterprise, project, or organization is following "the rules." Those "rules" pertain to whatever department or category- finance, safety, network security, clearance, etc. Audits ask "having rules isn't enough- do you follow them?"
Financial audits would compare operations against accounting practices, for example. GAAP is an acronym for "generally accepted accounting principles," not to be confused with Gäap, one of 72 demons listed in a grimoire on sorcery. GAAP are an industry standard for bookkeeping, among other practices.
An internal audit is easy enough; the org asks itself "are we following the rules? If not, we can correct ourselves before someone finds out— no harm done." When you and I hear internal audit reports, we can take them at face value, or look for an external audit, where a third-party checks the operations to see if this org is following the rules. External (or independent) audits carry more weight and credibility, since the conductors don't really have a vested interest in the organization passing the audit. Internal auditors could ostensibly "tilt the scales" as it were, because their paycheck depends on the organization passing. External audits require the organization to locate and hire an auditing contractor. It costs money, and exposes internal, potentially confidential information for the auditor to examine.
You could ask a child if they took from the cookie jar, or you could check the security camera footage.
In practice¶
I have never known of the LDS Church to have an external audit report, for whatever reason. Numerous other charities do, to prove that they're good stewards over your donations. One metric for how trustworthy a charity is comes from independent audits. If you donate to [example charity], you'd want to know how much of your donation actually goes to the declared cause. Charities need to provide an audit to qualify for a loan. The LDS Church seems content to stick with internal audits, where they assure you that they are handling your money responsibly, with no other corroborating information. We can just take their word for it, I guess.
Internal Audit Reports¶
I intend to do a deeper dive into the church's auditing department one day. Below are a bunch of links, many are redundant, but they're church auditing department reports from general conference. I don't expect any readers to follow each link and compare them— I haven't done that myself, but I have them here mostly to show some highlights in their contents.
- 1984: literally 1984
- 1988: "Incorporated businesses owned or controlled by the Church for which accounts are not maintained in the Finance and Records Department are audited by the Church’s internal auditors, independent professional auditing firms, or government regulatory agencies."
- 1995: No mention of Deseret Management Corp, which is explicitly stated in later years '95 mentioned non-specific "incorporated businesses owned or controlled by the Church."
- 1996: "Church-owned businesses are managed by professionals who report to independent boards of directors that do not include General Authorities as members. These companies maintain their own accounting and reporting systems in compliance with accepted business practices and are audited by the Church Auditing Department and/or independent public accounting firms. The board of directors of Deseret Management Corporation consists of General Authorities, who monitor most Church-owned businesses."
- 2002: "The financial activities of Church-affiliated organizations, which are operated separately from the Church, were not audited by the Church Auditing Department in 2002. These organizations include, among others, Deseret Management Corporation and its subsidiaries and the Church’s institutions of higher education, including Brigham Young University."
- 2003: Same mention of DMC
- 2004: "hmm, maybe we shouldn't draw attention to DMC." Note that from this year forward, the reports are (nearly) identical.
Again, this list is here to demonstrate how the financial audit reports are vague and self-congratulatory. Yes, there are a few gaps. No, I didn't track them down. No, I don't expect a meaningful insight from finding them.
If you're an absolute madman and do want to compare each report, one might notice that they become very "boilerplate" starting with 2004. With minor variation, it's the same copy-pasted three paragraphs repeated in years afterward. What insights to gain from that observation? Not much, other than it correlates with Ensign Peak Advisors gaining momentum.