Internal Financial Control Ideals at a Church 5039-01 ZZchu

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 28, 2008

       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 limited -- 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 28, 2008

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     (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 Jim@bcidot.org via IOMs (Inter-Office Memos) to the Ministry Finance Team (MFTeam); THRDs, a hypothetical Online conversation with members of the MFTeam; GLEANINGS, or Scripture within context of the MFTeam; FWIW; A periodic editorial (For What it is Worth); TRUISM, or believed Ministry Finance principles; and via FAQ, response to Frequently Asked Questions