Internal Auditor Matters  0038-02   ZZhlp

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               TO:  Interested Ministries                                                                                        FROM: Jim Bramer,  Retired Auditor CPA
                                                                                                                     Luke 1:37               FILE:  0038-02/hlp

                RE:  Internal Auditor Matters                                                                                Originated:  March 1997


        Below is a hypothetical Online Email thread between  Jim@bcidot.org  and one of the following MFTeam members PAT (Ministry Chief Executive), LEE: (Ministry Volunteer Treasurer), or FRAN: (Ministry Computer Bookkeeper)  Click here and go to List of threads (THRDs) at www.bcidot.org


        FR: PAT -

    In conversing with members of other Ministry Finance Teams,  I learn that you and other  qualified  Onliners might be available as an INTERNAL AUDITOR.  I have also read Link Contents   as to an INTERNAL AUDIT COMMITTEE.  Lee, Fran and I have been talking about this and wonder just how this works, Jim ?

FR: JIM

        OK.... Thanx for asking.  You will remember that my background  is serving Smaller  Ministries as an EXTERNAL CPA-Auditor - CPA.  In recent years there seems to be a need to build from these experiences and to work more closely with the Ministry Finance Team - MFTeam; or the Board Finance Committee, etc.. But at the same time contribute to the work of the MFTeam's EXTERNAL CPA-Auditor's effort .... or provide some INTERNAL AUDITOR assistance.
        There also seems to be a need to help Ministry users of
QuickBooks � (QB) in what I call "ASSUROR" efforts. Please Go Here and find out what this is all about. 

 

FR: PAT

        I hear you, Jim .. but sometimes I am confused as to really who is "THE" Auditor?

FR: JIM

        Yes, that could get a little confusing. Plse Go Here and then let me share:

        The MFTeam needs finance credibility for it's Board, Constituents and applicable Banks, or creditors. This comes about by an independent, or outside, CPA-Auditor  (EXTERNAL AUDITOR)  performing the appropriate financial examination and then providing your financial statements over their letterhead, along with their attestation of an agreed type of opinion. This 'audit' must conform to accounting industry 'according to hoyle', or GAAP,  Auditing Standards.
        The MFTeam can be made even more financial accountable when an INTERNAL AUDITOR  functions as a buffer between the MFTeam
and the EXTERNAL AUDITOR.  Another view is that the EXTERNAL AUDITOR  is an outsider looking in and the INTERNAL AUDITOR is an insider looking in.
        The INTERNAL AUDITOR complements the
EXTERNAL AUDITOR, but focuses in on the unique and expanded needs of that personalized MFTeam; the INTERNAL AUDITOR can be 'on the team'  while the EXTERNAL AUDITOR must be independent with no possible conflict of interest.  The  MFTeam 
itself should be the boss of the  INTERNAL AUDITOR  and not one of the Ministry executives.

      FR: PAT

            Good ... that helps, Jim. Please be more precise as to what tasks are involved as a  INTERNAL AUDITOR. Oh,  another thing ....if we get into this further with you, please share with us names of appropriate EXTERNAL AUDITORS.

FR: JIM -

             Be happy to do that .... we trust the following outline speaks to the other part of your question.

- - - DURING THE YEAR - - -

  •     Provide financial stewardship governance assistance to the MFTeam in its pursuit of righteous Ministry Finance management. In general, contribute to MFTeam meeting agendas during the year and attend many (even if by the agenized conference phone call method) of these meetings.

  •     Help the MFTeam declare its "Most Important Finance Issues" and assist in their resolution. Please Go Here  for more specifics.

  •     Help in identifying needed Board authorized Financial Policies and monitor Ministry compliance. Please Go Here  for more details with regard to a Church.

  •     Give assistance to the MFTeam in having the proper accounting infrastructure (Chart of Accounts, etc.) and help them make use (including certain training) of the appropriate Finance Computer system.  Maximize the potential of sending and receiving secure financial information via Computer Online Services. 

  •     Help to make sure that the MFTeam has efficient,  relevant and timely financial decision making information.

  •     Be assured that the methods and procedures in/around financial transactions are subject to the appropriate controls. To include unannounced physical examinations and the use of employee checks and balances ...  or what one employee does is a check and balance on what is done by an unrelated employee. Also that subsidiary accounting records agree with associated control accounts.  Please  Click here  for information about Church Counting;  plus Go Here  for more info on the topic of internal controls.

  •     Take part in making sure that the Ministry is complying with the current applicable governmental financial rules and regulations.
  •     Help to insure that the Ministry is managing its liquid assets, and/or deposits, so that it maximizes any possible interest income there from.  Please Go Here  for some specifics.

- - - IN/AROUND THE FISCAL YEAR END - - -

  •     Assist in providing documentation needed by the EXTERNAL AUDITOR. Assist in the year end journal entries, to support any of the items below.

  •     Double check the MFTeam provided Year end Bank statements and reconciled balances; old outstanding checks; plus verification of other liquid assets. Be satisfied about the validity of the Accounts Receivables and Allowance for Bad Debts. Be sure of Inventories; including reasonable assurance as to Merchandise markups.    Do applicable verification of Payables and Liabilities; including their short and long term status.

  •     Produce EXTERNAL AUDITOR formatted year end financial statements in conformity with industry G)eneral A)ccepted A)ccounting P)rinciples - GAAP. The over-all goal is to have the internal year end financial statements, and footnotes, to be just like the EXTERNAL AUDITOR financial exhibits flowing over their letterhead and subject to their attestation.

  •     Help to insure complete closing of the books with proper new year balance forwards.

     COMMENT: The mentality of an INTERNAL AUDITOR is one who looks over your shoulder and provides desirable direction, but does NOT execute financial transactions. 

FR: PAT -

        I always wondered what Auditors did to warrant those 'humungous' fees (BG!!)....Seriously, Jim, I now have a 'feel' for both INTERNAL and EXTERNAL AUDITOR 'doings.' It certainly is obvious that the INTERNAL AUDITOR is more involved as part of the "team" during the year when the MFTeam often needs help?

        Thank you. I believe this dialog serves our purpose for now.


        Please Click Here for a list of "How we help Onliners" here at www.bcidot.org..  The bulk of this Publication originated in March 1997 and was   UPTD: March 09, 2012  .

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