United States Conference of Catholic Bishops

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VIII. Diocesan Finance Councils

Canon 492
In accord with canon 492, revised Code of Canon Law (1983), each diocese is required to establish a finance council. The diocesan bishop or his delegate presides over this council.

The finance council must consist of at least three members of the Christian faithful. The members are to be appointed by the bishop, are to be noted for their integrity, and are to have diverse expertise in areas of financial affairs and civil law. Persons who are closely related to the bishop are not to be appointed as members.

The term of office of the member shall be five years, but members may be appointed to additional five-year terms.

Roles and Responsibilities of the Finance Council
The diocese should prepare a charter for the finance council that should include, at a minimum, the following roles and responsibilities.

The finance council must prepare the annual diocesan budget according to the instruction of the diocesan bishop (c. 493). (While the annual budget may initially be prepared by the staff of the diocese, final preparation rests with the finance council.)

The finance council must examine the annual report of income and expense prepared by the diocesan finance officer (cc. 493, 494). (This examination may take the form of reviewing the annual audited financial statements as presented by the diocese's independent public accountants.)

The finance council should give counsel to the bishop on the following:

Appointment of a finance officer (c. 494)

Removal of the finance officer (c. 494)

Imposition of taxes, either ordinary or extraordinary (c. 1263)

Decisions relative to the more important acts of administration (c. 1277)

Determination of the meaning of acts of extraordinary administration for institutes subject to his control if the statutes are not specific (c. 1281.2)

Review of annual reports submitted to him by clerical and lay administrators of any ecclesiastical goods (c. 1287.1)

Investment of tangible and intangible property assigned to an endowment (c. 1305)

Modification of the obligations imposed in executing last wills for pious causes if such obligations cannot be fulfilled (c. 1310.2)
The finance council must give or withhold consent to the bishop on the following:

Performance of an act of extraordinary administration as defined by the United States Conference of Catholic Bishops (USCCB) (c. 1277)

Alienation of property at or above an amount established by the USCCB (c. 1292 § 1) (effective March 31, 2004, $1,000,000 for dioceses with Catholic populations of half a million persons or more; $500,000for all other dioceses)

In addition to alienation, the entering into any transaction that worsens the financial condition of the diocese (c. 1295)
Be aware that consent must also be obtained from the Holy See for alienation of property and for transactions that worsen the overall financial condition of the diocese in the following amounts:

$10,000,000 or more for dioceses with Catholic populations of half a million persons or more

$5,000,000 or more for all other dioceses
The dollar limits in the two preceding paragraphs are to be linked to the consumer price index as determined annually by the United States Bureau of Labor Statistics and are in effect until March 31, 2006, at which time they are subject to change.

SEE CHAPTER XV FOR FURTHER GUIDANCE ON ALIENTATION AND ACTS OF EXTRAORDINARY ADMINISTRATION.

Other
In addition to the canon law requirements, diocesan bishops should consider consulting with their finance councils on the following:

Appointment of auditors

Appointment of legal counsel

Employee compensation and benefits

Insurance and risk management

Property management

Construction management

Investment policies

Internal controls

Development (fundraising)—See U.S. Catholic bishops, Principles and Guidelines for Fund Raising in the United States by Arch/Dioceses, Arch/Diocesan Agencies and Religious Institutes (November 16, 1977), available from the USCCB Finance Office

Banking arrangements

Leasing of ecclesiastical property
The diocesan finance council has a recommended reporting responsibility in accord with the 2000 USCCB resolution on diocesan financial reporting.

Diocesan Financial Reporting—USCCB Resolution
Bishop Joseph A. Fiorenza, then-President of the National Conference of Catholic Bishops (NCCB; later the United States Conference of Catholic Bishops), appointed an Ad Hoc Committee on Diocesan Financial Reporting, chaired by Bishop Joseph P. Delaney, to study ways in which bishops could better acknowledge their compliance with the requirements of canon law for financial reporting. This preamble and resolution were approved by the body of bishops at their November 2000 General Meeting.

Preamble
In 1971 the NCCB published Diocesan Accounting and Financial Reporting. In the Prologue the Manual says "the bishops of the United States recognize that these limited material resources have to be managed more effectively than ever before. To accomplish this, each ordinary and his managers need an accounting and reporting system which will reflect the financial condition and the results of diocesan operations in a rational and meaningful manner. . . . The prime objective of this Manual is to present a system of accounting and financial reporting which is usable by each and every diocese in the United States. This will permit financial reporting to the ordinary, the Catholic community, or the community at large."

