This process allows me to share some rather personal comments/thoughts (and sometimes written Prayers)  about Ministry Finance issues during this month.  Please go to  0200  for further explanation and links to earlier JIM's JRNLs.  The four digit links  xxxx  below come from www.bcidot.org .  See list of Frequently Used Vocational Terms at the bottom of this document.  If you would like to receive the next current  JIM's JRNL  during the first week of the next subsequent month,  please join the following Yahoo Group:   ---- http://groups.yahoo.com/group/JIMsJRNL/.    Caution --- the non www.bcidot.org web links that I reference in these JIMs JRNLs; do NOT imply my endorsement per se.  Further, if any of the links below do not work, let us know which one at LINK@bcidot.org.  Incidentally,  our more recent www.bcidot.org  Web Docs, or writings, can be found at 9712.   

Internal Financial Controls  (3)    

       Before me is a magazine article about how a church was understandably 'stunned'  when they discovered that one of their Pastors was stealing money from the church. This seems to happen all too often.
        I believe a regular Test  should be taken of your internal controls and/or checks and balances.  Please note the Flagable (how about that for a word?) Topics List below. This applies to Churches, Mission Agencies, Christian Schools, Christian Camps/Retreats and all other Christian Ministries supported by the public.  If the topic does not pertain to you... for example, the topic  B> RECEIPTS, "Church Ushers and Counters" might not apply to your Ministry... then you indicate that in the "(a) N/A" column.
        I recommend that the Finance group leader thoroughly digest Internal Control matters as outlined within 0039.  Then this leader would distribute such a Flagable Topics List to all those in attendance and explain each topic below, if necessary.  They would then agree on the "Red"  flag topics that need attention.

FLAGABLE TOPICS LIST :			(a) N/A	Green	Red
A> GENERAL INTERNAL CONTROL ITEMS:
	01-Embezzlement insurance (Bonding, etc) coverage		____	____	____
	02-Important records are in safe keeping		____	____	____
	03-Separation of finance duties to prevent
		staff member collusion	____	____	____
	04-Two people involved in Journal Entries		____	____	____
	05-Software "(c) Set in Concrete" issues		____	____	____
	06-Regularly compare actual to budget		____	____	____
	07-Merchandise Inventory matters		____	____	____
	08-Equipment accountability		____	____	____
	09-Donations & agreement of Control Acct/Subsidiary		____	____	____
	10-Other...plse indicate..............		____	____	____
B> RECEIPTS:
	1-Receipts not alone with people		____	____	____
		a) Event collections	____	____	____
		b) Church Ushers	____	____	____
		c) Church Counters	____	____	____
	2-Deposit intact (b)		____	____	____
	3-Receipts safe pending deposit		____	____	____
	4-Checks endorsed upon receipt		____	____	____
	5-Mail opening is secure		____	____	____
	6-Other.................................		____	____	____
C> AMOUNTS DUE THE MINISTRY:
	1-Matters concerning separation of duties		____	____	____
	2-Control & subsidiary Acct agreement		____	____	____
	3-Bal Due go out regularly		____	____	____
	4-Other.................................		____	____	____
D> DISBURSEMENTS-PAID OUTS:
	1-Limited Cash paid outs		____	____	____
	2-Someone else authorizes checks before
		Bookkeeper can write checks	____	____	____
	3-Bookkeeper does Not sign checks		____	____	____
	4-Original Inv/doc goes with check when
		signed and is voided	____	____	____
	5-Other.................................		____	____	____
E> BUYING - PURCHASING:
	1-In compliance w/authorized budget		____	____	____
	2-Advance approval of Volunteer buying		____	____	____
	3-Purchase Order or Plastic alternative		____	____	____
	4-Other.................................		____	____	____
(a) Seldom or Not Applicable (N/A)
(b) No payments made from Undeposited money
(c) Can not go back and change process

        Perhaps Church Associations should advocate and assist in their Churches taking such a test as this on a regular basis.
        For those of you that use QuickBooks (QB), there are some innate Internal Control concerns because the QB system is so User Friendly. When you Click Here you will find that we have tried to speak to such issues.
        Contact me at 0039@bcidot.org if you have any comments or questions. Let me know if there is any merit in a Ministry (anonymously, if desired) completing a form out on www.bcidot.org  that obtains the applicable "Flagable" test data and I assist the Ministry in evaluating "red flag" topics and correcting the agreed weaknesses.  Other www.bcidot.org resources along these lines include the following:

	PUBLICATION DESCRIPTION	I. D.
1>	Assuror definition & matters	0063-07/all
2>	Camps-Conference cash handling	0042-02/all
3>	Church Counting	5001-77/chu
4>	Check Signing and Internal Controls	0066-02/all
5>	Grade Examples	0075-01/all
6>	Grade Examples-More	0128-77/all
7>	Grade Examples-Church	5128-77/chu
7a)	Improve Financial Admin	0916-03/fwi
8>	Insurance Exam	0073-02/all
9>	Internal Financial Controls-in detail	0039-01/all
10>	Integrity Pledge	0915-03/fwi
11>	Ministry Finance Evaluation	0025-01/hlp
12>	QB Internal Controls	0647-02/qbb
13>	QB Self Exams	0603-09/qbb
14>	Self Exams	0005-01/all
15>	Self Exams-Editorial	0901-03/fwi
16>	Ten Commandments at a Ministry	0032-01/all
17>	TRUISMs on this topic	0069-01/all

                          ================================================================================================

Below please see a recent Onliner dialog on this topic:

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From Onliner:
    Hi Jim - I pulled off some of your web site stuff and just now got a chance to look at them. Just a couple of questions. Do you use the term "Bookkeeper" and "Treasurer" inter-changeably? What is the difference other than a church that has a paid person to actually do all of the church books while the treasurer is more involved with the budgeting? Is that what it is.?

From Jim::
    Either the Bookkeeper or Treasurer can be the "Transaction Processor" - or the one who cuts the checks and often produces the deposit slip.

From Onliner:
    Because your material said that the "Bookkeeper" should not sign the checks - does that mean I shouldn't sign the checks?

From Jim:
    In my judgment the ideal internal controls at a Church means that the "Transaction Processor" does not sign checks alone. Remember, the thrust is to have involved as many people "as efficiently necessary" in handling someone else's money (in this case the Church.). Also please remember, we have set forth "ideals" and sometimes they are not always possible or efficiently necessary, in the judgment of those in charge, etc.

From Onliner:
    Let me tell you the way it works in our church.  What holes would you detect?

1. We have a Financial Secretary who is in charge of ensuring the offerings are counted and balanced as soon as possible. We do have a safe that we store the funds in until they are counted.
2. She generally has at least one other person who helps to count - and most of the time there are two.
3. She enters the funds into a program that is used to show how the money comes in e.g. tithes; Sunday school, etc. and then it balances to the total of the offerings.
4. She takes it to the bank - in a locked bag - right after the funds are counted and balanced. if for some reason she can't get to the bank right away - the locked bag goes into the locked safe. But, this rarely happens - she almost always deposits it right away.
5. I get a copy of the "counting sheet" and enter the amounts into the deposit in Quick Books.
6. As the various bills come in, they are placed in my box at church. They are not reviewed before I get them.
7. We get a variety of different types of bills. Some are EFT's some are monthly checks to be written, e.g. the bank loan. We have some accounts that we charge against regularly, e.g  Sam's Club; Christian BookStore and others. As people on staff go out and purchase something e.g. custodial supplies; office supplies; postage, etc. they fill out a yellow sheet showing what was purchased and when and assigning an "account" for it to be charged against and they put that in my box. I then match up those receipts with the monthly statements as they come in and put them in the file to be paid.
8. We also have some people making purchases with their own funds. They come back to the church with a receipt and fill out the same yellow form and I pay them the following Sunday or Wednesday. In all cases, the yellow forms have to be signed by the appropriate committee head.
9. I then write the checks; attach the pay stub to the receipts and sign and mail the checks out. I then provide monthly reports for the church board and individual reports to each committee head. I need to do a better job of providing "budget to actual" reports to each committee head.

From Jim::
    Thanx for taking the time to write this down --- I would hope you would make this known to your leadership.  Which reminds me --- do you have a Finance Committee (or MFTeam) of your Leadership Board? If not, that is a Ministry Internal Control weakness, in my judgment. Plse see details within the following:  http://www.bcidot.org/all/0000-99.html  
    Also I would hope that the Counting would have a team emphasis rather than a person emphasis. Plus, there ALWAYS would be at least two unrelated people who can see the money (that is not in the safe) until it is actually in the bank.

From Onliner:  (see Jim's bracketed responses within this paragraph)
    Should somebody else be signing the checks? (Yes) Do we need two people? (Usually) Your message seemed to say that we'd only need a 2nd signature for "defined larger checks".  Would that be like - anything over $500? (Correct; that is an option) Would a second signature be needed for monthly bills where the amount is always the same, e.g. our bank loan; the cost of the ad in the newspaper --It's always $40 each month - or $50 in a 5 Sunday month --- and other things that are pretty routine. (I recommend that it be an "amount" issue and not a "vendor" issue).  I would think the greatest chance for defrauding the church through the checking account would be on those bills that are infrequent and for differing amounts or for the reimbursements to staff members - but in that case there would have to be collusion with that staff member. (right on!). I want to do this right - Jim, but I don't want to make it so complicated that it is hard to manage.

