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Please take a moment to relax your mind and humble your heart to

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Please take a moment to relax your mind and humble your heart to

    THE METHODIST CHURCH OF SOUTHERN

    AFRICA

    ACCOUNTING PROCEDURE FOR CIRCUITS

    AND SOCIETIES

    November 2011

     Guidelines to assist Society and Circuit Stewards

    / Treasurers with completions of Annual Financial Returns (From 4S and 4C Schedules)

    ACCOUNTING PROCEDURE FOR CIRCUITS AND SOCIETIES

    (Amended November 2011)

1 PREAMBLE

    This procedure outlines the accounting objectives and financial reporting

    requirements of The Methodist Church of Southern Africa. It gives

    guidance regarding the system of accounting which is virtually identical for

    Circuits and Societies. The procedure is simple and practical and will

    enable Circuits and Societies to record accounting transactions in such a

    way as to easily prepare the Annual Return. The year end for all Circuits

    and Societies is 31 December. This year end date also applies to all

    affiliated Associations of the Church. Each Circuit and Society (or Section)

    which handles its own finances and operates its own Bank Account is

    required to complete an Annual Return called a Schedule 4C for a Circuit

    and Schedule 4S for a Society. Where comments in this booklet apply to

    both Circuits and Societies they will be reflected as “Circuits/Societies”.

    2 OBJECTIVES

    The main objectives of this uniform accounting system are to provide:

     2.1 A clear record of the financial affairs of the Circuit/Society using a

    simple method of bookkeeping;

     2.2 The facility of progressive analysis, working towards the compilation of

    regular and prompt quarterly financial statements and the Annual

    Return;

     2.3 Simple accounting records which can be taken over by new people

    without difficulty when Ministers or Officials are moved and;

     2.4 Management information to facilitate decision-making by Leaders

    Meetings, Quarterly Meetings, District Executives and the Methodist

    Connexional Office.

    3 REGULATIONS AND REQUIREMENTS RELATING TO FINANCIAL

     REPORTING

    In accordance with Laws and Discipline;

    3.1 The Superintendent Minister has the power and duty “to ensure that

    all monies held by organisations or departments in the Circuit are

    reported to the Quarterly Meeting and the accounts are audited before

    being presented to Synod.” (Par.7.14.12);

    3.2 The Circuit Stewards have the duty “to manage all Circuit funds on

    behalf of the Quarterly Meeting and in conjunction with the Circuit

    Finance Committee where this exists. No other person shall perform

    this duty and the Circuit Treasurer, where appointed, shall operate

    ALL monies received and under the direction of the Circuit Stewards.” (Par.7.18.2);

    spent by Circuits, Societies, organizations and departments, including 3.3 It is a crucial requirement therefore that

    ALL Rona, fundraising and projects be accounted for and reported to

    the Quarterly Meeting. No Society or Circuit income or expenditure of N:/Home/Common/Accounting Procedure Amended 2011 1

    whatever nature is exempt from being disclosed and accounted for in

    this way. To give effect to this requirement Organisations,

    departments projects etc may continue to produce their own separate

    audited Financial Statements but such must be submitted to the

    Society Steward/Treasurer (or Circuit Treasurer if there is one) as the

    case may be, who will ensure that the new Addendum (Section 8),

    attached to the Society Form 4S or Circuit Form 4C is completed. 3.4 All accounts of the Circuit/Society shall be audited. A registered

    Accountant or Auditor (registered with the Independent Regulatory

    Board for Auditors (IRBA), South African Institute of Charted

    Accountants (SAICA) or South African Institute of Professional

    Accountants (SAIPA)) can both prepare and audit Financial

    Statements. Financial Statements prepared by a person other than a

    registered Accountant must be audited by a person with an

    accounting qualification, whose qualification shall be stated in the

    audited Financial Statement. Where the services of qualified persons

    are not available, there should be consultation with the Methodist

    Connexional Office so that the accounts are handled by a firm of

    Accountants or the Centralised Accounting Organisation. 3.5 The audited accounts are required to be submitted to the District

    Treasurer prior to Synod. He or she will then submit them to Synod for

    consideration. The District Treasurer will then, within two weeks of full disclosure of all Financial Statements on

    Synod rising, submit a copy to the Methodist Connexional Office takes on added importance in view of the MCSA tax exempt time

    3.6 The requirement for status with the South African Revenue Services. We must submit a

    Consolidated Financial Report to SARS annually, accurately reflecting

    all Society and Circuit Income and Expenditure. We cannot

    jeopardize our tax exempt status by incomplete financial disclosure or

    the non-submission of Financial Statements - Forms 4C and 4S.

