III. Report of the ad hoc committee

on our 1986-1993 finances

1. Members of the committee

Bros. Aloisio Kuhn, Antonio Martínez, Alan Henley, Eduardo Botero, Julian Casey and Gilles Ouimet.

2. Our task

—        to examine the financial operations of the General Administration;

—  to present our study to the assembly (it was not within our mandate to make proposals).

3. Our analysis:

A) We had at our disposal all available information concerning the accounts: bills, losses and gains on all financial operations, annual balance sheets, budgets, documents concerning the Provinces, monthly reports on the five companies handling our portfolios.

B) We analysed in greater detail:

—        the balance sheets,

—        the statements of financial operations,

—        the statements of profits and losses,

—        the budgets (4 out of 8 were available).

C) One member of the committee heads the accounting department of the Econome General’s office, and Bro. Vaquerin was available to answer all our questions. We therefore wish to express our thanks to Bro. Econome General and his associates.

4. Our observations:

A) There was a change in the accounting system last year. It is our opinion that the new system is more modern and preferable to the old. However, despite the obvious advantages attached to effecting the transition during the course of this administration’s term of office, it

would have been desirable that the change be made only at the end of their term, in order to facilitate comparisons.

B) In our opinion, the figures in the reports we studied reflect the present reality of the financial situation and its evolution over the past eight years.

C) Revenue from our investment portfolio (interest, dividends, etc.), as well as from the "per capita" and other receipts, were not sufficient to generate a surplus during the past five years, during which expenses exceeded income. The main reason for this accumulated deficit was the money invested in buildings (Manziana, Nairobi and the General House). One result was a drop in the real value of our portfolio. We have the impression that the policy regarding reserves should have been evaluated more regularly in order to avoid these repeated deficits.

D) We have no outside auditor. Since this practice is followed in a good number of our Provinces and schools, it would seem normal enough for the Chapter to be provided with verified accounts.

E) We would like to have seen in the financial report a table comparing this year with last year; this would have established a link with last year’s accounts.

F) We discovered some confusion in terminology. "special gifts" should be distinguished from "funds". Objectives should be clearly stated. In speaking of "funds", one should use only the interest for current needs.

G) We could not find the total value of our properties. The reports did not include the accounts of El Escorial, Fribourg and the building of the General House.

H) The hiring of stockbrokers is a decided improvement. However, we wonder if we really need five of them.

I) We agree with Bro. Ezequiel’s statement to the effect that there is no uniformity among the balance sheets of the various Provinces. However, we believe that we can and must reach that goal by applying international standards.

5. Conclusions

A) We realize that such a complex financial administration is no easy task. That is why projections and budgetary controls should always be an integral part of our financial operational strategy.

B) We wondered why the expenses of renewal sessions at the General House or other centers were not borne by the various administrative units involved.

C) We could not establish a direct relationship between the "per capita" and the financial needs of the General Administration. The criteria underlying that relationship escape us.

D) We think that a manual of procedures would guarantee clearer and more systematic economic, financial and accounting policies. The only such document that exists at present is the mandate for the Finance Commission.

On the 9 October, the Chapter adopted the following proposal:

The General Chapter accepts the financial report presented by the Brother Econome General.

1. Decisions

The Chapter modified some statutes concerning the administration of goods. For example, it specified that the brother Econome General is to be called in when the Council treats of financial matters, it established and defined the role of the international Council for economic affairs, it increased by one, the number of Brothers members of the Finance Committee. (see "new statutes")

2. Recommendations

2.1. To Brother Superior General and his Council

2.1.1 A handbook for the General Administration should be drawn up.

2.1.2 The composition and contents of this handbook would be the responsibility of a committee named by Brother Superior General before the end of December 1993. It should be approved as soon as possible by Bro. Superior General and his Council.

2.1.3 Among other elements, this handbook would contain:

A)        The flow-chart and general principles to be followed in establishing administrative financial policy.

B)        The functions of the personnel of the various sectors of the General Administration and the lines of authority among them.

C)        The financial resources of these sectors.

2.1.4 The hiring of an auditor for the financial management of the General Administration.

2.1.5 The juridical status of the Marist International Centre and the Marist Asian Center should be evaluated, to determine to whom they should belong.

2.1.6 Study each case, and take the necessary means to insure that the administrative units which are at present financially dependent on the General Council acquire their autonomy within the next eight years.

2.2 To the international Council for economic affairs

2.2.1 A study on the need to create funds (fund = capital on which only the annual interest is used, for a specific purpose).

2.2.2. A study concerning the use of a more common currency as basis        for the balance sheets.

2.2.3 An analysis of whether Rome is the most suitable financial centre for our needs.

2.2.4 Study the establishment of a certain uniformity in the financial reports of the administrative units, through the formation of economes.

2.2.5  Since a balanced budget for the finances of the General Administration depends on the "per capita" from the administrative units, the latter should be re-evaluated on a regular basis.

2.3. To Brother Econome General

2.3.1 a meeting of the Brothers Provincial Econome and of the financial experts who work for the General Administration.

2.3.2 at regular intervals, send the Brothers Provincials information about the financial situation of the General Administration.

2.3.3 visits by Brother Econome General or his delegate to the Provincial Economes if necessary.

2.3.4 all the properties administered by the General Administration should be valued and entered into the accounts so as to establish an accurate balance sheet.

2.3.5 the Finance Committee should meet every three months to study the accounts, in the context of the budgets of the Brother Econome General’s department.