Financial Statement Analysis of 2005 Australian Branch

by NewYork44M 8 Replies latest watchtower bible

• 

  NewYork44M

  Several weeks ago this board obtained a copy of the Australian Wt branch 2005 financial statements.

  http://www.jehovahs-witness.com/10/103528/1.ashx

  I have had a chance to review the statements and would like to add a few comments. I am a CPA and teach financial analysis at a local college. I thought it might be interesting to look at the statements in the same way I would look at any other corporation.

  When you review financial statements you end with more questions than answers. So, this is just a first step. It would be great if we could get some information from other branches so that we can put the pieces together.

  Also keep in mind that the statements are in Australian dollars. The current exchange rate is 1 Australian dollar = $0.72 US dollar. I did not do any conversions in my calculations.

  Here are some comments that may not have been discussed as of yet.

  If you notice there is not a significant amount of increase in the equity of the corporation. Net assets unrestricted remained at around $10.2 Million and restricted increased from slightly $3.4 Million to $4.1 Million. In a not for profit organization net assets represents what is left over from donations once the expenses have been paid. Net assets is similar to retained earnings in a for-profit enterprise.

  So you might assume that the branch is self sufficient, although not much more than that. However, look at the income statement (Statement of Financial Performance). Notice the administrative expense of $8,475,779. This amount refers you to note 2 in the disclosures.

  Note 2 states:

  "The total of $8,475,579 includes $8,142,277 for overseas aid."

  While it does not specifically state, my best guess is that overseas aid is the amount sent to Brooklyn or other international branches to “support kingdom service.” If this is correct, that means that over 50% of overall donations are going to the Brooklyn. Money is transferred out of the country to the society to give the impression that the branch is only just self sufficient, but not much more than that.

  Is this typical of all branches? Or, is this done only because this branch is required to make their financial statements public? To answer this question, we need financial statements from different branches. Help!!

  Speaking of donations I did some calculations on a per publisher basis:

  2005
  Donations $15,523,039
  Average Pubs 60,399
  Donation per pub: $257

  2004
  Donations $12,375,661
  Average Pub 60533
  Donation per Pub $204

  Is this typical? Any thoughts?

  One last comment: Note 3 indicates that they have an accounts receivable balance of $1.5 Million.

  How does accounting principles define accounts receivable. AR “consists of money owed to the corporation for services or merchandise it sold to customers.” This looks and smells like the literature sold to congregations. It is my understanding that Australia is on a donation basis for literature. However, from the perspective of the branch this literature is not donated. The society sells the literature to congregations. The value of the literature stays on the books until the literature is paid in the form of contributions going back to the branch.
  
  Doesn’t this debunk the whole concept of literature at no cost to the public?
• 

  serendipity

  Thanks for looking at this, NY.

  I really like to see the statements of the WTS' US corporations.
• 

  wombat

  New York...New York..A wunnerful town.The Bronx is up and the Batterys down...(Sorry couldn't help that).

  Mate, you won't get a good response until Ozzie or unclebruce come back from their Saturday nights out.. I'm just the resident funny man.

  But on reading your post, I scratch my nether regions and wonder if this is a registered charity or a business that should be paying G.S.T. (Same as V.A.T.).

  The income dispensed does not have to be accounted for.

