ARCHDIOCESAN FRAUD AND THRFT POLICY

OBJECTIVE

The Constitution of the Italo-Greek Byzantine Orthodox Catholic Church in the Americas and Canada addresses extensively the responsibilities of the Metropolitan and his delegates as administrators of the Church’s temporal goods.  Ultimately, the Metropolitan has the duty to ensure that no abuses exist in the administration of Church goods within the Archdiocese.  This policy is promulgated to support and assist the Metropolitan in that responsibility.

The Archdiocesan Finance Council provides review, oversight, and counsel to the Metropolitan at the Archdiocesan level.  At the local level, the parish finance council is to provide the pastor or administrator with similar advice and counsel.  The Archdiocesan internal auditors also serve a vital role in the review and monitoring of various internal controls at the parish and Archdiocesan levels.  This document should be made available to all parish and Archdiocesan employees and volunteers and studied together for sound parish and Archdiocesan stewardship in this matter.

Purpose

The Italo-Greek Orthodox Archdiocese of the Americas and Canada is committed to the highest possible standards of accountability in all its affairs.  It is determined to develop a culture of the Gospel, one of honest and accountable stewardship and opposition to fraud, theft, and embezzlement.  An environment, which allows any embezzlement, theft, or fraud, is not acceptable, and all criminal, civil, and canon laws will be considered pursuant to the Archdiocese’s Fraud and Theft Policy.  Restitution will be sought in cases concerning embezzlement, theft, or fraud pursuant to this Policy.

In line with that commitment, this document outlines the principles we are committed to in relation to reporting and investigating fraud, theft, and embezzlement of Church property and resources.  All acts of fraud, theft, or embezzlement will be collectively referred to in this Policy as “theft.”  The principles for preventing theft and safeguarding assets are outlined in this Policy in the Internal Control Questionnaire section.  This document in no way supersedes those requirements but is intended to reinforce them.  It will outline the steps that are to be taken in the event of suspicion of theft and communicate how such matters will be handled. These actions apply to the bishop, priests, deacons, monastics, lay employees, volunteers, parishioners, or any other person suspected of fraud, theft, or embezzlement.

The Archdiocese encourages all clergy, monastics, lay leaders, employees, parishioners, and volunteers to come forward on a timely basis and report instances of fraud, theft, or embezzlement and provides assurance against recrimination or retaliation in the proper circumstances (Refer to the Archdiocesan Whistleblower Policy).

Theft at the parish or any other level and at the Archdiocesan level represents a unique problem, which must be responded to in an appropriate manner.  The problem is unique in so far as an inappropriate or premature response may allow the suspected offender to cover- up or hide the suspected activity.

COURSE OF ACTION

Any suspected or documented fraud, theft o,r embezzlement should be immediately reported to the Metropolitan, Chief Operating Office, Vicar General, Chief Financial Officer, or to the Chancellor. An initial report of the incident must be documented in writing by the complainant and provided to the Chief Operating Officer, Chief Financial Officer, and the Chancellor. A downloadable form is available on the Archdiocesan website at www.igoarchusa.org. All complaints and reports of suspected theft will be kept confidential except as necessary for proper law enforcement and legal action to recover the stolen property in order to protect both the complainant and the suspect.  The complainant will be notified of the status of the report by the Archdiocese within five (5) days of the report.

The Metropolitan, Vicar General, Chief Financial Officer, and Chancellor will coordinate the investigative process closely with the pastor or department head, the Department of Human Resources, and Archdiocesan General Counsel until final resolution of the matter.

The suspect engaging in the theft should not be approached or apprehended.  No personnel action shall be taken without prior consultation with the Archdiocesan General Counsel, the Chief Financial Officer, and Law Enforcement.

The premature approach might jeopardize the gathering of necessary evidence, result in a needless lawsuit or cause physical harm to the persons involved.  The clergy, monastic, lay employee or volunteer reporting the suspected activity to the Archdiocese shall not communicate with any other priest, layperson, employee, parishioner, volunteer, or finance council member concerning the suspected activity or embezzlement until he/she is notified by the Chief Financial Officer.  All information regarding the incident should remain confidential by the complainant unless the complainant is contacted by law enforcement or an Archdiocesan representative handling the investigation, in which case the complainant should cooperate fully.

Neither the pastor, parish finance council nor any person at the parish has the authority to release the suspected person from liability or agree to terms of restitution.  There should be no attempt to contact law enforcement agencies or a lawyer at the parish or agency level or to deal with the suspected embezzler at the parish or agency level.  The Chief Financial Officer will coordinate contact with appropriate local parish or agency representatives, legal counsel, and law enforcement agencies on behalf of the Archdiocese and the local parish if applicable.

