Keeping the books308de48b1c66600c1bbd-d8590c8a28c33460e15368faedce8b94.r0.cf2.rackcdn.c…says a...

Keeping the books

and NOT getting tookKeeping the Books - PRC Leader Dev. Day

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Signposts of a Financially Healthy Congregation(PC USA Stewardship Manual)

» Understands that all giving, of ourselves as well as our financial resources, is in response to God’s goodness and generosity.

God gives, then we respond, and we spend our lives learning and growing in our responses.

Keeping the Books - PRC Leader Dev. Day

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» Discusses money in the context of worship instead of considering money a disreputable subject that should not be confused with the sacredness of worship.This distinction should not exist within Christ’s church.


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» Understands that the offering is an integral part of corporate worship.Just as we bring our gifts of wine and bread to God’s table, we present ourselves as an offering through our financial gifts.


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» Talks about money openly and candidly in all aspects of the church’s life, realizing that how we use our money says a great deal about our values and priorities.


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» Engages in mission beyond its own doors and interprets this mission (both local and worldwide) through a planned year-round program. When people know how their money is used to do God’s work, they are reinforced in their giving.


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» Plans long-range for its program objectives and financial needs.

Budget developmentis a long-term process.


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Six essential elements of an effective financial stewardship campaign are:(PC USA Stewardship Manual)

» Identifying and celebrating what members value in their congregation.» Informing members how their gifts are used.» Challenging members to a higher giving level.» Securing a financial commitment from members.» Affirming members and acknowledging their response.» Evaluating your program.


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Church Financial Fraud is Big Business Worldwide(Brotherhood Mutual Insurance Company)

• Christians worldwide committed more than $39 billion in church-related financial fraud during the first half of 2014 vs. $35 billion spent on worldwide mission work.

• About 80% of all cases of church fraud go unreported and therefore are not included in statistics.

• The average church loss due to fraud is $120,000 and each year it increases by nearly 6%.


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Church Financial Fraud is Big Business Worldwide(Brotherhood Mutual Insurance Company)

• Reported frauds last approximately 18 months before detection.

• Approximately 85% of fraudsters are first-time offenders.

• Asset misappropriation schemes made up 87% of reported cases.


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Fraud Triangle Model

• Pressure - perceived financial need• Perceived opportunity• Rationalization


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General fraud prevention tactics(Brotherhood Mutual Insurance Company)

• Put the church’s financial policy in writing• Keep expectations consistent and clear

Step 1 Financial Policy

• Give those involved in financial matters access to the written policy, so the offender can not claim they did not know

Step 2 Prevent plea of ignorance

• Conduct annual background checks and credit reports on those who have access to church funds

• Require annual external audits

Step 3 Conduct annual checks and audits


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Addressing the Fraud in Church &Internal Control Procedures

Implementing “Best Practices” to help prevent fraud at your church:

• Special Practices for tithes and offerings (two unrelated rotating counters, checks stamped for Deposit Only and etc.)

• When you catch a thief, what’s next?

Contact insurance agent, enlist CPA for help, investigate, report, prosecute.

• Setting a high standard of financial responsibility.

Internal Audit Highlights:

• Overseeing Operating Bank accounts (bank statements, check images, signatures, large checks, voided checks, general ledger classification).

• Reviewing investment accounts, monitoring funds activity.

• Comparing Income and Expense statements to prior month or year.

• Comparing bank deposits and reviewing money counters rotation.


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Church Accounting Software:

Aplos SoftwareChurchWindowsPowerChurchQuickBooksShepherdbaseACS Technologies


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QuickBooksAdvantages

• Affordable.

• Very popular, easy to find bookkeeper that knows the program.

• Can be password protected.

• Handles bills, payments, & bank reconciliation easily.

• Great budgeting tools.

• Handles payroll and payroll taxes.

• Prints Checks.

• Compatible with Microsoft Office Programs.

• Can use it on the go with the online edition.Keeping the Books - PRC Leader Dev. Day

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http://www.anrdoezrs.net/click-5432044-10528307

http://www.anrdoezrs.net/click-5432044-10528307

3 Common Mistakes When Choosing Software

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Considering only one option

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Not getting a trial or demo

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Just asking your friends what they’re using


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Questions to ask when considering church accounting software:

1. What is your church’s budget for accounting software?2. How much do technical support and program updates cost?3. Do you need accounting software specifically designed for

churches or will an off-the-shelf accounting package do?4. How user-friendly is the software?5. Do you need payroll capabilities? Will it integrate with your

current or future payroll software?6. Will the software package require additional hardware?


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Effective chart of accounts

Not helpful chart of accounts

• Multiple insignificant accounts

• Unclear description of accounts

• Not utilized sub accounts

• Too detailed

Proper chart of accounts

• Only important major accounts

• Often used and clearly described sub accounts

• Concise and clear


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Proper reporting

January 2015

January 2015 2015 2015 January 2014 2014 Over 12 Month

General Fund Actual BudgetActual YTD

Budget YTD Actual

Actual YTD (Under) Budget

IncomeDonations & Offering 110,000 77,500 110,000 77,500 92,681 90,000 32,500 866,500Miscellaneous 500 1,667 500 1,667 1,797 1,797 (1,167) 20,000

Rental Income 850 917 850 917 1,053 1,053 (67) 11,000Income Before Transfers In 111,350 80,083 111,350 80,083 95,531 92,850 31,267 897,500

Transfers in 0 0Endowment 5% Total Returns 264,688 264,688 264,688 264,688 212,509 212,509 0 264,688

