UNA Auditing Committee completes annual review of business operations (05/14/00)

UNA Auditing Committee completes annual review of business operations

PARSIPPANY, N.J. - The Auditing Committee of the Ukrainian National Association completed its annual audit of the fraternal organization's business operations here at the UNA's Corporate Headquarters on May 4 and promptly issued its report to the UNA membership.

The commitee members are: William Pastuszek, chairman; Stefan Hawrysz, vice-chairman; Dr. Alexander Serafyn, secretary; and Myron Groch and Yaroslav Zaviysky, members.

Their report, the full text of which appears below, covers the operations of the financial and recording departments, UNA publications and the Soyuzivka resort, as well as implementation of the decisions of the most recent UNA convention (held in 1998).

During their review of UNA operations, the auditors, each of whom is assigned a specific department, met with UNA officers and department heads.

Report of the Auditing Committee of the Ukrainian National Association

In accordance with the UNA By-Laws, the Auditing Committee, on May 2-4 conducted a review of the business operations of the Ukrainian National Association for 1999. The previous audit was conducted at the beginning of December 1999.

The Auditing Committee's plan of action consisted of reviewing the implementation of the decisions of the 34th Convention of the UNA, the operations of the financial and recording departments, UNA publications, the management of the UNA resort Soyuzivka, and other matters.

As a result of its review, the Auditing Committee reports the following.

1. Implementation of decisions of the 34th Convention of the UNA

Delegates to the 34th Convention adopted a series of resolutions that were conveyed for realization to the General Assembly and the UNA Executive Committee. A list and summary of the resolutions that have already been implemented was published in previous reports of the Auditing Committee.

As of the end of December 1999, the status of implementation of decisions of the 34th Convention remains unchanged, with the exception of the following:

The General Assembly was to conduct a referendum on amendments to the Charter and By-Laws of the UNA with the goal of creating a governance structure that would consist of an 11-member board of directors elected by the convention to conduct the business operations of the UNA during the period between conventions.

This referendum was to be completed by the end of 1999. The General Assembly at its annual meeting in December 1999 decided to extend the deadline for completing this referendum to the end of the year 2001.

2. Financial Department of the UNA

For 1999 the financial deficit of the UNA totaled $1,080,000, while the surplus decreased by $1,100,000 to the sum of $6,978,000. A positive development was the fact that, in comparison with 1998, the decrease in surplus was lower by $421,000.

In 1999 there were one-time expenses associated with the New Jersey insurance authorities' audit of the UNA, Y2K issues, the closing of the Canadian sales office and other matters. The fact that these expenses will not recur, as well as the fact that the full effect of the reduction of personnel in 1999 will be felt only this year are reasons to expect a continuing significant reduction of the deficit during 2000.

Of the space it occupies on the second floor of its building, the UNA vacated 13,000 square feet, which are now available for rent. The Executive Committee expects that this will increase income and make the building profitable. The new building's deficit in 1999 was $92,000.

Expenses and losses of the UNA were reviewed by a consulting actuary. He affirmed that losses were not caused by any mistakes, but that they were the result of the past two decades.

In the opinion of the actuary, the UNA's investment portfolio is of high quality. The UNA's insurance business is healthy and in a good state, though the number and face value of its insurance policies and annuities should be increased.

3. UNA Publications Svoboda and The Ukrainian Weekly

As of the end of 1999, the number of Svoboda subscribers was 7,521, while The Weekly's subscribers numbered 7,100. In comparison with the end of 1998, the number of Svoboda subscribers declined by 23, while the number of Weekly subscribers declined by 24.

During the first quarter of this year the number of subscribers to both publications has changed little.

The deficit of both publications for 1999 totaled $246,000 (of that amount, Svoboda's deficit was $54,000). In comparison, let us note that for all of 1998 the deficit totaled $578,000. In accordance with the budget for 2000, the deficit of both publications should not exceed $100,000.

The editorial staffs of both publications and the publications' administration are continuously working to improve the contents of their newspapers, gain new subscribers and increase advertising revenues.