The Chief Financial Officer will consult with the Human Resource Director and proper Archdiocesan officials and legal counsel to discern appropriate actions to pursue in light of canonical, civil, and criminal statutes, the nature of the allegation, and other significant circumstances.  Restitution will be sought in all cases.

In order to protect the innocent and secure the evidence, no internal control procedures or other operating controls or employees should be changed until requested or instructed by the Chief Financial Officer.  The parish or agency must contact the Chancery Office immediately upon suspicion of theft.  In all instances, the parish or Archdiocesan agency shall work in conjunction with the Chief Financial Officer and the Archdiocesan officers to resolve fraudulent financial situations.  The matter must not be handled at the parish or agency level in any way.  The parish or Archdiocesan agency should not attempt to conduct its own investigation.  This could lead to erroneous information being obtained, improper allegations being leveled, or the inability of the Archdiocese to properly pursue the matter in line with canon, civil, and criminal law.

The Chief Financial Officer will also notify the appropriate insurers. 

FRAUD RESPONSE PLAN

The Metropolitan or his delegate and the Chief Financial Officer, in consultation with the Archdiocesan Finance Council and the Archdiocesan General Counsel, and any other consultants deemed necessary, will make the determination of how fraud, theft, and embezzlement are handled.  This includes decisions regarding when criminal and civil authorities and insurers are to be notified.  All civil, criminal, and canon laws will be strictly adhered to.

General guidelines are as follows:

Once sufficient facts have been uncovered to determine that a fraudulent activity has occurred, the Vicar General, the Chancellor, the Director of Human Resources and the Chief Financial Officer shall advise the Archdiocesan General Counsel to contact appropriate law enforcement authorities and insurers to report the circumstances.

In all instances, the suspect will be removed from the situation in which the theft occurred.  At the direction of the Chief Financial Officer, administrative leave may be invoked on a temporary basis during the investigative process. If the suspect is a member of the clergy, specifically a priest or deacon, the priest or deacon will be immediately removed from his position and placed on administrative leave pending the results of a thorough investigation. If the investigation reveals that there is credible evidence against the priest or deacon, he will be immediately suspended from all ministerial functions pending an ecclesiastical trial. If the priest or deacon is found guilty, penalties may range from suspension to deposition.

As a matter of justice and vigilance in preventing the creation of an environment, which allows for fraud, restitution will be sought in all cases, regardless of the amount of the embezzlement, theft, or fraud.

TYPES OF THEFT

The following list includes fraud and embezzlement to be aware of and watch for.  While several types are listed below, others may happen that are not included in the list.  Any activity that results in the improper diversion, utilization or transfer of Archdiocesan or parish property constitutes a form of theft.

Collusion

Two or more individuals overriding the control system can collectively perpetrate and conceal actions from detection.  This could include collusion between an employee and a vendor or customer, or another employee.

Lapping

This is one of the most common types of fraud.  It is the postponement of entries for the collection of receivables to conceal a cash shortage.  The fraud is perpetrated by a person who records cash in the cash receipts journal and the accounts receivable journal.  The employee defers the recording of the cash receipts from one source and covers the shortage with receipts from another source.

Theft

Theft is the diversion of cash, checks or other assets before or after they are recorded by the accounting system of the parish or school.  It can take the form of removing cash from the collections basket or mail, taking cash or goods donated to the parish or school, or diverting checks to another bank account.

Forgery

Forgery occurs when a person passes a false or worthless instrument, such as a check, with the intent to defraud or injure the recipient.

Accounts Payable

An employee may create payments to false vendors or create phony addresses to which payments are sent.  Invoices could also be overpaid, with the refunds pocketed by the employee. 

Payroll Ghosts

Another common form of fraud is to create false employees.  Paychecks are then issued to the false employee and diverted into a bank account.  Unauthorized pay charges and not recording vacations taken are other frequent forms of fraud.

Kickbacks

An employee may take bribes or kickbacks from suppliers or vendors.  This is more difficult to document because they are usually in cash. 

Supplies or Inventory Embezzlement

An employee may purchase, with the parish or school’s funds, supplies or equipment for personal use.  Inventory or supplies may also be stolen from the parish or school.

Other Types of Fraud or Embezzlement

Individuals may come up with other methods of fraud or embezzlement.  These include inflating personal expense reimbursement amounts, using the parish gross receipts tax exemption for personal purchases, stealing stamps or other office supplies, falsifying time cards, misappropriating petty cash, misusing archdiocesan or parish credit cards, or other theft.