  Move to Australia and we'll start a church
• 

  cosmic

  NY44M,

  Interesting. I have a question. How is are the total numbers arrived at? What I mean is this: in the US taxes are pretty much made on traceable income, i.e. income that someone else has reported giving to you. The $200/year/publisher figure sounds somewhat light for the congregations that I've been in. That breaks down to roughly $20/month, or $5/sunday talk (this, of course, doesn't count CAs or DAs). However, I never claimed the money that I donated on my taxes, and I never got a receipt because the individual amounts were never that large. In Australia, how much can an individual claim on their taxes as "donation" before they have to supply receipts? I can say that, on average, I tried to keep the 10% tithing rule in place, but towards the end, as I faded, I was near the point of trying to figure out how I could get money OUT of that [edited] little box, just for the principle. But then, trusting in good ol' Joe Hober, I never did the math. But I am curious as to the "expenses" part. In the congos that I've been to, usually the biggest "expense" is the mortgage, which was held by the WTS, which switched money from pocket a to b. I'm surprised that the Aussie govt (or any govt for that matter) would let $8million slip out of the country completely untouched. But still, considering it as PURE PROFIT, if the $120 per publisher PROFIT figure is held linearly across the board, (quick, somebody multiply 120 by 6 million) that is a rather healthyYEARLY PROFIT (COMPLETE PROFIT!!!) figure!!!! That in itself would certainly open the eyes of those starving, yet sacrificing, humble, yet happy, Pioneers. It would seem that from the profit alone, the WTS could considerably ease the pain of Pioneering. Besides, why does Brooklyn need all that money, after all, the end of the system of things is "so close I can stick my tongue out and taste it", right?

  At an estimation of $720million PROFIT per year, this site ought to have a banner attached to each page that is called "The Countingtower: Announcing Jehovah's Profit!" and daily accrue the $2million the WTS is sucking in. But then, I'm sure that it would probably amaze us at how fast the WTS lawyers would be in trying to get that info taken off the Internet, as that is information that I am sure the Fleecing and Deceitful Slave class would not want published. Talk about a demotivator. But, with the figure out for all to see, it would not escape notice by even the most casual of JW lurkers.
• 

  NewYork44M

  Cosmic:

  How is are the total numbers arrived at; What I mean is this: in the US taxes are pretty much made on traceable income, i.e. income that someone else has reported giving to you. The $200/year/publisher figure sounds somewhat light for the congregations that I've been in;

  I used the donation amount from the "Statement of Financial Performance" and divided that amount by the number of publishers from the latest summary of publishers printed in the Feb Wt and reprinted on this board.

  At an estimation of $720million PROFIT per year, this site ought to have a banner attached to each page that is called "The Countingtower

  Actually the surplus is $716,000 (Thousand not Million). This is my point. The surplus would be $9 Million except for the fact that they transferred +$8 Million to their offshore account (i.e. Brooklyn) and called that an expense.

  Since Brooklyn does not have to publish their financial statements it is a convenient way to hide excess profits from various branches.
• 

  cosmic

  NY44M,

  I understand about the transfer of the 8megabucks; but, regardless of how it is listed, it is PROFIT, i.e. it is money that is not used to pay real expenses of the Aussie KHs (as, say, property taxes, utility bills, hall rental/mortgage, etc.). The thing I was getting at is that in the US, it is standard (but unadmitted) practice to decide what anmount of taxes will be paid (that is, profit admitted to) this year and work backwards from there. In short, the practice is to try to determine what the least amount of taxes can be claimed before the Feds audit your butt, add, oh, say, 15% saftey factor, and figure out how to make the figures agree. There is a growing understrata of American business that is learning how to deal in cash only. If I ask you to build a swimming pool for me, you will quote me X, and upwards of 40% of X being for taxes, permits, etc. etc. If I say to you, I will pay you 70% of X as cash, and you have a ready supply if illegal alien labor (or not), you can make 10% more profit by accepting the cash and never declaring the income. Now, that scenario is a bit fraught with danger, as the pool is a physical item, if the community is on its toes and sees the construction going on w/o a permit they might get a little nosey (although bribes to teamsters as well as public officials are more than common) and the problems begin. However, since the WTS issues receipts for some donations, they know that these receipts will be pretty much ALL that the Feds will be able to have a paper trail on. In other words, if I donate $100 ands do not demand a receipt (therefore announcing my intention to NOT specifically declare the donation to the FEDS) the WTS can claim that I didn't give them a thing, thereby generating $100 of PURE profit. But, the WTS knows that I would probably become just a bit suspicious, not to mention the Feds. So, what the WTS must do is figure out what amount they can declare that I gave to them with it being reasonably acceptable to me and the Feds. In other words, they have to decalre SOMETHING, and knowing the way these weasles think, dollars to donuts, they claim 10% of actual, non receipted, donations. You know, Ceasar's tithings to Ceasar.

