Resources for Congregational Treasurers and Bookkeepers
The ELCA Office of the Treasurer web page lists a number of helpful resources for treasurers and bookkeepers (www.elca.org – click on Office of the Treasurer – Finance for Congregations):
Congregational Treasurers’ and Bookkeepers’ Financial & Accounting Guide – Reviews the responsibilities of the treasurer, creating the chart of accounts, financial reporting, employment and payroll taxes, audits, and more.
Handling Financial Matters in the Congregation – An overview of many of the financial matters relating to the congregation, including duties and safeguarding of funds.
Accounting Methods – Learn the advantages and disadvantages of cash vs. accrual methods of accounting and recording transactions.
Program Budget Presentations – Show your congregation’s budget in a way that will describe the breadth and depth of the congregation.
Financial Contingency Planning – Learn about key areas of financial contingency planning for congregations.
Accountable Reimbursement Policies – Explains how an accountable reimbursement policy to pay the necessary business expenses of congregational ministry is handled.
Congregational Audit Guide – Discusses the procedures involved in auditing both income and expenditures in a congregation. Helpful exhibits are also available.
Data Security – Offers suggestions on how to keep data secure at many levels.
Identity Theft – Presents statistics on identity theft, defenses to help prevent such theft, how best to handle data, and storage policies intended to prevent the loss of identity information.
The IRS has published a resource entitled “Tax Guide for Churches and Religious Organizations” which can be down-loaded from this web page.
In addition to these resources, the ELCA Office of the Secretary web page also lists a number of helpful resources:
(www.elca.org – click on Office of the Secretary – Congregation Administration – Records Management for Congregations).
Topics discussed include record retention (including a schedule for retaining various types of documents), insurance and risk management, and dealing with legal issues.
HANDLING CASH FUNDS
A climate of personal trust is usually assumed in the congregational setting. This is healthy and proper. However, some systems of handling money place individuals in a position in which their honesty can be questioned or in which they may be tempted to sin. Prudent and consistent practices in handling money are needed to maintain this trustful climate. The incidence of embezzlement and mishandling of funds has grown steadily in the ELCA and it would be good to reverse this trend.
Cash Handling Principles
Normal handling of funds in the congregation involves several steps.
Some general principles:
- No individual should be required or allowed to handle the congregation’s cash alone at any point.
- No cash of substantive amounts should be stored in the church.
- It is preferable for several people to be involved on a rotating basis in handling cash.
- All cash transactions (receipts and disbursements) should be properly recorded and verifiable.
Suggested Steps in Handling Income
- Immediately following the service, two persons carry the contents of the offering plates to a room for counting.
- The envelopes are immediately opened by at least two persons. Envelopes are marked as to intent and purpose if for other than undesignated offerings.
- Balances between envelope totals and cash totals are reconciled.
- A summary report is prepared and initialed by at least two persons.
- A deposit slip is prepared and at least two persons bring deposit directly to the night depository at the bank.
- A copy of the deposit slip and the summary report are given to the treasurer and to the financial secretary.
- Persons in the above steps should be rotated periodically. It is best if the treasurer and the financial secretary are not involved.
- Members should be encouraged to make their offering by check, not cash.
Suggested Steps in Handling Expenditures
- Bills and obligations should be approved for payment. This approval should be indicated in writing by the person responsible. In larger congregations, a purchase/approval form may be used to approve payment and identify the account to be charged.
- Check is prepared.
- Check is signed by two authorized persons. The pastor preferably is not an authorized signer.
- Check number is written on invoice/support document to prevent duplicate payment, and check is mailed.
- At least three persons should be involved in the above four steps, even in a simple system.
Bank reconciliations should be prepared by the treasurer. They should be reviewed and initialed by a person other than the treasurer.
The above suggestions should not be interpreted as a lack of trust in the financial officers of a congregation. Rather, they offer protection for their reputations. No person with this kind of responsibility should be placed in a position where any suggestion of mishandling of funds must be defended by the word of one person against that of another. This system is intended to provide verification and support of sound practices at every step. This is important for the church as a trustee of “public” funds.
The above principles are applicable to the congregation’s auxiliaries and organizations. The church council is constitutionally responsible for all funds of the congregation. It is preferable for all congregational funds to be in a single checking account and investment program, with each organization authorizing disbursement of funds through the church treasurer with a voucher system.
The financial reports to the church council and congregation should include all funds, accounts, and bank accounts of the congregation.
SPECIAL NOTE: “Dormant” bank accounts should be carefully monitored and preferably closed.
