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Financial Audit Procedures for Churches

By Christine Murray,2014-05-16 08:21
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Financial Audit Procedures for Churches

    Annual Financial Review Procedures for Mountain View

    Community Church

This document provides guidance to the MVCC financial review team for the annual review of the

    church’s finances.

1. Key MVCC Financial Personnel

Chief Financial Officer: The MVCC Chief Financial Officer (CFO), normally an Elder or Deacon, shall

    be responsible to the Elder Board for the proper oversight of all MVCC financial activities. The current

    MVCC CFO is George Eastwood.

    Financial Secretary: The MVCC Financial Secretary, together with the Treasurer or an approved assistant,

    shall count and deposit all funds received by the church. He/she shall keep an accurate record of all

    receipts. He/she shall keep a record of all known individual contributions, and provide a receipt to

    contributors if required. The current MVCC Financial Secretary is Karen Hartman

    Treasurer: The MVCC Treasurer shall normally assist the Financial Secretary in counting and preparing for deposit all funds received by the church. He/she shall pay by check all funds provided for in the

    budget and authorized for payment by the Board of Deacons. Checks shall be signed by the Treasurer and

    any designated member of the Board of Deacons or Elders. He/she shall keep an accurate record of all

    accounts. The current MVCC Treasurer is Pam Cram.

    Accountant: The MVCC Accountant will provide bookkeeping services to the treasurer as required to keep an accurate record of all accounts. The current MVCC Accountant is Janice Jones.

2. Key MVCC Financial Requirements

a. The counting and recording of all offerings by at least two duly appointed persons.

    b. The keeping of adequate books and records to reflect all financial transactions, open to inspection by

    authorized church officers at reasonable times.

    c. Periodic reporting of MVCC financial activities to the Elder Board vested with financial oversight at

    least quarterly and to the congregation at least annually.

    d. A full financial review of all books and records relating to finances once each year by a public

    accountant or public accounting firm or a committee of members versed in accounting procedures. Such

    auditors should not be related to the any of the key MVCC financial personnel.

3. Financial Review Procedures

    Terminology in this section is meant to provide general guidance and is not intended to require or not

    require specific audit procedures or practices as understood within the professional accounting

    community.

This section will provide basic guidelines for the MVCC Financial Review team to conduct an annual

    independent financial review utilizing qualified church members who are not related to those who handle

    funds on behalf of the church.

A. Items Needed

    _____ Bank Account Statements

    _____ Bank Account Reconciliations

    _____ General Ledger

    _____ Beginning and Ending Balances for Special Funds (Memorial, Building, etc.)

    (Note Receipts/Disbursements and ascertain that funds have been disbursed for authorized purposes only)

    _____ Bank Records and Backup Materials for Special Funds

    _____ Cash Receipts Records (Offering Count Sheets)

    _____ Paid Invoices

    _____ Payroll Records

    _____ Checking Account Stubs

B. Process

    _____ Verify that all monthly Bank Statements were reconciled and balanced to the General Ledger

    _____ Verify that invoices paid * were properly paid with regard to:

    a) Amount

    b) Approval by responsible authority (session, pastor, committee chair, etc.)

    c) Amount paid trace to General Ledger

    d) Verify that payments were charged to proper account

    (* use a selected sample of 6-8 invoices of some variety from each month. If there are no problems, this

    should be sufficient. However, if discrepancies are noted, a larger sampling is in order.)

    _____ Trace amount from weekly count sheets to bank deposits and trace items from the count sheets

    to the various General Ledger accounts.

    _____ Select at least one count sheet from each month and apply the same principle to the sampling

    as noted above.

    _____ Verify that amounts paid to employees and the pastor were in the proper amount as authorized

    by the MVCC annual budget/Elder Board and that amounts withheld were subsequently paid to the

    proper authority.

    _____ If salary advances have been made, were they properly recorded and does the annual salary

    paid correspond to the budgeted salary. If the two figures do not correspond, is their an explanation?

    _____ Trace amounts paid and withheld to the General Ledger. This can also be done on a sampling

    basis.

C. Report and Follow-up

When the financial review has been completed, the person(s) carrying out the review shall present a

    written report to the Elder Board for inclusion in its minutes. The report will say one of the following:

    “We have reviewed the financial records of Mountain View Community Church for (Fiscal Year)

    and find them to be in good order and in accordance with generally accepted accounting procedures.”

    “We have reviewed the financial records of Mountain View Community Church for (Fiscal Year) and

    find the following irregularities: (LIST) We make the following suggestion(s) for correction:

    (LIST)”

    “We have reviewed the financial records of Mountain View Community Church for ( Fiscal Year)

    for (YEAR) and find the following irregularities: (LIST) We recommend that the Elders employ the

    services of a Certified Public Accountant to assist the church in resolving these irregularities and

    bringing the church’s financial records into conformance with generally accepted accounting

    procedures.”

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