SAN ANTONIO – Financial records leaked to the KSAT 12 Defenders paint a disturbing picture about how money is being handled by Catholic Charities of San Antonio, the charitable arm of the Archdiocese, which claims to serve hundreds of thousands of people a year across 19 South Texas counties.

An audit done by an outside accounting firm looked at the charity's records for its financial year ending June 30, 2018. The subsequent report, which was finalized in November, found a long list of accounting problems, some of them serious and referred to as "material weaknesses."

'I think it's unforgivable.'

Randy Burton, chairman and founder of the national nonprofit Justice for Children, reviewed the 2018 audit and said it is difficult to understand how Catholic Charities of San Antonio is still in business.

"I couldn't believe the kinds of things I was reading," said Burton. "I mean, my organization wouldn't be in business if we had those kind of findings."

Burton pointed out the mismanagement of money came with funds that could have theoretically gone to another nonprofit. 

"Knowing again, how hard it is to get that kind of money, I think it's unforgivable," said Burton.

Audit shows long list of problems

The financial deficiencies have caused at least one program partner to withhold hundreds of thousands of dollars in grant money from the organization. 

Among the audit's findings:

• Checks over $2,500 were processed without the required two signatures
• A new bank account was opened but not reflected in the general ledger accounts
• Support documentation for credit card purchases missing
• Cash was not consistently accounted for in the general ledger accounts
• The value of in-kind donations was consistently exaggerated beyond its fair value
• $25,559 spent on client furniture at a store without an informal bid or written bids from other businesses
• Reconciliations were not performed on a regular basis
• Reconciliations did not agree with the general ledger
• Policies not consistent with accounting principles generally accepted in the U.S.

A reconciliation takes place when an accountant compares an agency's financial records with bank statements, credit card bills and other documents to see if they match.

Other problems included:

• State awards inaccurately reported as federal awards
• 2018 federal and state expenditure schedules were misstated
• Lack of knowledge of program eligibility requirements by program staff
• Monthly reimbursement requests not submitted in a timely manner
• Accrued leave was not properly calculated
• Program director's emailed approval missing from certain reimbursement requests

Officials with the charity blamed many of the issues on substantial turnover within its accounting department during the year in question.

The audit, however, came on the heels of an audit from a different firm for the year ending June 30, 2017, that found several accounting and reporting issues and, like the 2018 audit, policies "not consistent with accounting principles generally accepted in the United States of America."

Request for funding denied

Citing material weaknesses in the audit for Catholic Charities of San Antonio, officials with the Texas Veterans Commission earlier this year declined the charity's request for funds from a general assistance grant.

The commission had awarded Catholic Charities $300,000 for both the 2017-2018 and 2018-2019 grant terms. 

Since material weakness was identified in its latest audit, Catholic Charities' application was deemed ineligible, TVC officials confirmed.

A spokeswoman for United Way San Antonio, one of Catholic Charities' other partners, said officials with its agency met with Catholic Charities staff and board leadership regarding concerns with the charity's 2017 audit.

The spokeswoman said United Way officials received the 2018 audit and "saw progress."

She said United Way's decision to stop funding multiple Catholic Charities parenting programs at the end of June came as a result of a "new funding model." 

She declined to attribute United Way's decision to the findings of the audits.

Immigrant and refugee efforts lead to higher profile

The profile of Catholic Charities of San Antonio, and for that matter CEO Antonio Fernandez, has been elevated the past year due to the charity's role in housing immigrant children separated from their families at the U.S.-Mexico border, and more recently, its efforts to assist asylum seekers.

Fernandez has made himself readily available for members of the media seeking information on both topics.

During a phone conversation with the Defenders July 8 about the audits, Fernandez said, "I mean, we're willing to talk to anyone. It's not something that we're proud of. But, I mean we're here to be transparent." He then declined repeated requests to be interviewed for this story.

The Defenders attempted to ask Fernandez about the audit's findings as he left work July 12, but he ran to a nearby vehicle and was driven away without answering questions.

Public records show the vehicle is registered to a Catholic Charities spokeswoman.

However, the Defenders did receive a written statement from the nonprofit that reads in part:

Catholic Charities of the Archdiocese of San Antonio serves more than a quarter-million people each year through a network of over 40 programs that address basic needs, family and children services, legal services, refugee resettlement, counseling, pregnant and parenting education, and senior care. Recent audits have identified some areas of the organization in which financial controls could be strengthened, and staff continues to work diligently to implement recommendations and new policies to ensure compliance with accounting and reporting procedures. The organization worked closely with their auditors, who even noted in a report, 'Management and employees have been most helpful and cooperative. We were given full access to accounting records, supporting documents and other information we requested.' The generous donors and dedicated volunteers of Catholic Charities can be assured that their financial resources and hours of service given to those in need are valued and respected, and that the agency will continue to seek new ways to maximize their outreach to provide for the needs of the most vulnerable of our community.

Monday, hours before this story was published, Fernandez failed to show up at a downtown press conference regarding humanitarian reimbursements, despite being listed in the press release as one of the attendees.

A Catholic Charities spokeswoman did not respond to repeated questions about the audits from the Defenders after the press event ended and then said, "I don't have any comment for you."

Prior problems

A published report in June 2015 from the Office of the Inspector General for the U.S. Department of Justice found issues with how Catholic Charities of San Antonio handled an $810,000 grant to provide services to victims of human trafficking.

The grant was closed out in late 2012, months before Fernandez was hired away from Catholic Charities of Chicago for the top post here.

The OIG report found that more than 35% of sampled grant expenditures had little to no documentation about why the money was spent.

The federal investigation also found that the charity had no written procedures for monitoring contractors.

"The agency is not working hard enough to correct its problems," said Daniel Borochoff, president and founder of Chicago-based Charity Watch.

Borochoff sat down for an interview with the Defenders after reviewing the 2015 OIG report and the 2018 audit.

"I think it's good that you're reporting on this because then there'll be some additional information" said Borochoff. "It is true that so often these problems get swept under a rug."

The San Antonio chapter of Catholic Charities appears to be not as transparent financially as other chapters in Texas and in other parts of the country.

For example, the Houston-Galveston chapter has submitted its financial information to the Better Business Bureau and has been certified by the organization.

WATCH: Defenders Debrief on Catholic Charities investigation