Internal Audit Group - 0113-01 ZZall

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                      TO:   Interested  Ministries                                                               FROM: Jim Bramer, Retired Auditor-CPA 
                                                                                                                                      FILE: 0113-01/All

                       RE:   Internal Audit Group                                                               Originated:  December 2003                                       

     I participate in the following Church Yahoo group:   Many of the participants graciously share about their Church and such edited information as the following :

Internal Audit Group or Committee

A- Possible Committee composition

1. Senior Pastor, ex-officio member with voting rights
2. Church Business Administrator, ex-officio, non-voting member.
3. Representative from the Board of Leadership
4. Three to five members at large, with accounting, business and finance background.

B. Weekly Duties

1. Receives copy of all original offering reports.
2. Receives corrected copies of offering reports
3. Test the correctness of these reports on a periodic basis and reviews corrected reports on a weekly basis

C. Periodic Duties

1. Review cash handling procedures and be familiar with church accounting policies and procedures
2. Determine that computer records are adequately safeguarded.
3. Determine that important records on the church computer are backed up regularly. Daily records should be backed up. A hard copy should also be on file,
4. Determine that payroll documents are complete, accurate, backed up on disk and a hard copy is on file.
5. Insure safeguards for assets are in place.
6. Insure that valuables are properly protected.
7. Sets controls for egress/ingress. Determine if church offices are locked when not in use and it the computers are locked or password protection is properly used.  Insure that passwords are changed at least every 30 days.
8. Insures issuance of keys are properly controlled
9. Insures contribution reports are properly maintained
10. Assures the accuracy of accounting information
11. Periodic review of internal controls
12. Surprise audit of petty cash fund annually
13. Review errors and insure training for ushers and accounting staff as appropriate.
14. Insures accounting records are safeguarded and backed up
15. Insures proper accounting procedures are in place
16. Insures the inventory of securities valuables, equipment and other non-cash assets are maintained.
17. Insures ushers training and financial staff training is sufficient
18. Periodic (at least annually) review of insurance coverage. Makes recommendations for changes as necessary.
19. Monitors the performance of the Church Business Administrator. Send a report on CBA performance to the Senior Pastor at least annually.
20. Review church stewardship programs and makes recommendations for changes.
21. Reviews records retention at least on an annual basis.
22. Insures that a list of all assets is maintained and updated as necessary. Insures that a back up copy of the inventory list is kept off site.

D. Year-End Review

1. Obtain Year-End Financial Report
2. Compare beginning balances per current report to ending balances on prior year-end annual report. . _
3. Check clerical accuracy of the year-end financial report.
4. Compare ending cash balances for each fund to:

A- Bank Statement reconciliation
B. Ending balance per check register or savings account.
C. Identify outstanding checks and U-" subsequent clearing of those
checks and deposits in transit for previous year.

5. Prepare a written report of this Committee to be included in the annual report to the congregation. The written report should read something like: "The Internal Finance Committee has reviewed the financial records for all funds of (Name of Church) handled by the church business administrator for the year ended 2xxx."  Disbursement and receipt records were tested by the committee on a random basis. The committee noted no material discrepancies in the church records and found all funds and accounts in order as of December 31, 2xxx."
6. Oversees preparation of annual W4's and 1099s
7. Annual review of conflict of interest forms
8. Responsible for annual audit. The Church bylaws requires and annual audit. This committee will be responsible to make sure the annual audit is completed.

E. Planning and Budgets

August -
>>  Meet with the executive board at the beginning of the budget cycle. The purpose of this meeting is to insure that this Committee is in sync with the goals and objectives of the executive board.
>>  Publish guide for budget input process.
>>  Send out fund request documents/forms

September -
>>  Determine the method of measuring performance
>>  Review program goals and objectives
>>  Receives budget request forms from all departments
>>  Review requests for funds

October -
>>  Hold annual budget preparation meeting - all Department Heads attending
>>  Prepare annual budget
>>  Prepare 5 year budget
>>- Get buy-in from department heads
>>  Present Budget to the Executive Board January - July

1. Evaluate the consistency between program and church goals and objectives
2. Compare interim dollar results against budgeted expectations
3. Evaluate program performance
4. Recommends ways to improve program results
5. Compare total dollar results against budgeted expectations
6. Evaluate program performance for the full period ,
7. Report on program performance for next year's commitee and recommend changes in budget amounts, program goals and objectives, methods of measuring performance or program leadership

F. Monthly Duties

1. Review offering counters reports, corrections, and balance to bank statement on a test basis.
2. Each month test individual funds, Youth, Royal Rangers, Singles, Women's, Men's and Adult Sunday School Classes, etc. Test at least one fund each month.
3. Review monthly expense reports with the Church Business Administrator prior
to presentation to the Board of Directors.
4. Compare expense account totals to budgeted amounts looking for any large unusual budget variances.
5. Test Accounts Payable Data.  Insure documentation is on hand - Verifies accuracy of invoices - Make sure all invoices are property approved - Verify any past due invoices and determine why they did not get paid - Insure that any outstanding invoices not paid in the current month are included on the "Unpaid Accounts Payable From Previous Month report
given to the Board of Directors - Insure that charges are going to the correct department and expense code.
6. Review line item periodically. Test 2-5 line items each month.
7. Insures bank reconciliation's are done monthly.

G. Quarterly

1. Review numerical sequence of checks issued.
2. Review check disbursements by tracing the item as recorded in the disbursements register, (computerized checking account),-to the canceled checks agreeing dates, amounts, payee, signature and endorsement.
3. Send out quarterly contribution reports
4. Receives feedback from quarterly contributions
5. Periodic review of payroll taxes, form 941s and 8109's

I trust that this Church document will also assist other Ministries along these same lines.

       This publication originated in December 2003 and was     UPTD: January 03, 2010


        (1) An Online Document, or WRIT (Writing), may be applicable to all Ministries, or it may be designed for just groups like: Evangelical Church, School, Missionary Agency or Organization, Christian Camp / Conference, or other named group.
        (2) WRIT formats include the perspective of   via IOMs (Inter-Office Memos) to the Ministry Finance Team (MFTeam); THRDs, or a hypothetical Online conversation (thread) with members of a MFTeam; FWIW; A periodic editorial (For What it is Worth); TRUISM, or believed Ministry Finance principles; or via a FAQ, or a response to Frequently Asked Questions.