Churches Not Exempt from Needing Strong Internal Controls
Church and ministry leadership often assume that since their employees are mainly committed church members, they are worthy of trust and the extent of the internal control system can be less than for a secular organization or business. Unfortunately, it is this higher degree of trust that often results in weaker controls and increased theft and misappropriation of funds!
Some key elements of internal control for churches and ministries are:
1. Clear organization structure and policies and procedures. Church and ministry operations are often carried out by using part-time and volunteer personnel. To minimize the training and supervision time required of leadership, policies and procedures should be established, documented and communicated to employees and volunteers.
2. Separation of incompatible duties. Some of the most common incompatible duties for churches and ministries include handling cash collections or mail receipts and, at the same time, being responsible for recording the receipts in the accounting records.
3. Dual control over all cash collections and mail receipts. Two persons should be assigned counting responsibility for all offering and mail receipts and for deposit preparation. The cash counters should be different than the people preparing the deposits and all positions should be rotated periodically.
This information was provided by Larry Perry, CPA. For more information on good accounting systems and procedures for churches, check out Larry’s Church Accounting and Internal Control webcast on March 15. You won’t find more practical information on this subject anywhere else!
by Sue Anderson - Based on 30 years of experience in continuing education for accountants. Currently program director for online CPE provider, CPE Link. Formerly with the California CPA Education Foundation managing key operational areas including marketing, program development, and distance learning.