  Now, this all generates a whopping pile of cash, which NY wants sent to them. The problem is that most govts take a dim view of letting a large pile of cash that is generated in their space just flit away into the night. Plus, unless the $8million is laundered in some fashion (by declaring it as "foreign expenses", or "bumblebee research", or some such) the Feds are gonna be hard pressed to allow the "non-profit" status to continue. Now, there isn't anything "illegal" about this; however, we do start to use words like "immoral", and "materialistic".

  Which is my final point: what [edited] is this $8Million bucks being used for? I came up with $720million bucks by taking the profit per Aussie publisher, i.e. $120. (8,000,000 (profit) divided by 60,000 pubishers actually comes out to $133 per publisher, but I rounded it down to be conservative). Plus, you came up with $200 per publisher donation (and that is just the claimed stuff) and a 40% overall expense rate (for hall utilities, magazines, and traveling medicine men overseers. What else is there?) seems reasonable. Now, just straight across the board ( I don't know if Australia is the mean for world economies. I know that the US is probably greater, as would be the UK, Saudia Arabia, but then there is Somalia, Peru, Ehtiopia) and with no other figures to go on, I assume that of the nations with substantial (a subjective term, I know) JW population, Australia has the average economy. This would mean that with a world of 6 million JWs, $120 time 6,000,000 gives $720 million of PURE PROFIT going to Brooklyn EACH YEAR. Now folks, even in this world of trillion dollar deficits and trade budgets and $67 per barrel for oil, $720,000,000 is still a lot of frigging cash. (Yes folks, keep that in mind, this is [edited] cash!!!! Not raw materials with eventual profit after manufacturing investment, this is right now, buy the puppy, folding dollar bills cash. That is enormous.) Where is all of this cash going? Again, you can't let that kind of bucks just sit in a NY bank and not have the Feds continue to agree to non-profit status. It has to be going somewhere to be doing something or the Feds would be siphoning it. You've got many many congrgations in the US doubling and tripeling up on the same KH, while $720,000,000 could by a shite load of KHs, but it ain't happening. Where is that money going?
• 

  moggy lover

  Putting it in another way, if the average member of the Aust JWs is donating $257 a year, it means that this works out to $4.90 a week.

  At first glance, it may appear to be particularly ungenerous, but one must consider the huge commitment it already takes to be a follower of the WTS - emotionally, socially,personally, etc.

  Remember also that the WTS gets a double whammy out of the flock: 1 The publisher has to "donate" the value of the literature he is receiving - if, say, he takes 10 mags, then it is expected that he will "donate" $5 into the box. 2 He is also obliged to account for any money he does get from the public. So, in turn if I "donate" $5 to the publisher for the literature, the publisher is now obliged to put that money as well into the box.

  As a consequence the personal donations tend to diminish. That $4.90 per publisher, per week may also not reflect the correct picture. Remember that the WTS receives largess from sources such as wills. The figure of $4.90 is arrived at without taking that into account. [$15 Mill contributed by 60,000 makes it $4.90 per week] However if a legacy of $2 mill to the society was part of a persons will for this year then the average per pub per week in donations would be as little as $2.15.

  This lack of generosity would then appear to compare unfavourably with the corresponding generosity of those who are in such "Babylonish" religions as the Anglican Church or the RC Church

  Cheers
• 

  ozziepost

  wombat:

  Mate, you won't get a good response until Ozzie or unclebruce come back from their Saturday nights out.

  Not necessarily. Sometimes in my board personna I choose to remain silent on some things I may know much about, simply because I still feel that I have privileged information which may have been entrusted to me and it's against my personal ethics to flout that.

  However (what a great dub-ism that is!!!) I have already posted some details as i feel i am able in another thread about the Society's finances, including:

  Mate, are the real estate assets (all the KHs) included in their quoted $30 mill assets? If not, who owns them?