In some areas of its work and mission, the congregation does not follow the same practices as a business might. However in accounting and handling of cash funds, it is helpful to follow the same standards and safeguards that apply to a good business operation.
THE AUDIT COMMITTEE
The audit committee is appointed by the church council. This committee should be composed of at least two members of the congregation, excluding the treasurer and the financial secretary. It is preferable that they be individuals who have had training in accounting procedures.
The audit committee, with approval of the finance committee, may secure outside help on a fee basis from an independent accountant, registered in the state.
The Audit Committee
- Examines and reviews all accounts and records.
- Exercises supervision and oversees the work of the audit if it is conducted by an outside auditor.
- Examines all insurance policies and prepares a schedule of the insurance coverage.
- Inspects and examines securities and investments.
- Prepares a schedule of the securities and investments for review by the finance committee.
- Reports its findings in writing to the church council with supporting schedules and recommendations for change and improvement.
- Review the recording of cash receipts:
- Trace deposits from the counter’s reports in the financial secretary’s and treasurer’s records. Compare these to the entries recording such deposits so they agree with the deposits recorded by the bank.
- Check on the timeliness of the deposits.
- On a sample basis, check the account distribution in the cash receipts journal, being especially alert for funds designated for specific purposes.
- Verify check accounting:
- Inspect the cash expenditures record in the cash disbursement journal which should show the date, check number, name of payee, amount of check and account distribution for each check written.
- Check mathematical accuracy of entries.
- Examine the authority for writing a check such as approval on invoices; pastor’s call, including current salary and housing arrangements; contract agreements; actions of council reported in minutes.
- Examine checks to verify that disbursements were actually paid to the proper parties.
- Account for all checks, used and voided.
- Prepare a statement of expenditures for comparison with the adopted budget for the year and analyze variances.
- Prepare a tabulation of benevolence payments to the synod and compare with statements received from the synod. Compare this total with the expected response for the year.
- Analyze expenditures, noting proper capitalization of major improvements, refurbishing, new equipment.
- Reconcile bank accounts:
- Inspect, on a sample basis, endorsements on the cancelled checks.
- Request banks, savings and loan associations, and other investment agents to confirm, in writing, the balances held in accounts.
- Confirm authorized signatures for check writing with the financial institutions.
- Compare signatures on the card with those currently used on checks.
- Prepare a statement of reconciliation between bank balances and balances shown on the books. The reconciliation should begin with the bank’s balance. Add to that figure deposits shown on the books but not yet credited on the bank statement. Subtract the outstanding checks (those which have not yet cleared the bank) to prove the balance shown on the books.
- Examine petty cash funds to determine that
- Disbursements vouchers have proper approval.
- Reimbursements to the fund are made properly.
- Maximum figure for individual payments has been established and followed.
- Examine individual member records
- Compare “pledge amount” with actual giving.
- On a sample basis, check the financial secretary’s posting of contributions to the members’ records.
- Inspect insurance policies and prepare a schedule of insurance in effect to show:
- Effective and expiration dates.
- Kind and classification of coverage.
- Maximum amounts of each coverage.
- Premium amounts and terms.
- Comparison of insurance coverage with the insurance appraisal or other supporting cost data.
When Filling Out Your Benevolence Remittance Form…
Please be sure to note these items:
- Please use a separate check for gifts to the Endowment Fund (General, Answer the Call/Fund for Leaders, Skogman, and Kemppainen). These gifts go into a different account than benevolence remittances and should not be combined with your benevolence.
- All checks must be made payable to the Northern Great Lakes Synod. Do not send checks made out to Fortune Lake or any other organization to the synod as we cannot pass these through our books.
- Please include your Northern Great Lakes Synod ID number. Your ID number is noted in red on your monthly statement.
- It is very important to note what month your remittance is for, especially in January, February and December.
- When giving to Lutheran Campus Ministry, please note the location (NMU or MTU). If not specified, the money will be split between the campuses.
- When giving to the ELCA Disaster Funds, please note if you are giving in response to a specific disaster. When unspecified, gifts are given to ELCA General Disaster Relief.
- If using a label with your congregation’s name and address, please label both the white and yellow forms.
- Please include a telephone number where the person filling out the form can be reached.
- Please make sure to designate what your gift to “Other” is for.
- Be sure to double check your math before sending in your remittance.
Please notify the Synod office when you need more forms, either by phone (906-228-2300) or with a note on your benevolence form stating that you are running low.
Thank you for your help in this financial ministry to which we are called!
Northern Great Lakes Synod
1029 North 3rd Street
Marquette, MI 49855