The Religious Herald Publishing Association Incorporated is a nonprofit corporation licensed under the State Corporation Commission of the Commonwealth of Virginia.
Not that any of you care. You want your news accurate, concise and in a readable form, and you want it in your mailbox before the end of the week.
Being a nonprofit corporation means we submit our financial records each year to an independent audit. A certified public accountant camps in our office and reviews our financial accounting system, receipts, bills, checks, bank statements, assets, liabilities and budget. We undress financially, the accountant pokes and prods, and we submit the results of our check-up for publication in the Baptist General Association of Virginia’s Annual. So does every other BGAV agency.
An audit is about two things, integrity and credibility. Our ministry is funded in part by gifts from Virginia Baptist individuals and churches, not just the sale of subscriptions and advertisements. Therefore, it is essential for Virginia Baptists to know we handle your gifts in an honest, responsible manner. An audit helps us prove we can be trusted.
This assumes, of course, the firm that conducts the audit has credibility based upon its integrity.
Since last October Americans have been reeling from the Humpty-Dumpty-like act of Enron, the Houston-based energy-trading company that collapsed after hiding billions of dollars in debts behind hundreds of private partnerships and complex accounting schemes. Apparently the company could not succeed at this all by itself; it required the help of its Big Five accounting firm, Arthur Andersen, who allegedly enabled Enron executives to cover their oncoming bankruptcy by shredding mountains of company documents.
Remember the Baptist Foundation of Arizona, whose 11,000 investors lost millions when BFA officials were involved in a Ponzi scheme that promised mom and pop Baptists double-digit returns on their investments? Their accounting firm? Arthur Andersen.
Early this month Andersen agreed to cough up $217 million to compensate the bilked investors in the Baptist Foundation of Arizona, who had sued Andersen for dismissing warnings about BFA’s fraud and continuing to certify its financial statements. Last week Andersen was indicted for obstruction because it destroyed evidence 24/7 in the Enron debacle. Andersen’s corporate clients are deserting the accounting firm in droves in order to avoid undermining investor confidence in their own companies, and political candidates are returning political donations linked to the company.
The point, please.
For several years the Southern Baptist Convention Executive Committee has employed Arthur Andersen to conduct its annual audit. Last month LifeWay Christian Resources of the Southern Baptist Convention signed a new three-year contract with Andersen to serve as its auditor. Months after revelations that Andersen was up to its nosehairs in the Enron scandal, and two years after Baptist Foundation of Arizona investors sued Arthur Andersen for its alleged role in the BFA’s Ponzi scheme, the SBC and a closely related entity continue to contract with Andersen for its services.
An SBC official defended the Executive Committee’s good relationship with Arthur Andersen, but said they would allow other firms to bid on future auditing contracts. LifeWay trustees, on the other hand, defended their loyalty to Andersen when they signed their new contract last month.
The SBC Executive Committee should find a new auditor and LifeWay trustees should have dumped Andersen last month. Having missed that opportunity, they should do it now.
Under ordinary circumstances the SBC Executive Committee and LifeWay acted with laudable loyalty. These circumstances, however, are extraordinary. In a contest between loyalty and credibility, the latter must get the nod. Think of it in these terms. The SBC Executive Committee and LifeWay are religious corporations. Baptists and their churches are the SBC’s investors. The preservation of corporate integrity and investor confidence is essential to the future of both entities.
Most of the persons financially affected by the Arizona affair are loyal to the SBC and many have given to its Cooperative Program. How are they to feel about the SBC’s loyalty to Andersen? Where should the SBC’s and its agencies’ loyalty be greater, to their auditing firm or to the 11,000 Baptist individuals and churches who were victims in a scheme involving an entity related to one of its member conventions?
Scripture, not to mention the advice of our mothers and fathers, counsels us to avoid the appearance of evil, not just evil itself. Is it possible that secular corporations, by dropping their association with Andersen, are living closer to the spirit of this admonition than the Executive Committee and LifeWay? We are known by the company we keep and hire.
The SBC has an excellent record of fiscal probity. If the Executive Committee and LifeWay want to retain financial credibility, they should dump Arthur Andersen.
Michael Clingenpeel is editor and business manager of the Religious Herald, from which this column is reprinted with permission.