In the next few pages, we are reprinting the 2012 financial audit conducted by Cherry Bekaert LLP. Each calendar year, we have a financial audit performed by an independent third party auditing firm to review our financial statements and financial internal controls. In the “Report of Independent Auditor” opinion section it states: “In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Living Church of God (International), Inc. and Affiliates as of December 31, 2012 and 2011, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.”
We reprint these statements in their entirety for your review. They follow a set format each year as determined by good audit practices and standards, which includes a notes section that gives more detail on specific areas of the financial statements.
As we review some excerpts, keep in mind that any financial report is a “snapshot” that compares 2011 and 2012. As such, it looks back to show how the Living Church of God used its financial resources to pursue its goals.
In the expense section of the Consolidated Statement of Activities you will note that we categorize the expenses in three main categories. Preaching the Gospel, Feeding the Flock and General and Administrative. In 2012 we spent $7,780,189—or 45.1 percent of total expense— on Preaching the Gospel. We spent $8,292,364—or 48.1 percent of total expense—on Feeding the Flock. Just 6.8 percent—$1,164,225—of our total expense went to the General and Administrative category. General and Administrative expenses include facility costs, accounting, legal, insurance and other costs that cannot be directly attributed to Preaching the Gospel or Feeding the Flock. Overall, total expenses for 2012 increased by $2,218,932 with the largest increase ($1,147,132) in Preaching the Gospel.
With regard to income, Mr. Dexter Wakefield, our Vice President of Finance and Operations, reports:
“I am glad to report that the regular income is now 1.1 percent above last year—and on an upward trend. Income in December 2012 was especially strong, and to the extent that it was the result of extra tax-related donations for the yearend, it resulted in the unusual dip in January/ February 2013 income as compared to last year. For now, we are back to our normal income trend. The offerings for First and Last Days of Unleavened Bread—a good indicator of the trend for the year— were up 3.1 percent over last year, which is encouraging.
In 2012, the Church was blessed with an income increase of 11.9 percent, but some of that increase came from non-recurring sources such as bequests from estates and special large offerings—which are not part of our normal tithes and offerings. We are extremely thankful for those special blessings. That extra income enabled us to add, among other things, more ministers, television stations and some much-needed equipment. For instance, the envelope labeler in the Mail Processing Department was an older machine that had been running well over 1 million pieces per year. It was on its last legs and the staff was constantly nursing it to keep it going. We now have replaced the old machine with an industrial-quality labeler that can handle our growing volumes for years to come—and do it at a lower cost. We expect to recover the cost of the new labeler in savings over its operational life. We have also acquired HD television cameras for our Tomorrow’s World production, and our viewers will be seeing the high quality results soon.
As expected, the extra offerings and estate bequests are not being repeated at the same rate in 2013. Therefore, we are being very careful about our higher 2012 “baseline”of expenditures and have made adjustments to match our expected 2013 income trend, by cutting three television stations and postponing some expenditures. This is something for which we made contingency plans last year, and we look forward to replacing the television coverage soon, as income growth permits.
We greatly appreciate God’s generosity to His Work and the faithfulness of the brethren and co-workers in their tithes, offerings and bequests.”—DBW
As Mr. Wakefield mentioned, we received several large bequests in 2012, which allowed for several upgrades of equipment and expansion of Internet and television coverage. We are constantly evaluating Internet advertising and television coverage trying to find the right balance of cost per response. We take seriously the stewardship of your faithful tithes and offerings. In 2012, we more than doubled advertising expense over 2011 from 182,324 to 371,221. You will also note in the Asset purchases chart that we upgraded the main editing software for TV production and added a Tricaster system to prepare for multiple camera shoots of our Tomorrow’s World program.
An added benefit to careful stewardship of the tithes and offerings is the ability to set aside funds for needed purchases or take advantage of savings. You will note that the replacement roof for the TV building and a portion of the remodel was part of the monies set aside for long term building maintenance. Our main building here in Charlotte was built more than two decades ago, and we began preparing for heating and cooling units, roofs, painting, carpet, windows and office expansion several years ago. If all those items were to need replacing at the same time it could greatly impact us financially. We have been replacing the heating and cooling units for several years now and in 2011 and 2012 we replaced the roofs on the two buildings. It was logical to consider the carpet when we remodeled the back of the building to add the additional offices and we purchased the carpet in January of 2013 with installation being implemented in stages.
We also try and take advantage of savings while planning for long term needs. An item that was ordered in 2013 and paid for in January of 2013 was an upgrade to server space adding Terabytes of space to our capacity with a several thousand dollar discount because of the special offerings in 2012. We also were able to take advantage of a thorough analysis of fleet car usage and purchase several fleet cars which will save on lease costs.
A closer look at the breakdown of our support shows that in 2012 that donors and co-workers made up 15.6 percent of our total income. Members and prospective members made up the balance of 84.4 percent of the total income. It is personally encouraging to me as a father of two children to see that even many of our youth tithe faithfully on their part time jobs and other blessings.
I hope that we as Church members never lose sight of the important role that our financial support has in the missions of the Church and that we always keep our eye on the goal of preaching the gospel to every nations. The commission that Christ gave to his disciples applies directly to us today. Matthew 28:19 makes very clear that we are to, “Go therefore and make disciples of all the nations, baptizing them in the name of the Father and of the Son and of the Holy Spirit, teaching them to observe all things that I have commanded you; and lo, I am with you always, even to the end of the age.”
All this work that we do collectively is with those words in mind. Whether it is new high speed printer that can print addresses clearly for the thousands and thousands of letters, booklets and magazines, or a new camera to be able to shoot new television programs or even a reliable fleet car for a minister to be able to visit his congregations and anoint and council those whom God calls; these are all just pieces of an overall work for which you support of prayers, tithes and offerings keep us always moving forward.
When we allow the cares of this world to take away our focus it serves the purpose of taking our eyes off the goal. In the model prayer that Christ gave as an outline in Matthew 6:9–13, after acknowledging the Father, the very first thing that he focused on was the kingdom of God: “…Our Father in Heaven, Hallowed be your name. Your kingdom come. Your will be done on earth as it is in heaven” (vv. 9–10). This is not just a bedtime prayer suggestion. We are to yearn for the kingdom and we are to yearn to share the good news of the kingdom to every nation.
When you hear that statistics of the television response or number of magazines printed or even the number of visitors to a Tomorrow’s World presentation, do you rejoice? Your faithful tithes and offerings help to drive this Work forward—and your prayers that God would take those tithes and offerings, increase them and cause them to bear fruit are being answered. I have often asked the following rhetorical question: What is one person’s life actually worth? When we hear a brand new person or even a “lost sheep” coming back to us, can a price be set? The truth is that there is no price. The value is beyond price—they are priceless!
As you review the 2012 audit and as we all look forward to 2013 and beyond, let us all rejoice in the impact we are making together as collective body. Our message of warning has made, is making, and will continue to make a difference in the lives of people that it touches. Your example, your prayers and our collective tithes and offerings do make a difference. Isaiah 52:7 says it much better than I ever could: “How beautiful upon the mountains are the feet of him who bring good news, who proclaims peace, who bring glad tidings of good things, who proclaim salvation, who says to Zion, ‘your God reigns!’”