Non-standard Trust Review Findings
Many organizations have gone through the trust review process and found items listed on the Review of Trust Operations report that are not direct violations of any North American Division (NAD) Working Policy (WP) or NAD Planned Giving & Trust Services (PGTS) Standards. These findings are risk factors that General Conference Auditing Services (GCAS) has determined hold the potential to do harm to the organization they are reviewing and are compelled by their charter to bring them to the attention of the organization’s leadership. This article provides some guidance on how to correct and document trust review findings that are risk factors but are not covered by WP or PGTS Standards.
Reason for Findings
The NAD requires all accredited NAD PGTS organizations to follow WP and PGTS Standards in order to mitigate the risks inherent in providing PGTS services to Seventh-day Adventist (SDA) church members. To ensure all organizations are adhering to WP and PGTS Standards GCAS has been given the task of reviewing each PGTS Accredited organization and writing a Review of Trust Operations (ROTO) that documents all instances in which the organization is out of compliance. The purpose for all this accountability is to ensure PGTS is not a legal liability but a blessing that supports the mission of the church organization.
If your organization has ever been sued, or had to deal with litigation, you are aware of the hazards and costs involved in ignoring the risks. This article is intended to encourage all NAD PGTS organizations to be proactive in avoiding risks that could result in expensive and time-consuming court experiences. In case you think it won’t happen to your organization think again. Over the past five years there have been multiple instances of legal proceedings across the NAD.
The question has been asked, “Why are there items on the ROTO report that are not related to WP or PGTS Standards?”
GCAS samples work completed by PGTS departments to identify instances and practices that could leave the organization open to legal and financial risks. NAD WP and PGTS Standards are used as a primary resource to determine risk factors. From time to time GCAS may also identify other factors not directly related to NAD WP or PGTS Standards that have the potential to increase risk and they will note these factors on the ROTO. These other findings are usually listed under the headings General Accounting or Other Procedural Matters. GCAS has full authority and right to bring these risks to the attention of the organization’s administration.
Examples From ROTOs
What are some examples of these risk factors?
- HIPAA releases not on file for all donors where the organization has current or future fiduciary responsibility. (this will be a standard starting in 2021)
- No approval initials authorizing and taking responsibility for journal vouchers
- Trust and estate bank reconciliations not performed
- Distribution of net income for trust not completed
- Original documents lost or misplaced
- Attorney opinion for scrivener error correction not followed
- Distribution not in compliance with Section 663(b), the 65-day rule concerning estate taxes
- Property tax payments not documented
- Revoked trust assets still not returned to donor after two years
- Erroneous distribution – direction of the original documents not followed
Responding to Non-standard Findings
How should you deal with these risk factors not discussed in WP or Standards? These findings need to be considered just as important as all the other findings listed in the narrative of the ROTO. The findings need to be reviewed by the organization’s financial audit review committee, or governing board, and appropriate action taken to correct them as required by Standard 46 and 47.
Every accredited organization in the NAD has attorney opinion letters that assesses risks and guides the organization in the best way to avoid those risks. These additional risk factors that GCAS has brought to the attention of your organization may need to be assessed by your local legal counsel. If an attorney’s opinion is obtained on how to deal appropriately with these risks, it should be put in writing. You would then follow what the opinion letter instructs you to do to correct the problem and document the corrections to the C&A Committee.
If you are not sure what to do to correct finding(s) contact the GC/NAD PGTS office and we will seek to assist you in finding a way forward. Do not contact GCAS unless you have a question about specific information contained in the report, such as the name or number of a specific file. The department’s direct telephone number is 301-680-5002 and the email is [email protected]. It is imperative that you do not ignore the findings or delay the resolution. Take action immediately.