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.
Showing posts with label Extended Ministries. Show all posts
Showing posts with label Extended Ministries. Show all posts
Friday, September 5, 2008
HM's Memo to BOD on Extended Ministries (27.12.07)
To: Bro Edward Rajasingam
cc: Bro Lee Tuck Heng
Bro Chow Sang Hoe
Through: Sis Bernadette Tay
From: Wong Hong Meng
Date: 27th December 2007
Dear Bro Edward,
Calvary Church Extended Ministries (“EMs”)
First of all I must apologize for taking so long to write this note to you. After our meeting in early April with you, Pastor Peter Ong, Pastor Timothy Ong, Deacon Patrick Wong, Deaconess Bernadette Tay and Bro David Peters, I had received the answers to my questions. As I said at the AGM the answers to my questions would help me understand what is going on with the EMs. From our discussion I also believed you know the potential issues that can be raised with regards to the accounts as presented to the members. As such there was no real hurry or need for my input. Nonetheless I would like to submit my gratuitous input for your consideration. I am copying this note to the auditors as they are responsible to the members for the truth and fairness of the accounts as presented by you to the members. I was waiting for the right time to be in the right frame of mind to be contributive and constructive and not come across as confrontational or critical. Yet I was always aware that I would have to do it before the year end. Therefore I hope you would receive this note in the right spirit as I know you will.
As I recollect from my notes, I received the following information at the meeting. Please correct me if I am wrong.
Separate accounts are maintained for each of the EM. The annual accounts are audited by the Church auditors and presented to the Board of Deacons.
The EMs do receive offerings and other income in their own names and issue receipts in their own names.
The EMs can contract and incur expenditure in their own names.
They have their own assets and liabilities and balance sheets.
They operate their own bank accounts. The signatories are the Senior Pastor or Pastor Peter Ong and either of two officers of the respective EM.
They maintain their own payroll which would include the heads of the EMs but if the head is a pastor he /she would be on the Church payroll.
The EMs are accountable to the Missions Committee.
Management and policy decisions are made by the Senior Pastor and the Missions Committee.
Management accounts are presented monthly to the Missions Department.
Deficits, if any, in the EMs are covered by the Missions Department based on justified requests.
Surpluses are retained within the EMs and are not re-channelled back to the Missions Department.
The annual budgets of the EMs are presented to the Board of Deacons for approval.
From the above it would appear that the EMs operate quite independently under the direction of the Senior Pastor and the Missions Director. Nonetheless after due consideration I am of the view that these EMs are legally and operationally part of Calvary Church and their financials must be reported to the members at general meetings.
The only reason advanced at that meeting for not including the EMs in the financials of the Church as presented to the members was that it was intended (by the Board I presume) to eventually constitute the EMs as independent entities, separate from Calvary Church. The Gemas Church was given as an example. I am of the opinion that this reason is not able to support the non-disclosure of the EMs financials to the members of the Church.
Firstly you and I know that the accounts cannot be made to reflect mere intentions. When an EM is legally separate then you can treat it as separate entity, accounting wise. In the meantime before the actualization of the intentions the financials of these entities must be incorporated in the report to the members at general meetings.
Secondly, the example of Gemas was not appropriate. Gemas was started as an outreach church which eventually became independent. Its ministries were not part and parcel of Calvary Church. It eventually became an independent church with its own legal status under the AG umbrella accountable to its own members.
On the other hand the EMs are part and parcel of the ministries of Calvary Church. These ministries are an integral part of the Church ministries. Without them the ministry coverage of Calvary Church would be that much poorer. They were set up to add to and enrich the work of Calvary Church. I do not see how we can intend for any of the ministries of the EMs to be separate from Calvary Church. And what possible benefits would accrue to the Church by having these ministries as separate entities independent of the Church? If there are no benefits then why are we intending to do it?
I also suspect that you might indeed run foul of the IRS if the EMs are treated as separate entities especially those with operating surpluses. If they are at the moment tax exempt I would suggest that the IRS, based upon our submission, has treated them as part of Calvary Church which enjoys tax exempt status. Is it possible that quite unwittingly we are having one accounting treatment for the IRS and another for the members?
Thirdly from the discussion it would appear that the ultimate ”owner” of the EMs is Calvary Church. This is true even in the case of Calvary Land. Although the properties are registered in the names of the Trustees of the AG General Council, the General Council is neither the legal or beneficial owner. They are just trustees. This is similar to the Church properties which are registered in the name of the three Church trustees. The trustees are neither the legal nor beneficial owners. Calvary Church is. I believe you will find words on the land titles to the effect that they are acting as trustees for Calvary Church. If legal ownership had indeed been transferred to the AG and the General Council is not acting as trustees then it begs the question as to under what authority had the Board made this transfer.