From Jim::
    Again, I have set forth "ideals" within the web pages and herein and sometimes they are not always possible or efficiently necessary, in the judgment of those in charge, etc. The leadership needs to know what takes place -- especially exposures caused by the lack of internal control etc ---- and they decide which ideals do and do NOT apply.

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IRS Publication (4)

Poll re Church Payroll Matters (1):

                A recent poll out on http://groups.yahoo.com/group/churchadmin  re Church Payroll Matters indicates the following:

			Staffers		Staffers
			12 & Less		13 & More
Total	Payroll Frequency:
10	Weekly		7		3
38	Semi-Monthly		6		32
23	(1) Other		5		18
71	Total		18		53
	Outsource to:
7	ADP		0		7
7	Paycheck		1		6
8	Others		4		4
49	(2)Manually		13		36
71			18		53
(1) Mostly once a month
(2) Likely via such software as
Shelby, ACS, QBooks etc

QuickBooks 2004 (2):

        I have reviewed the latest about the new QuickBooks 2004 edition -- if you have not done so, then click here .
        Personally, I do NOT recommend that most Ministries (especially Churches) use any of these Non Profit QuickBooks editions.  In my mind, the QuickBooks Pro 2002 edition (QBPro2002 --- or even QBPro2001),  that you can buy inexpensively out on www.eBay.com , provides you with all of the tools needed to do Ministry Fund Accounting that we set forth out on 0041 and 0601.  Churches do not need to do the functional expense accounting (Divide all expenses among:  Program, General/Admin and Fund Raising) that is needed for preparing form 990 or, in our opinion, to do essential GAAP accounting at a Church.  I am convinced that most Ministries (Churches especially) do not need to spend the $199.95 (see more info when you click here) needed to upgrade to QBPro2004 --- even though it appears that QBPro2004 gives you some improvements re Bank Reconciliation and Budget Management.   Please also click here for my views on some GAAP overkill issues at Churches. Let me know at QBPro2004@bcidot.org  if you would like to interact with me about your situation.  You no doubt will find the Online dialog below within context. 

==========================================================================================
Via ONLINER #1
    Are there any vendors out there selling older versions of QB at discounted prices?
===========================================================================================
Via ONLINER #2
    Search the internet. I bought a copy of Quick Books 2000 for $122, and no S&H.
========================================================================================
Via ONLINER #3
    The best place would probably be www.EBay.com . Look under "QuickBooks" and it will take you to where the auctions are happening for these products.
    CAUTION: Be very careful ---- if you buy, you need both the key code and the registration number to install and update the program.
    Also, if you use the payroll tax subscriptions, be aware that QB99 support is ending. Intuit only supports the last 4 versions and so if you use the payroll tax tables, you can no longer get them after this year for 99, after next year for 2000 and so on. If you do use the tax subscriptions, then it's cheaper to purchase the latest version and get the free tax table update (assuming they are still offering that) than to subscribe to one. The full version comes with a rebate that makes it cheaper than the updated version. And fewer problems installing it, too. The newer program will last for four years before being mothballed by Intuit.
====================================================================================

Dear Lord.   With regard to the readers of any of these JIMs JRNLs,  as mentioned by the Apostle Paul in I Thessalonians 1:3, it is my desire that I would continually remember before the Lord:
        >> their work produced by faith
        >> their labor prompted by love, and
        >> their endurance inspired by hope." 
    Please, oh Heavenly Father, meet some of the righteous "wants" as well as the continuous real "needs"  of these Ministry Finance Teams.  In the precious name of Jesus .... Amen.

 Possible "Frequently Used Vocational Terms" appear below:

            CBA = Church Business Administrator, CBAer;  CMS = Church Management Software/System;  CPA = Certified Public Accountant;  GAAP = Generally Accepted Accounting Principles/Practices;  GPFund or GPF = General Purpose Fund; MFTeam or MFT= Ministry Finance Team;  QBOE = QuickBooks Online Edition;  QBooks or QB = Quickbooks; SPFunds or SPFs = Special Purpose Funds

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Click Here and go to a list of earlier JIM's JRNLs - Contact JimRetCPA@bcidot.org

This document was updated last on:  June 17, 2008