Auditors warned officials of the Church of Christ, Scientist, last year that the church needed to increase financial controls to end a long period of budget-busting spending, according to documents obtained by the Globe.
But the warning about budget controls was deleted from the final copy of the April 1991 "management letter" prepared by the church's auditor, the accounting firm of Ernst & Young.It was at least the second warning from the auditor to the financially troubled church. In 1989, the same firm said the church did not have "the financial resources to absorb losses from broadcasting and publishing activities at the present level on a continuing basis."
On April 15, just two weeks before the end of its current fiscal year, the church announced the departure of three officials who pushed for the new media operations. It also suspended new programming for the Monitor Channel and laid off most of the 400-person cable television staff.
The church's directors also promised that the church and Publishing Society would have a balanced budget for the next fiscal year, based on the "historical" projection of having about $70 million in income.
Release of financial information is one of the central issues in the current crisis in the Christian Science movement. At the annual meeting of the Boston-based Mother Church each June, the church's treasurer - who is appointed by the board of directors - has reported the size of the church's restricted and unrestricted funds and the total deficit for operations. But officials have not released budget information despite requests by members.
Former church employees say that while the draft and final versions of the auditor's management letter were received by financial officials at the church, it is not clear whether the directors of the church saw the draft last spring.
Apparently after negotiations between church officials and the auditor, the warning about the lack of budget controls was deleted in the final letter. In a "management response," church officials said only that they "will continue to improve" the working relationship between the controller of the Christian Science Publishing Society and managers responsible for spending.
The warning in the draft letter - which courts have held to fulfill an auditor's responsibility to warn of unsound financial practices - was much more pointed.
Church officials did not reply to a request for comment on the auditor's 1991 warning and the reason it had been deleted.
Publishing Society financial records, described to the Globe by a church source, show that officials have underestimated their net losses by $10 million a year since 1989, even as some church members and officials were warning that the church could not afford its new media activities.