Also if the General Council is the legal owner then the properties of Calvary Land must be reflected in the accounts of the General Council. I believe this is not the case. Any artificial entity, not being a natural person, with assets and liabilities must have an ultimate owner. Who owns Calvary Land? If it is Calvary Church then it must be reflected in its accounts. If it is the General Council it must be reflected in their accounts. It cannot own itself. Societies and companies have members. So does a church or a ministry.
If they are ultimately constituted legally as separate ministries they must still be reflected in the Church accounts. They would be “subsidiaries” of the Church. If ownership of the assets and liabilities of the EMs are transferred to another legal entity then I believe the Board would need the approval of the members at general meetings. I suspect if it is done without the approval of the members it may be construed as a breach of trust. You may wish to check with Bro David Peters who was at our meeting.
Fourthly these EMs have no legal status of their own. They operate under the auspices of Calvary Church. They are neither societies nor companies. Their legal rights and responsibilities flow from and to Calvary Church. I do not know if the AG has granted legal cover to independent ministries that can collect money in its own name but ownership is vested only in the promoters of the ministry and their financials are not reflected in the AG accounts. If it had, then I would suggest that the AG need to look at its legal obligations and liabilities in relation to these independent ministries. I am confident that it was never the intention of the Board to have the EMs “owned” by those running the ministries.
Therefore I am of the opinion that the financials of Calvary Church are not complete if the financials of the EMs are not included. The financials of very significant activities had been omitted from the annual report to the members of the Church. If the EMs are not accountable to the members at general meetings then to whom are they accountable? At the meeting I was told that they are accountable to the Missions Department. As the Missions Department is accountable to the members at general meeting then it stands to reason that the EMs must also be accountable, ultimately, to the members at general meetings. The flow of accountability is from the EMs to the Missions Department to the Board and then to the members at general meetings. All activities carried out for and on behalf of Calvary Church must ultimately be reported to the members of Calvary Church at general meetings.
I believe that quite unintentionally the Board had removed the performance and financials of the EMs from the purview of the members of the Church. There is no accountability to the members for these activities which are part and parcel of the ministries of Calvary Church.
I am sure you are well aware of the debacle at Enron. Certain activities were left out of the accounts and members of the company were not aware of the financial implications of those transactions. In the corporate world there may be justifiable reasons to disclose only the barest minimum as required by the law. But in a Church such reasons do not exist. Therefore it would be reasonable to expect complete transparency and accountability. And I believe this has been the declared intention of the Board and of Senior Pastor. After all the Church Constitution grants each member the right of reasonable access to the accounting records of the Church. This right is never available to shareholders of a company. I am sure there is absolutely no intention to conceal or deceive but if the accounts are in any way incomplete then transparency and accountability would be impaired. The absence of bad intentions does not negate the need for due care and diligence in accounting and reporting. I am personally convinced, as were many of his church members and even some aggrieved ex-employees, that Kenneth Lay had no intention to cheat or defraud. He was a sincere and committed Christian. Nonetheless the Court found him guilty of all fifteen charges. Let’s err on the side of caution.
Accountability is providing relevant and pertinent information to the members before they are asked for. By reading the annual report we should have enough information to fulfil our responsibilities as members. We should know what is going on in each and every ministry in the Church. We would then be well equipped to pray intelligently for each ministry. We would also know which ministry needs special support and encouragement.
I therefore request that the audited accounts of each EM be attached to the Annual Report to the members. I have taken note that Calvary International Ministry is not an EM. Rightly so as it is a personal ministry of Senior Pastor although it bears the name of Calvary. You may wish to check on its legal status vis-à-vis Calvary Church.
The audited accounts of the EMs are already available and are presented to the Board. Just include them in the annual report. There is no need to be burdened with a consolidation exercise. Indeed consolidation may be meaningless as the activities of each EM are quite unique and distinct. For the members to know what is happening in each EM we need to have the separate accounts of each. What possible harm can come from providing this information to the members? The objective of the Board is to have well informed and knowledgeable members. The degree of transparency is obviously higher with separate accounts for each EM than with consolidated financial statements. Without the EMs I suspect the accounts as presented in the annual report may not truly be “true and fair”.
I thank Bernadette for arranging the meeting at which I was able to understand what has happened in the accounting treatment of the EMs. I see no valid reason for excluding the EMs from your reporting to the members. I trust you can receive my opinion for what it is intended to be; an attempt to improve the overall governance in the Church. Your role as Church Treasurer is to provide financial control over the entire church and all its activities. My role as a responsible member is to contribute in any way for the betterment of the Church. Our roles are different but towards the same objective. Ultimately both of us are accountable to God for what we do and what we fail to do. I write this note in fulfilment of my responsibilities. I leave it to you how you wish to fulfil yours.
