Internal Financial Control Ideals at a Church 5039-01 ZZchu

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                             TO:  Interested Churches                                                                                       FROM: Jim Bramer, Retired CPA-Auditor
                                                                                                                                                                    FILE:  5039-01/chu

                              RE:  Internal Financial Controls,  Ideals at a Church                                      UPTD: April 24, 2010


       It is essential that Ministries exercise internal control over their finances by separating duties among staff members even though accounting staff members are few. Strive for some of these ideals below. Please go to  0647  for coverage of such issues within a QuickBooks (TM) (QB) system.

DEFINITION OF "INTERNAL CONTROLS" INCLUDES:

        "Steps and procedures by which what one independent person does in carrying out their financial tasks becomes a check and balance on what another independent person does."

--- E X A M P L E S ----

RECEIPTS:

        Money is always in view of at least two people; Cash receipts are provable by other records; Documentation occurs by the first person handling cash; Cash receipts staff has limited access to other accounting records - especially the accounts receivable; All cash receipts are promptly deposited intact - or there are no cash paid outs from receipts.

CASH/CHECK PAID OUTS:

        Cash paid outs is discouraged -- use pre-numbered checks; people producing checks have limited access to other accounting records; Invoices/check requests authorized by non-accounting staff; payroll is authorized by non-accounting staff; Invoices are balanced to vendor's statements; Invoices/check requests accompany checks to be signed; two signatures of unrelated parties on checks after they have been written .... no pre-signing of checks.

GENERAL:

        Two people sign authorized Journal Voucher forms; regular comparison of Actual to Budget; Regular bank reconciliation by someone not doing Cash receipts or Paid outs; Receivables are proofed to a control account by someone not doing Cash receipts; Periodic historical statements go out to Donors and Unpaid Receivables by non-cashier  (also see the need for agreement of Donations Control Acct to Subsidiary list as detailed at  0021;  the Cashier has no responsibilities in accounting for Donors and Receivables; Use of Imprest Petty Cash system; Equipment/furniture are physically inventoried and balanced to a control account; Important records are in a Safe Deposit Box.


  .  The bulk of this Publication originated in December 1992 and was    UPTD: April 24, 2010

ABOUT  US   |  OUR PURPOSE   |  TABLE OF CONTENTS   |  SEARCH  MATTERS  |  HELP DETAILS   |  FUND ACCTG VIA COMPUTERS   |  GLOSSARY