In 1983 the Conference published Accounting Principles and Reporting Practices for Churches and Church-Related Organizations in which it was stated "a wide variety of individuals and groups is interested in the financial statements of Churches and Church-related organizations. Among them are governance, communicants and contributors, service beneficiaries, members of the organization's board of trustees, employees of the organizations, governmental agencies providing funds for programs and services, creditors and potential creditors, and constituent organizations."

Also in 1983, Pope John Paul II promulgated the revised Code of Canon Law, Codex Iuris Canonici.

Canons 492-494 provide for the establishment of diocesan finance councils, the preparation of diocesan budgets, and the responsibilities of the diocesan finance officer. Canons 1276-1278 discuss the responsibilities of diocesan bishops with regard to the administration of goods, consultation with the finance council and college of consultors and delegation of responsibilities to the finance officer. Canon 1284 enumerates specific duties of administrators of ecclesiastical goods. Canon 436 describes the competence of the metropolitan in suffragan dioceses.

In 1995 the Committee on Budget and Finance published a framework Diocesan Internal Controls. In its foreword, Archbishop Thomas J. Murphy, Treasurer, said that "canon 1284 states that all administrators are to perform their duties with the diligence of a ‘good householder.' The bishop can delegate the authority but not the responsibility. He has the duty to ensure that no abuses exist in the administration of church goods within the diocese." The executive summary of that document points out, "Although the bishop will not become too involved in the details of the internal control system, he is the only person who has the power to ensure that each area of a diocese carries out its responsibility for the system. The proper tone must be set at the top of the organization, and for a diocese, this is the bishop."

Chapter 2 provides, "The bishop, as head of the organization, should assume ownership of the system of internal control. He is responsible for ensuring integrity, ethics, competence, and other factors of a positive control environment. The bishop fulfills his responsibilities by providing leadership to his senior management team, who shape the values, principles and operating policies that are the basis for a strong internal control system. . . . The bishop and his representatives, therefore, establish a controlled environment that ensures effective communications and sets up monitoring procedures."

That document went on to say, "The finance council of a diocese should have a significant role in the internal control function of a diocese and in providing direction, guidance, and oversight to the bishop. In addition to its advisory capacity, the finance council has specific rights and duties under canon law."

Having considered the almost thirty-year history of this Conference's interest in the promotion of responsibility and good stewardship over the ecclesiastical goods entrusted to the diocesan bishop, this Committee proposes that the bishops of the United States now consider how they might provide fraternal support to each other in some collegial manner while at the same time respecting the principle of subsidiarity and the desire to not burden any person or office with unrealistic responsibility that might encroach on the legitimate rights of a diocesan bishop to manage his diocese.

The Committee proposes that the Conference consider some advertentia, that is, helping bishops pay attention to the law of the Church and confirming that each is doing so. The Committee proposes that each suffragan bishop would provide an affirmative statement to his metropolitan archbishop that he is in compliance with the canon law and, therefore, proposes the following be adopted as a resolution of the National Conference of Catholic Bishops. As we are all called to the proper administration of the Church's temporal goods in Book V of the Code of Canon Law, the submission of a statement is understood to mean that fiscal matters are being addressed in a timely and appropriate manner.

The diocesan bishop (under church law) has ecclesial and civil responsibility for the management of the diocese. Church law provides a context and direction to the bishop in the exercise of these responsibilities (as described in the preliminary statement); and therefore this resolution is offered to assist the bishop in the exercise of his duties and not to change or diminish those responsibilities.

Resolution
Annually, after the end of the fiscal year, each suffragan bishop is asked to send a letter to his metropolitan archbishop containing:

The names and professional titles of the members of his diocesan finance council;

The dates on which the finance council has met during the preceding fiscal year and since the end of that fiscal year;

A statement signed by the finance council members and the finance officer stating that they have met, reviewed, and discussed the [audited] financial statements of the diocese and the management letter, if any, for that fiscal year and have reviewed the management letter and the recommendations made by the auditors.
The metropolitan archbishop will provide this same letter to the senior suffragan bishop in the province.

This resolution was effective January 1, 2001, and applies to the current fiscal year of each diocese.