Thanking you for a listening ear and a caring heart which had made me comfortable to put this note to you.
Together in His Service and For His Glory Only.
cc: Bro Lee Tuck Heng
Bro Chow Sang Hoe
Through: Sis Bernadette Tay
From: Wong Hong Meng
Date: 27th December 2007
Dear Bro Edward,
Calvary Church Extended Ministries (“EMs”)
First of all I must apologize for taking so long to write this note to you. After our meeting in early April with you, Pastor Peter Ong, Pastor Timothy Ong, Deacon Patrick Wong, Deaconess Bernadette Tay and Bro David Peters, I had received the answers to my questions. As I said at the AGM the answers to my questions would help me understand what is going on with the EMs. From our discussion I also believed you know the potential issues that can be raised with regards to the accounts as presented to the members. As such there was no real hurry or need for my input. Nonetheless I would like to submit my gratuitous input for your consideration. I am copying this note to the auditors as they are responsible to the members for the truth and fairness of the accounts as presented by you to the members. I was waiting for the right time to be in the right frame of mind to be contributive and constructive and not come across as confrontational or critical. Yet I was always aware that I would have to do it before the year end. Therefore I hope you would receive this note in the right spirit as I know you will.
As I recollect from my notes, I received the following information at the meeting. Please correct me if I am wrong.
Separate accounts are maintained for each of the EM. The annual accounts are audited by the Church auditors and presented to the Board of Deacons.
The EMs do receive offerings and other income in their own names and issue receipts in their own names.
The EMs can contract and incur expenditure in their own names.
They have their own assets and liabilities and balance sheets.
They operate their own bank accounts. The signatories are the Senior Pastor or Pastor Peter Ong and either of two officers of the respective EM.
They maintain their own payroll which would include the heads of the EMs but if the head is a pastor he /she would be on the Church payroll.
The EMs are accountable to the Missions Committee.
Management and policy decisions are made by the Senior Pastor and the Missions Committee.
Management accounts are presented monthly to the Missions Department.
Deficits, if any, in the EMs are covered by the Missions Department based on justified requests.
Surpluses are retained within the EMs and are not re-channelled back to the Missions Department.
The annual budgets of the EMs are presented to the Board of Deacons for approval.
From the above it would appear that the EMs operate quite independently under the direction of the Senior Pastor and the Missions Director. Nonetheless after due consideration I am of the view that these EMs are legally and operationally part of Calvary Church and their financials must be reported to the members at general meetings.
The only reason advanced at that meeting for not including the EMs in the financials of the Church as presented to the members was that it was intended (by the Board I presume) to eventually constitute the EMs as independent entities, separate from Calvary Church. The Gemas Church was given as an example. I am of the opinion that this reason is not able to support the non-disclosure of the EMs financials to the members of the Church.
Firstly you and I know that the accounts cannot be made to reflect mere intentions. When an EM is legally separate then you can treat it as separate entity, accounting wise. In the meantime before the actualization of the intentions the financials of these entities must be incorporated in the report to the members at general meetings.
Secondly, the example of Gemas was not appropriate. Gemas was started as an outreach church which eventually became independent. Its ministries were not part and parcel of Calvary Church. It eventually became an independent church with its own legal status under the AG umbrella accountable to its own members.
On the other hand the EMs are part and parcel of the ministries of Calvary Church. These ministries are an integral part of the Church ministries. Without them the ministry coverage of Calvary Church would be that much poorer. They were set up to add to and enrich the work of Calvary Church. I do not see how we can intend for any of the ministries of the EMs to be separate from Calvary Church. And what possible benefits would accrue to the Church by having these ministries as separate entities independent of the Church? If there are no benefits then why are we intending to do it?
I also suspect that you might indeed run foul of the IRS if the EMs are treated as separate entities especially those with operating surpluses. If they are at the moment tax exempt I would suggest that the IRS, based upon our submission, has treated them as part of Calvary Church which enjoys tax exempt status. Is it possible that quite unwittingly we are having one accounting treatment for the IRS and another for the members?
Thirdly from the discussion it would appear that the ultimate ”owner” of the EMs is Calvary Church. This is true even in the case of Calvary Land. Although the properties are registered in the names of the Trustees of the AG General Council, the General Council is neither the legal or beneficial owner. They are just trustees. This is similar to the Church properties which are registered in the name of the three Church trustees. The trustees are neither the legal nor beneficial owners. Calvary Church is. I believe you will find words on the land titles to the effect that they are acting as trustees for Calvary Church. If legal ownership had indeed been transferred to the AG and the General Council is not acting as trustees then it begs the question as to under what authority had the Board made this transfer.
