In CEO and founder K.P. Yohannan’s recent “exclusive personal response” to the fraud lawsuit settlement involving Gospel for Asia, Yohannan traces GFA’s problems to a 2015 “confidential letter from a financial standards association we were part of, and of which we were a charter member.” That letter was from the Evangelical Council for Financial Accountability and outlined 17 potential violations of ECFA financial standards. In October 2015, ECFA evicted GFA from membership. To help donors understand the nature of the concerns ECFA had about GFA, I am posting the concerns one at a time with commentary. You can read all of the posts by clicking this link.
From that letter, here is the seventh compliance issue:
7. GFA’s financial statements do not appropriately report transactions with foreign partners.
During our review on June 3, GFA staff indicated that funds transferred to GFA India were actually transferred to a number of related entities instead of the single entity reflected in the 2013 audited financial statements. Additionally, on August 24 we learned that GFA received a $19,778,613 donation from GFA India, which was classified as a related party elsewhere on the 2013 audited financial statements (also see #8 below).
On August 27, GFA staff confirmed that this donation was neither disclosed in the footnotes of the 2013 financial statements as a related-party transaction nor to the GFA board of directors. This inconsistency within the financial statements and lack of disclosure to the GFA board of directors about a significant related-party transaction appears to violate ECFA Standards 2, 3, and 6. On July 20, ECFA was informed that GFA engaged a new audit firm and they are in the process of reviewing related-party transactions.
This is one of several problems related to the nearly $20-million in donations which was sent to “the field” but then sent back to Wills Point, TX to complete the GFA headquarters complex. Apparently, GFA leadership tried to obscure this transfer of funds from their board and auditors. It has never been made clear to the public whether or not the auditors (Bland Garvey) knew the full circumstances of this transaction.
In the first paragraph, ECFA refers to the fact that GFA sends funds to multiple shell organizations in India. These organizations are incorporated as charities there with Yohannan and his family in control. However, they have no other purpose but to funnel funds to Believers’ Church.
This point is a reminder that GFA has not released audited financial statements to the public since 2013. Actually, they did not release that statement willingly. I requested it and published it in stages to demonstrate the problems with this “related party transaction.”
Next: Use of funds restricted for the field for other purposes.