HM's Speech at AGM (28.03.08)

WHAT I SHARED WITH THE MEMBERS
AT THE AGM ON 28TH MARCH 2008

*Words in red are comments added after the AGM.

Pastor Chairman Sir, I thank you for allowing me to share my views with my brothers and sisters gathered here. After last year’s AGM I met with three deacons, two pastors and Bro David Peters from the Missions Committee. From that meeting I was able to understand what had been happening with the extended ministries. It is my humble opinion that the financials, i.e., the assets and liabilities and income and expenditure, of the extended ministries must be included in the Church Accounts. Otherwise the Church accounts are not complete and cannot be approved by this meeting. The main reason why the extended ministries must be included is that these ministries belong to Calvary Church and by not including them in the Church accounts causes the accounts to be misstated. In other words the Accounts are wrong and cannot be accepted.

It is my opinion that the extended ministries belong to Calvary Church and not to any other organization or person. As such these ministries are fully accountable to the members of Calvary Church and their accounts must be presented to the members of the Church. If the Board is of the view that the Extended Ministries do not belong to Calvary Church and therefore not accountable to the members then the Board must tell us who then owns these ministries. And the Board must also tell us when and under what authority these transfers of ownership were made.

The extended ministries belong to Calvary Church because they have no legal status of their own. They derive their legal existence from Calvary Church. And even if they are established as separate legal entities they would still belong to the Church. I have checked with another large AG church. Some of their ministries are formed even as sendirian berhad. Yet all these separate legal entities belong to the Church and are accountable to the members of the Church. (Therefore it is perfectly acceptable that Calvary Book Corner and Calvary Sunshine Home are organized as sole proprietorship in the names of two separate individuals. But these ministries must still be accountable to the members of the Church and their accounts be presented to the members at AGMs.)

Secondly some of these ministries are income generating but they are not paying tax because for tax purposes we treat them as part of the Church. If they are not part of the Church they would have to pay tax. So we cannot tell the members that these ministries are separate from the Church when we are telling the tax authority that they are part of the Church.

Thirdly, these extended ministries are integral to the ministries of the Church. They form the total ministry and pastoral care that Calvary Church provides for its congregation and the local community. In most other churches these ministries are just called church ministries. They are part and parcel of the local church.

Fourthly, they are managed and run by personnel from Calvary Church. Calvary Church has full operational control over each of these ministries.

Fifthly, the initial funding for these ministries comes from the Church, through the Missions Department. And the Missions department would continue to fund any operational shortfall. However, surpluses are not rechanneled back to the missions department but kept within the ministry. And some of these ministries are income generating. In the Calvary Missions News of January 2008 it was revealed for the first time that 24% of the monthly budget of RM218,000.00 goes to support the Extended Ministries. This amounts to RM52,320.00 per month or RM630,000.00 per annum. In previous years this allocation to the extended ministries was lost among the vague classification of expenditure.

Finally there is no provision in the Church Constitution for extended ministries. Calling these ministries extended ministries may therefore be ultra virus the Constitution. In other words, again in my humble opinion, classifying them as extended ministries may be illegal as far as the Constitution is concerned.

Because the extended ministries are not included, the Church accounts as presented are misstated. In other words they are not correct. For example some of the people running these ministries are on the Church payroll whilst others are on the payrolls of the extended ministries. Therefore the stipend, i.e., the salaries and wages, as reported in the Church Income and Expenditure Account for 2007 amounting to RM2.5 million did not include what was paid out of the various payrolls in the extended ministries. The payroll as reported to the members was in fact understated. What was paid as salaries through the extended ministries are not made known to the members. (N.B. At the AGM the Church Treasurer’s presentation revealed that about RM780,000.00 was paid as personnel costs through the extended ministries.) Similarly, offerings and other income of the extended ministries were not reflected either in the Church Accounts or the Missions Accounts. Therefore the total income of the Church was also understated.

Finally I refer to the specific case of Calvaryland. It had been acknowledged that the two pieces of land are registered in the name of the “Registered Trustees of the Assemblies of God of Malaysia”. It had also been acknowledged that the beneficial owner of these two pieces of land of 5 and 10 acres is Calvary Church. Therefore these two pieces of land must be reflected in the accounts of the Church, the beneficial owner. The same goes for the more than RM7 million spent to develop the property. Again the assets of the Church are understated by this very significant asset called Calvaryland. (N.B. At the AGM it was revealed that the two pieces of land would have a market value of about RM10.0 million and that development cost was close to RM7.0 million.)

Therefore it is my opinion that the Church Accounts are incomplete and would not comply with good church governance. There had been no transparency or accountability from the extended ministries to the members.

I now propose that the following be done:

The accounts and auditors report for the Church and the Missions Department be withdrawn.

Upon the completion of the rest of the agenda, this meeting be adjourned to be reconvened at a later date to be determined by the Board of Deacons.

In the meantime the Church Treasurer completes the accounts of the Church by incorporating the financials of the extended ministries as attachments to the main accounts.

The auditors complete the audit for the Church, the extended ministries and the Missions Department in accordance to the standards recommended by the Malaysia Institute of accountants.

Re-present all the accounts to the members at the reconvened meeting.

Pastor Chairman, thank you once again for giving me the opportunity to share my views with my fellow members of the Church. Finally I request that my sharing be recorded fully in the minutes of this meeting.

Thank you.

Decision made at the AGM.

Lee Tuck Heng, one of the two auditors and a partner of PricewaterhouseCoopers, told the meeting that he had checked with his Technical Director at PwC, the largest firm of public accountants and auditors in the world. The advice was that all the accounts, not just the extended ministries but also the auxiliary ministries and the outreaches, have to be presented to the members. Senior Pastor then asked for the members to stand up to indicate whether they are happy with the status quo or if the members wanted the accounts of the extended ministries be annexed to the Church Accounts. The members voted 289 for and 232 against the accounts to be annexed to the Church Accounts. Therefore the meeting had decided that the accounts of the extended ministries must be annexed to the main Church Accounts and presented to the members at the AGM. This would be done commencing with the accounts for 2008.

Therefore what was asked for in my memo of 27th December 2007 would be done only from 2008. In my opinion, the accounts for 2007 had not been properly presented and approved by the members.

The accounts of the extended ministries for 2007 are being audited. Please remember to ask the Church Secretary for a copy of all 10 extended ministries when ready, estimated to be by end June 2008.