Thus, for example, the newspaper Ukrainski Visti (Ukrainian News) of Detroit will cease publication in May 2000. Subscribers to that paper (approximately 900) are invited to become subscribers to Svoboda.

The editorial staff of The Ukrainian Weekly has published a book of the most significant articles published in that newspaper since 1933. The first volume of this compilation has been released and is being mailed to all subscribers to The Ukrainian Weekly. The Auditing Committee expects a positive reaction and the support of readers for this publication.

4. Soyuzivka

In 1999 Soyuzivka had a deficit totaling $474,000. This sum includes the costs of capital improvements to roads and water tank, which totaled $69,000. Soyuzivka's deficit for 1998 was $372,000. Another reason for these higher expenses during the year was the purchase of drinking water and water to fill the pools at Soyuzivka. Soyuzivka's own water supply was not sufficient due to low precipitation last winter and a dry summer.

Summarizing Soyuzivka's 1999 season, we note that, despite increased business in July, business in August was unsatisfactory. Business was up during the fall, but only on weekends.

The Executive Committee continuously seeks new ways to increase the income of Soyuzivka because all realistic means of reducing expenses have been utilized. With this in mind, the Executive Committee obtained three proposals from consulting firms on how to expand the season; these are now being studied. Consequently, we conclude that without a drastic increase in income and additional expenditures of capital, Soyuzivka will remain deficit-producing and will have a negative effect on the future of the UNA.

5. Organizing Department of the UNA

The Organizing Department is one of the most important divisions of our institution because new members are the guarantor of the UNA's future. This is so also because the more new members we have the more membership dues we collect - and that is how the UNA's business success is measured.

In accordance with statistics, during the 1999 report period 515 new members were enrolled for insurance coverage of $5,726,568. Speaking about newly enrolled members, it should be noted that for the most part this is due to the work of our tireless branch secretaries who continue to be the foundation of the UNA despite their age.

It should be noted also that during the report period the UNA encompassed 27 districts and 259 branches throughout the United States and Canada. When comparing the organizing achievements of individuals districts, first place was earned by the Northern New Jersey District, which enrolled 121 new members insured for $1,257,461. The chairman of this district is UNA Advisor Eugene Oscislawski.

As regards the state of the UNA's membership, as of December 31, 1999, there were 34,051 adult members, 14,983 juveniles, and 4,209 holders of ADD (accidental death and dismemberment) policies - a total of 53,243.

Our consulting actuaries, Bruce and Bruce Co., have affirmed: "1999 was a year of major restructuring: fraternal benefits were drastically changed (necessarily); the new computer system was implemented; the products to members were made more competitive with the introduction of a new ratebook; the complete portfolio was refiled in New Jersey in satisfaction of their new law; new reserve factors were installed; and the quadrennial examination by New Jersey was completed. Any one of these projects represents a major undertaking. The fact that all were absorbed in one year is a great tribute to the industry and abilities of the officers."

6. Miscellaneous

Throughout the year insurance authorities of the state of New Jersey conducted their regular triennial audit of the UNA. The firms Arthur Andersen, PricewaterhouseCooper and others also were engaged to work on this audit.

The UNA assembled a Year 2000 Project Team that examined possible Y2K problems. The IBM AS/400 main computer and personal computers, as well as operational and administrative software were year 2000 compliant. The examination was conducted by UNA specialists and other companies. The UNA also made appropriate inquiries with its computer service providers and vendors.

Through increased sales of life insurance and annuity policies and continued decrease of expenses, especially for fraternal activities, the growth of the UNA will be revived. The UNA has the financial capacity to support all its actions as long as corrective steps continue to be taken and the required time is allotted for them to take effect.

The Auditing Committee urges not only UNA members, but the entire patriotic Ukrainian community to become subscribers to UNA publications and to contribute to their respective press funds in order to decrease their deficits.

For the Auditing Committee:

William Pastuszek, chairman
Stefan Hawrysz, vice-chairman
Dr. Alexander Serafyn, secretary
Myron Groch and Yaroslav Zaviysky, members

(Translated by The Ukrainian Weekly.)

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