Denominational Internal Control and Conflicts of Interest

Speaker: Categories: Jul 09, 2005


[1hr, 17min, 19sec / 44min, 45sec]


This presentation, the first of the 2005/2006 San Diego Adventist Forum year, might be appropriately sub-titled:The judgment was set and the books were opened... Though taken entirely out of context, these words of Malachi 3:16 might help to provide the setting for what David Dennis will share on July 9. What is reported then will be the first time that theentirestory of this embarrassing moment in Adventist history will be made public. In the following paragraph the speaker for that meeting provides the background for what he will present and challenging questions to ponder.

"With the shock of earth-shaking business failures at such companies as Enron and World Com, brought about by the total failure of internal controls, it seems time for the church to take a look at its system of internal control, which has failed to prevent many financial debacles over the past couple of decades. Legislators are struggling to enforce appropriate business practices in publicly traded entities. The Sarbanes-Oxley Act is bringing much-needed guidance to a trembling corporate world. But so far the act has not been mandated for private companies and not-for-profit organizations. The US differs from countries of the Commonwealth, in that audits are not required for most non-publicly traded organizations, including not-for-profit corporations. There is also an inherent weakness in the way auditors relate to top management. For Arthur Andersen at Enron it was the pursuit of money. For the church it is the threat of position if the audit report is not favorable. This presentation will be painfully candid in addressing some mundane issues and very real losses of both money and a respect for the church and its leadership."


A second generation SDA, Dave Dennis, was born and grew up in the mid-West. Most of his first 16 years of formal education were in denominational schools. From an early age he developed a keen interest in the graphic arts and used this vocational training to earn his way through Union College in Nebraska. It was during college that he shifted his career emphasis to accounting. From his home influences he felt compelled to devote his service to the church. Soon after beginning his first job out of college as the assistant treasurer of the Iowa Conference in 1960, he married Charlotte Morris from Boulder, Colorado. Some eighteen months later they began a 14-year overseas mission assignment, which took them to Uruguay and Chile in South America and to Indonesia and Singapore in Asia. His last position abroad was as the internal auditor for the Far Eastern Division. In 1975 he returned to the United States to become an associate auditor at the General Conference. With an MBA and a CPA, he felt he could be of greater service to the church employed within it than serving in a lay capacity. During the next 19 years, as the director of internal audit for the world church, and following a major reorganization of the audit function of the church, he was called to assist in the examination and review of some of the denomination’s most notable fiscal scandals including multi-misappropriations at Loma Linda University and Medical Center, the Davenport bankruptcy, the Lake Region fraud, the collapse of Harris Pine Mills. He was at the cutting edge of identifying the FER (Family Enrichment Resources, formerly the Home Health Education Service) failure and the fall of Robert S. Folkenberg, before this auditor's firing at the end of 1994. He was hardly prepared to face the realities of a near total breakdown in the system of internal controls for the church and· the epidemic of conflicts of interest, which precipitated most of the financial disasters. Since 1995 he has been gainfully employed in the private practice of accounting in the Maryland suburbs with his son, Sam, also a CPA. Married for 45 years, he and Charlotte have two grandchildren.

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