  A Registered Australian public company, limited by guarantee and named "Jehovah's Witnesses Congregations". It was licensed by the ASIC to omit "Limited" from its name. It has the ACN 001 825 618 Registered Office: 11 Raby Road, Catherine Field NSW 2171 (this is the address of the Sydney Assembly Hall and is quite close to the Australia Bethel) It was first registered on 25/1/1996

  http://www.jehovahs-witness.com/11/110135/1920712/post.ashx#1920712

  Then there was this:

  Here's my understanding of the situation:

  The 'wicked' churches each prepare statutory accounts which show values of their properties, as well as properly record income and expenditure. despite what the WTS claims, churches do pay tax - some income is subject to GST for example, and from what I've seen at closehand, it's required to allow no subterfuge or tax avoidance.

  One denomination I'm familiar with, the Anglican Church has a company, the Anglican Church Property Trust, that holds title to all properties. However, the valuations are included in each church's (parish's) statutory accounts.

  Compare that with JWs and their WTS in Australia where congregations do not, as you know, prepare statutory accounts and certainly never submit themselves, nor even register, for GST. Thus, although there is a company holding title to KH properties, they have managed to position themselves to avoid making public the extent of their real estate holdings. There certainly isn't transparency.

  So much for their empty boast about respecting the "superior authorities".

  This was http://www.jehovahs-witness.com/11/110135/1921314/post.ashx#1921314

  There was also the point i made in jwfacts thread that the WTS avoids tax payments including GST

  Now to some comments on the original post on this thread:

  NewYork44:

  It's sometimes difficult trying to analyse documents not made for analysing, eh?

  Some things to contemplate:

  Contributions may not be limited to simple donations by the publishers to the WorldWideWork™. Included may be congregations' donations to the Travelling Overseers Automobile Program (TOAP). Depending on when the congregations remitted their annual contributions, this would result in "Timing Differences" when comparing one year with another. The amounts involved are huge.

  Frankly, I wouldn't hang my hat on averaging out one year against another on a 'per publisher' basis.

  There also may be other reasons to account for the differences.

  Other points:

  The surplus would be $9 Million except for the fact that they transferred +$8 Million to their offshore account (i.e. Brooklyn) and called that an expense

  Are you sure about that? Are you sure they remitted those funds to Crooklyn?

  It was more likely to have been moved to other places at the direction of Crooklyn. Australia cares for the South pacific and it may have been moved there---or other parts of the globe, but not necessarily Crooklyn.

  Also remember that this is the Watch Tower Bible & Tract Society of Australia, not New York or Brooklyn - it's an Australian corporation and must make its own payments.

  You have not taken into consideration the costs of the publications which are supplied to Australia. Contributions for these from the Donation Arrangement™ will distort the income and expense ratio since Australia doesn't pay for them directly but shifts funds at the behest of Crooklyn, but not in payment for the literature. It's these funds (i.e. Administration Expense Note 2) which may represent literature costs.

  Finally I would caution making conclusions in an American context.

  moggylover:

  That $4.90 per publisher, per week may also not reflect the correct picture. Remember that the WTS receives largess from sources such as wills. The figure of $4.90 is arrived at without taking that into account

  I agree.

  Cheers, Ozzie
• 

  NewYork44M

  I understand about the transfer of the 8megabucks; but, regardless of how it is listed, it is PROFIT, i.e. it is money that is not used to pay real expenses of the Aussie KHs (as, say, property taxes, utility bills, hall rental/mortgage, etc.).

  
  

  It was more likely to have been moved to other places at the direction of Crooklyn. Australia cares for the South pacific and it may have been moved there---or other parts of the globe, but not necessarily Crooklyn.

  
  

  
  If Australia cares for other regions these expenses generally would show up as direct expenses. In the case of direct transfers to other branches these would be considered "related party transactions" If so, they should be disclolsed. I will provides some additional guidelines about related party transactions.

  Finally I would caution making conclusions in an American context.

  Austrailia follows IAS (International accounting Standards). Most rules are the same or similiar to US GAAP.