     4 GENERALLY ACCEPTABLE ACCOUNTING STANDARDS

    In order to comply with Laws and Discipline, the following standards must be adopted by circuits and societies:

4.1 All money collected is immediately banked;

    4.2 Receipts are issued for money collected and handed from one person

    to another, prior to banking. If it is not feasible to issue receipts,

    proper records are to be kept to substantiate the source of all money

    received with at least two persons signing such record; 4.3 All payments should be made by cheque;

    4.4 Cheques, payable to any payee, must be signed by two authorised

    signatories. Cash cheques may NOT BE ISSUED. DO NOT SIGN

    BLANK CHEQUES. Cheque books must be kept in a safe place to

    prevent unauthorised access thereto. Unused cheques that are stolen

    / lost must be reported to the Bank and SAPS immediately and a

    “Stop Payment” placed on them at the Bank.

    4.5 Wherever possible invoices must be obtained to substantiate

    payments made;

    N:/Home/Common/Accounting Procedure Amended 2011 2

    4.6 At the year end, all vouchers, receipts, invoices, receipt records, bank

    deposits, paid cheques and bank statements together with the cash

    book and other bookkeeping records are given to the auditor; 4.7 An Annual Return (Schedule 4C or Schedule 4S), as at the year-end

    is prepared and audited;

    4.8 The audited Annual Return is submitted, in the case of a Society to

    the Church Council for approval, and in the case of a Circuit to the

    Circuit Quarterly Meeting, and thereafter to the Synod, via the District

    Treasurer.

    4.9 For any large items of expenditure, e.g. repairs or maintenance, three

    quotes must be obtained prior to a decision to do the work. The most

    reasonably priced quote should be accepted;

    4.10 The use of credit cards is strongly discouraged;

    4.11 Electronic payments are only permissible where dual control of

    authorisation on a payment instruction is a requirement of the banking

    system and separate confidential password codes are used. 4.12 In accordance with paragraph 5.43.15 of Laws and Discipline no loan

    from Circuit or Connexional Funds may be made to any private person

    or body. 5 PRINCIPLES OF THE SYSTEM

    5.1 The principles of the system are identical for Circuits as well as

    Societies (or Sections) which administer their own finances. Please

    refer to the standard Circuit Schedule 4C and Society Schedule 4S in

    following this procedure. The Circuit has INCOME and

    EXPENDITURE Account numbers which are different from those

    relating to a Society although some Account descriptions are the

    same.

    5.2 INCOME and EXPENDITURE are the two main aspects of

    Circuit/Society finance. INCOME and EXPENDITURE transactions

    are entered in an analysis Cash Book. This must have sufficient

    columns for all the major INCOME and EXPENDITURE Accounts

    used at present throughout the Church. These include Stipends,

    Assessments, Building, Circuit Travelling, Connexional Office and

    ABank@ under both INCOME and EXPENDITURE. Sundry Payments. Each Account has a number. Ensure that there is 5.3 It is assumed that double entry bookkeeping is the basis of the system. a column for

    This means maintaining a Cash Book as well as a Ledger and a

    Journal. It would be advantageous to enlist the services of an official

    (bookkeeper) who is familiar with double entry bookkeeping. If you

    open a Ledger and do double entry bookkeeping this will assist in

    keeping accurate records of transactions concerning monies held as Afunds@, loans and investments or any other continuing Adebtor@ or

    Acreditor@ balances. Such details will be required for Sections 1 and

    5 to 7 of Schedules 4C and 4S.

     However, if a person familiar with double entry bookkeeping is not

    available, it is urged that the uniform procedure as described herein

    be maintained in the Cash Book, without using a Ledger and Journal. 5.4 The selected Account numbers heading up the various columns in the

    Cash Book are the same numbers used in the pre-printed Schedules

    N:/Home/Common/Accounting Procedure Amended 2011 3

    4C and 4S. Therefore the uniform Account numbering system will

    greatly facilitate the compilation of Quarterly Statements and Annual

    Returns. All Circuit/Society Financial Statements which are presented