0 0Total Income 376,038 344,771 376,038 344,771 308,040 305,359 31,267 1,162,188

ExpenseWorship 4,541 4,358 4,541 4,358 3,664 3,664 182 52,300Education 338 1,396 338 1,396 1,175 1,175 (1,058) 16,750In-Reach 3,210 2,062 3,210 2,062 2,425 2,425 1,148 22,515Out-Reach 13,789 18,196 13,789 18,196 12,698 12,698 (4,407) 218,350Personnel 62,557 58,443 62,557 58,443 62,931 62,931 4,113 704,837Operations 6,723 4,871 6,723 4,871 6,965 6,965 1,852 67,450Buildings & Grounds 17,227 9,808 17,227 9,808 8,668 8,668 7,419 117,700Communication 853 1,625 853 1,625 560 560 (772) 19,500Discipleship 455 500 455 500 75 75 (45) 6,000

Total Expense 109,693 101,260 109,693 101,260 99,160 99,160 8,434 1,225,402

Net Income 266,345 243,512 266,345 243,512 208,880 206,199 22,834 -63,214

Budget vs. Actual


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Fund accountingGeneral Company

Ledger Endowment Capital Campaign Capital Fund

Day Care Center

Total of all Funds

Revenue Revenue RevenuePledges Pledges PledgesCash Offering Cash Offering Cash OfferingCheck Offering Check Offering Check OfferingEndowment Endowment EndowmentRent Rent RentTotal Revenue Total Revenue Total Revenue

Expenses Expenses ExpensesStaff Staff StaffBuilding Building BuildingWorship Worship WorshipMusic Music MusicChristian Education

Christian Education

Christian Education

In-Reach In-Reach In-ReachOut-Reach Out-Reach Out-ReachOperations Operations OperationsCommunication Communication CommunicationTotal Expenses Total Expenses Total Expenses


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Review and Questions

Signposts of a Financially Healthy CongregationPreventing fraud Choosing accounting softwareChart of accountsReportsFund accounting


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PRC Solutions Services

Weekly management of your deposits, bills.

Bank account reconciliations.

Monthly financial reporting.

Outside monitoring of your assets.

Payroll and taxes.

Stewardship consultation.

Advising on improving the chart of accounts.


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Fraud prevention Quiz:Scenario #1: Pastor in charge of finances

The church board put the pastor and his secretary in charge of church finances. Originally, the board also assigned a trustee as a signatory on the church bank account, which he occasionally reviewed. After the trustee began to question the pastor’s practices, he had the trustee removed from the account, giving the pastor total control over the church’s bank account and credit cards. Subsequently, the pastor gave himself a $5,000 raise and a $15,000 bonus, followed the next year by a $22,000 bonus. By the time the board confronted the pastor, he had managed to spend more than $200,000 on clothing, meals, vacations, and a number of other purchases at some impressive stores and restaurants.

What risk management step(s) could the church have followed to keep this from occurring?

A. Do not allow the Pastor to also be in charge of finances.B. Regularly audit bank statements.C. Regularly audit credit card statements.D. All of the above.


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Scenario #2: The overworked employee

Although the employee really wasn't overworked, her submitted hours suggested she was. This woman was a daycare director and her husband was the bookkeeper. He was responsible for approving the employees’ payroll. A number of embezzlement activities were in progress: purchasing numerous personal items, such as makeup and hairspray, gift cards, doctor visits, clothing. They even made college loan payments. In addition, this woman submitted hours that she had not worked and submitted time for personal leave she had not accrued. Her husband approved her timesheet and she got paid for hours she had not accrued.

Allowing immediate family members to oversee other members:

A. Is highly recommended.B. Should be strongly discouraged.C. Is OK, but should be closely monitored.D. It could go either way.


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Scenario #3: Missionary supportA. This case involves three individuals. At least one of them was part of the church. The trio set up a new mission ministry. This was NOT a legitimate mission entity, but was posing as one. One person posed as a missionary under this false ministry. Then the three of them worked to get the church to send donations to support this "missionary." The church responded by sending $12,000 one year and $15,000 the next.

B. The church treasurer took funds that had been designated for missions. He was found out when the missionaries began to call the church, asking why they were no longer being supported.

These scenarios confirm:

A. Never support missionaries or other ministries.B. Support only ministries/missionaries you know.C. If you aren't familiar with a ministry/mission, do your homework on them.D. Both B and C


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Scenario #4: The Certificate of DepositWhen this church had some additional cash, they decided to put the funds into a Certificate of Deposit at the local bank. When the CD was set to mature, the secretary advised the pastor that rates were so good she simply renewed the $61,000 certificate. In reality, she had already cashed it in and was using the money for her own personal use. In addition, she was regularly withdrawing money from other accounts and reporting a much higher account balance to the board than what was actually available—$40,000 as opposed to accurate numbers closer to $9,000. Eventually, the secretary confessed to taking about $97,000. After confessing, she revised her will to have the funds go to the church to reimburse the loss; then she attempted suicide by overdose. The attempted suicide failed and the secretary was prosecuted and sentenced to eight years of probation.

This scenario shows:

A. Never purchase Certificates of Deposit from a bank.B. Never let the secretary be in charge of finances.C. There are often more issues to deal with than just the financial loss.D. Never trust a bank.


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Parish Resource Centerwww.parishresourcecenter.org717-299-1113

Kate GoodExecutive Director of Parish Resource Center

Kristina SzokeManager of Accounting and Reporting Services, PRC Solutions


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