Policies - Financial - at a Church - Q & A 5005-01 ZZchu

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                             TO: Interested Churches                                                                                            FROM: Jim Bramer, Retired CPA-Auditor  
                                                                                                                                                                        FILE: 5005-01/Chu

                             RE: Financial Policies Q & A                                                                                      Originated: October 1996              


           
          The objective is for the Smaller Church, especially, to conclude and write down Financial Policies and be sure they are authorized and in the Board Minutes.

            By the way, I like to define a "policy" by what you 'always do' or by what you 'never do', within a certain set of circumstances. When appropriate, a policy matter can be preceded by some written perspective or philosophy on the issue under consideration ----- hopefully all such policies end up in a  'Finance Policy Manual' Please go to 5005  for a detailed Sample.

            However, I am aware that the preparation of a 'Finance Policy Manual' is not always done, even though policies have been concluded but not written down.    Certain Finance Topics/Issues presented below are done in a format so that answers allow policy determination, and, hopefully, this will function in lieu of formal Finance Policy Manual. Of course, it is important to have written clarity as to methods/procedures re Church Counting and Fund Raising methods.

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                               --TOPIC/ISSUE --

Yes

No

N/A


A.    
INCOME

      > As a good steward, be sure that all

incoming funds are under the maximum

Internal Controls.

_____

_____

_____

      > We have concluded our Fund Raising

or Fund Gathering philosophy and policies

in a separate document. 

_____

_____

_____

     > We will accept pre-approved designated funds in

compliance with understood IRS regulations.

_____

_____

_____

    < We will be sure that our finance system allows us to conform

to both our Staff Handbook policies and IRS requirements.

____ ____ ____

    < Any Ministry literature or tapes produced

by Ministry Staff becomes the property of the Ministry. Any possible Ministry 

Staff royalty or amount of Inventory or scope of such Inventory is to be

concluded annually.

_____

_____

_____

    < All Staff honorariums, particularly

those in cash or checks payable to the Staff

Member, are to flow through the Ministry.

_____

_____

_____

    < All monies not designated for specific

Staff/Projects (Board Discretionary Funds)

are to be managed righteously as would a

prudent person holding funds in trust.

_____

_____

_____

    < Fund Accounting;

    External  designations will be honored so

such fund balances are known regularly.

Any regular borrowing of such funds will be

not be allowed.

_____

_____

_____

    There may be Internal designations, or

Board authorized Set-A-Sides. Borrowing

of these funds may be permitted upon agreement.

                           --TOPIC/ISSUE --

  Yes

  No

 N/A


B.
.   EXPENSE

    < All of the following Staff Issues are

to be thoroughly covered in the Staff Handbook; authorization

clergy status; salaries; housing allowances;

bonuses; social security; retirement; and such

benefits as medical and life Insurance.

_____

_____

_____

    < Staff ministry expenditures, or Minis-

try Expense Reimbursements (Defrayments), are to be in

compliance with authorized project and bill paying policy.

_____

_____

_____

    < General Fund (GPFund) Operations --

A Budget is to be authorized annually; subject

to possible mid-year adjustments.

_____

_____

_____

    < All Expense advances will be settled

within a 30 day period of time.

_____

_____

_____

                               --TOPIC/ISSUE --

 Yes

  No

N/A


C.
   FINANCIAL ACCOUNTABILITY

    < We will have an annual relationship with

an external outside Auditor/CPA.

_____

_____

_____

    < We will have periodic examinations

and internal audits by the Board/agents.

_____

_____

_____

    < A part of our annual constituency

report will include a brief annual financial report to clearly show,

as a minimum, how much came in and how it was spent.

____ ____ ____

                                 --TOPIC/ISSUE --

 Yes

 No

N/A


D.    Assets

    < Cash

   Non of our cash deposits will be in a

un-insured account at a financial institution .

_____

_____

_____

   Our goal is to earn the maximum

amount of yield on the maximum amount of

deposits for the maximum of time.

_____

_____

_____

    < Non-Cash

    We will book all purchase of

Capital assets over _______; we will

regularly inventory our Capital assets

for full accountability.

_____

_____

_____

    We will not 'play the stock market';

either directly or indirectly; any stock gifts

will be turned into cash within 30 days of

receipt.

_____

_____

_____

    Generally we do NOT invest any of our

Board Discretionary Funds in anything but

insured deposits with financial institutions .

_____

_____

_____

                                     --TOPIC/ISSUE --

Yes

No

N/A


E.    
LIABILITIES

    < Borrowing philosophy and limits;

    Generally we will not borrow from

external sources; Credit Cards will be

paid within 30 days.

_____

_____

_____

    As would a prudent business man, we may borrow:

>> (Certain leases are are the same as borrowing ) to

fund purchase of certain equipment or vehicles

_____

_____

_____

>>  To acquire certain land or  buildings

>>  From certain Board Discretionary

Funds to acquire capital assets.

_____

_____

_____

                                  --TOPIC/ISSUE --

Yes

No

N/A


F.      
INSURANCE

    > Periodically the Board will conclude the

amount of necessary insurance for:

   1-General Ministry Liability

_____

_____

_____

   2-Specific Tangible Asset coverage

_____

_____

_____

   3-Board Member liability

_____

_____

_____

G.     GOVERNMENT MONIES

    1- Payroll taxes to be handled in

accordance with understood regulations

_____

_____

_____

    2- This Ministry will not accept or be  responsible for any

non-payroll Federal, State non-payroll County or local funds.

_____

_____

_____

    3 - Will NOT accept Fed or State Grants etc

H.     DEFERRED/PLANNED GIVING

    > Generally, no operational funds will be

used to operate a Deferred/Planned Giving program.

_____

_____

_____

                                  --TOPIC/ISSUE --

Yes

No

N/A


I.    
AUXILIARY ENTITIES

    > Such entities are a subsidiary of ours

and subject to Board control and Tax Exempt

Status and regulations.

_____

_____

_____

    >  If we allow such a practice, the activity in their separate

Bank account will be reported annually

to the Board for unified finance accounting and reporting.

_____

_____

_____


J.
     BOARD FINANCES

    > No conflict of financial interest item

shall be allowed any Board member.

_____

_____

_____

    > Annually a Non-Staff Board Treasurer

will be elected with written and agreed Ministry

expectations. Generally this Board member

will NOT do the bookkeeping, but will concentrate

on understanding and communicating finance

matters to those who should know.

_____

_____

_____

    > There will be a Board appointed Finance

Committee that will be chaired by the Board

Treasurer or the Treasurer's appointee.

_____

_____

_____

                                     --TOPIC/ISSUE --

Yes

No

N/A


K.
     WHEN MINISTRY HAS FOUNDER'S NAME

    < The founder's salary, benefits and

other financial 'fringe benefits', including

personal use of Ministry assets, will be annually

authorized by Board action to insure that

these matters are fully known to all Board and are to

be supplied to any Board qualified constituent

_____

_____

_____

    < The Founder's annual tax return will be

available to any Board qualified constituent.

_____

_____

_____

    < As with any Staff Member, the Board

will authorize employment of any Founder's

family member.

_____

_____

_____

    < The above applies even if founder's name is

NOT a part of our name..

_____

_____

_____

           FISCAL YEAR

    < Our Fiscal Year End of ___________ is

after full consideration of the fact that

December 31 is generally a poor logistical time to end a Ministry finance year.

____ ____ ____

 


 Please Click here for list of Church resources here on www.bcidot.org. This publication originated in October 1996 and was . UPTD: February 24, 2013    

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