Also if the General Council is the legal owner then the properties of Calvary Land must be reflected in the accounts of the General Council. I believe this is not the case. Any artificial entity, not being a natural person, with assets and liabilities must have an ultimate owner. Who owns Calvary Land? If it is Calvary Church then it must be reflected in its accounts. If it is the General Council it must be reflected in their accounts. It cannot own itself. Societies and companies have members. So does a church or a ministry.
If they are ultimately constituted legally as separate ministries they must still be reflected in the Church accounts. They would be “subsidiaries” of the Church. If ownership of the assets and liabilities of the EMs are transferred to another legal entity then I believe the Board would need the approval of the members at general meetings. I suspect if it is done without the approval of the members it may be construed as a breach of trust. You may wish to check with Bro David Peters who was at our meeting.
Fourthly these EMs have no legal status of their own. They operate under the auspices of Calvary Church. They are neither societies nor companies. Their legal rights and responsibilities flow from and to Calvary Church. I do not know if the AG has granted legal cover to independent ministries that can collect money in its own name but ownership is vested only in the promoters of the ministry and their financials are not reflected in the AG accounts. If it had, then I would suggest that the AG need to look at its legal obligations and liabilities in relation to these independent ministries. I am confident that it was never the intention of the Board to have the EMs “owned” by those running the ministries.
Therefore I am of the opinion that the financials of Calvary Church are not complete if the financials of the EMs are not included. The financials of very significant activities had been omitted from the annual report to the members of the Church. If the EMs are not accountable to the members at general meetings then to whom are they accountable? At the meeting I was told that they are accountable to the Missions Department. As the Missions Department is accountable to the members at general meeting then it stands to reason that the EMs must also be accountable, ultimately, to the members at general meetings. The flow of accountability is from the EMs to the Missions Department to the Board and then to the members at general meetings. All activities carried out for and on behalf of Calvary Church must ultimately be reported to the members of Calvary Church at general meetings.
I believe that quite unintentionally the Board had removed the performance and financials of the EMs from the purview of the members of the Church. There is no accountability to the members for these activities which are part and parcel of the ministries of Calvary Church.
I am sure you are well aware of the debacle at Enron. Certain activities were left out of the accounts and members of the company were not aware of the financial implications of those transactions. In the corporate world there may be justifiable reasons to disclose only the barest minimum as required by the law. But in a Church such reasons do not exist. Therefore it would be reasonable to expect complete transparency and accountability. And I believe this has been the declared intention of the Board and of Senior Pastor. After all the Church Constitution grants each member the right of reasonable access to the accounting records of the Church. This right is never available to shareholders of a company. I am sure there is absolutely no intention to conceal or deceive but if the accounts are in any way incomplete then transparency and accountability would be impaired. The absence of bad intentions does not negate the need for due care and diligence in accounting and reporting. I am personally convinced, as were many of his church members and even some aggrieved ex-employees, that Kenneth Lay had no intention to cheat or defraud. He was a sincere and committed Christian. Nonetheless the Court found him guilty of all fifteen charges. Let’s err on the side of caution.
Accountability is providing relevant and pertinent information to the members before they are asked for. By reading the annual report we should have enough information to fulfil our responsibilities as members. We should know what is going on in each and every ministry in the Church. We would then be well equipped to pray intelligently for each ministry. We would also know which ministry needs special support and encouragement.
I therefore request that the audited accounts of each EM be attached to the Annual Report to the members. I have taken note that Calvary International Ministry is not an EM. Rightly so as it is a personal ministry of Senior Pastor although it bears the name of Calvary. You may wish to check on its legal status vis-à-vis Calvary Church.
The audited accounts of the EMs are already available and are presented to the Board. Just include them in the annual report. There is no need to be burdened with a consolidation exercise. Indeed consolidation may be meaningless as the activities of each EM are quite unique and distinct. For the members to know what is happening in each EM we need to have the separate accounts of each. What possible harm can come from providing this information to the members? The objective of the Board is to have well informed and knowledgeable members. The degree of transparency is obviously higher with separate accounts for each EM than with consolidated financial statements. Without the EMs I suspect the accounts as presented in the annual report may not truly be “true and fair”.
I thank Bernadette for arranging the meeting at which I was able to understand what has happened in the accounting treatment of the EMs. I see no valid reason for excluding the EMs from your reporting to the members. I trust you can receive my opinion for what it is intended to be; an attempt to improve the overall governance in the Church. Your role as Church Treasurer is to provide financial control over the entire church and all its activities. My role as a responsible member is to contribute in any way for the betterment of the Church. Our roles are different but towards the same objective. Ultimately both of us are accountable to God for what we do and what we fail to do. I write this note in fulfilment of my responsibilities. I leave it to you how you wish to fulfil yours.
Thanking you for a listening ear and a caring heart which had made me comfortable to put this note to you.
Together in His Service and For His Glory Only.
