very member who returns tithe or gives a freewill offering ought to have an interest in the stewardship of those funds: that is, in the local congregation as well as at conference, union, division, and General Conference level. The local church board, and the executive committees at the other levels, have a fiduciary responsibility to church members. It is their duty to ensure that denominational funds are reported on correctly and safeguarded properly.
In accounting parlance the process that addresses those objectives is known as internal control. At its most rudimentary level the underlying premise of internal control is that no one individual should be involved with a transaction from its inception to conclusion: there needs to be a division of duties and responsibilities, and/or intervening checks and balances.
The Good Book counsels us "Let all things be done decently and in order." (1 Cor 14:40). Internal control assists in adhering to that counsel. While individuals of integrity are appointed to positions of responsibility, experience has, unfortunately, taught us that trust is not enough. The vast majority of individuals serve with distinction; a few regrettably succumb to temptation. Sound internal control protects those who handle church assets from rumors and innuendos. Church treasurers hold one of the most demanding positions and they need to be protected from acrimony.
The focus of this article is on the local congregation, but the principles are universally applicable. Even the smallest congregation can implement the essential controls after careful consideration.
The church board may delegate certain or all of the following functions to a finance committee. Written procedures should be developed for the following: handling of tithes and offerings every Sabbath; making disbursements by cash or check; preparation of an annual operating budget; review of monthly/quarterly financial reports; investing surplus funds in interest-bearing accounts; authorizing the opening and closing of checking/savings accounts as well as the signatories to those accounts. The church board then needs to monitor that those procedures are being complied with.
Detailed records of all transactions must be kept. Some of these may be kept manually whereas others may be computerized. These will include cash statements, ledgers, tithe and offering envelopes, duplicate receipts, bank statements, returned checks, bank reconciliation statements, supporting documentation for cash and check payments, and tithe and offering remittance advices. In short, anything that gives a historical account of the business of the congregation should be retained.
The primary source of funds collected by the local congregation are tithes and offerings. Offerings should be counted by at least two individuals according to the outlined procedures (a record being kept of the count), and deposited in the checking account as soon as practically possible. Whenever cash is passed from one person to another the recipient should provide a receipt. Deposits should be reconciled with tithe and offering envelopes and the cash-count sheets. Members should be provided with a monthly/quarterly receipt detailing their contributions. Restrictive endorsements should be placed on all checks. Tithe and world mission offerings as well as other conference-designated offerings must be remitted to the conference every month: these are trust funds. Voided or cancelled receipts should not be destroyed but kept on file. Unused receipts should be kept in safe storage.
All payments should be authorized by designated individuals like the pastor, department heads, and church board or finance committee members. Checks for payments over a specified amount should be signed by two authorized members. Cash disbursements should be kept to a minimum. Documentation supporting disbursements must be obtained and retained in every instance. Payments to vendors must be supported by original invoices. Payments by check should be to a specific payee (not to "cash"), and for the exact amount of the transaction. Personal items or accounts should not be paid for from church funds. Voided or cancelled checks should not be destroyed but kept on file. Unused checks should be kept in safe storage.
Checking and savings accounts must be reconciled promptly every month and reconciling items cared for. The reconciliation statements should be prepared by someone other than the individuals who authorize payments or do the accounting.
The treasurer should provide periodic financial reports to the church board and church business meetings, complying with the predetermined format and details.
A designated member of the church board or finance committee should conduct a mini-review of accounting records at least every six months. This review will ensure that the prescribed procedures have been complied with, and that the checking and savings account balances per the church records agree with the related bank records. The church board should also encourage the conference to conduct a detailed review of the church records in compliance with North American Division Working Policy P 62 05.
Even with the best-laid plans it is never possible to give absolute assurance that nothing will go wrong in either the reporting or safeguarding of funds. However, with the dedicated interest of the church board, the committed service of the treasurer, and the active interest of church members, under the blessing of God, reasonable assurance is possible.
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Eric A. Korff is the director of the General Conference Auditing Service.
very member who returns tithe or gives a freewill offering ought to have an interest in the stewardship of those funds: that is, in the local congregation as well as at conference, union, division, and General Conference level. The local church board, and the executive committees at the other levels, have a fiduciary responsibility to church members. It is their duty to ensure that denominational funds are reported on correctly and safeguarded properly.
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