From here:
Regarding financial resources, Budget Chair Andrew Clinkard reported that “the diocesan financial position continues to get healthier.” He pointed out the diocese has not used their “interest bearing credit line” since March of this year, the “long term debt from parishes has been reduced by $179,000.00 and “we are anticipating an operating surplus for 2013.”
What Clinkard omitted from this rosy assessment was mentioning the influx of cash the diocese received from selling St. Hilda’s church building and rectory.
The rectory sold for $650,0000 and the church building for $2,250,000 (note: I have changed this to an exact number), making the debt reduction of $179,000.00 appear rather less impressive.
Once they’ve sold everything but the bishop’s gold cufflinks, do you suppose that reality will begin to dawn on these muppets? It isn’t a “gain” to sell churches, if your business is building churches and your revenue depends on their viability.
The post doesn’t mention somebody using the word “gain.”
Plus, as AMP_Anglican can probably confirm, an operating surplus is separate from the sale of capital expenditures, such as churches. In other words, operating surplus for the diocese would most likely mean whatever is left over from your donations once you pay expenses. The sale of the church is not a donation so it would not show up in this calculation.
This post is making a “straw man” out of confusing two separate transactions. Selling your house and paying off the rest of your mortgage is a completely separate issue than if you can live within your monthly salary. What the post is suggesting is that the diocese is using the sale of the church as operating income. I don’t think that many accountants would agree with this assumption.
I think you can increase your operating surplus by using the proceeds realized from the sale of capital assets to pay down some debt, which would thereby reduce or eliminate the expenses associated with that debt, assuming those expenses were to that point being paid out of income.
Also, the proceeds realized from the sale of capital assets can be invested to generate income. The question then would be to what extent the ACoC is allowed, under Canadian tax law and generally accepted accounting principles, to continue to obtain income from such investment.
Income from the sale of the assets was $2,650,000.00. Debt reduction was &179,000.00. Where is the remaining $2,471,000.00? If it is that that gives them the operating surplus for 2013, what will 2014 look like.
And legal or not, that $2,650,000 really was just taken from the members of St Hilda’s. It’s not like there was a split and half stayed.
As much as I would like to be able to make something of a definitive comment I don’t feel that I can. I work for what accountants call a CCPC (Canadian Controlled Private Corporation) and thus function according to a very specific set of accounting standards (Part II of the CICA Handbook) now know as ASPE (Accounting Standards for Private Enterprises). The Diocese is what we call a NPO (Not for Profit Organization). The accounting standards (Part III of the CICA Handbook) for NPO’s are quite different than those for CCPC’s.
I would have to review my text books for the correct accounting procedures pertaining to the sale of Saint Hilda’s. However, in principle the “profits” from the “disposal” of a capital asset would not appear in the operations section of the financial statements.
But I have to wonder what exactly is “long term debt from parishes”? Possibly the amount of debt of the parishes (i.e. bank loans) that is guaranteed by the Diocese? On the surface this sounds good, but the details need to be examined. One question that I would pose is this. Has there been any postponement or cancellation of regular maintenance? (i.e. lets put off repairing the roof for a couple of years.)