by Mark Jones

Values that I hold as essential have been shaped by a number of sources; parents, work, friends, church and by the Bible. But the values I live by may not be the same values that others in my organization or finance area share. So I have found it important that we externalize the shared values we hold as a group of individuals who are committed to the functioning of our finance area.

At my church, we’ve written down guidelines and values for our finance function. We have these posted on our wall and every time we add a new volunteer or staff, we go over these to ensure they are understood and embraced. So, I thought I’d share what we have put together.

Handling of funds entrusted to us by others is a stewardship responsibility ultimately to God but also to those within our community and those who watch us from outside. Thus, we desire to maintain integrity in how we hand our financial affairs.

We want to follow the principle of two (dual control) and maintain accountability to another individual by ensuring segregation of duties.

  • We desire to not put any one person at risk by having two independent individuals handle or review all transactions.
  • When processing revenues, we use two unrelated individuals for counting and verifying receipts. Deposits are prepared by the team with a tally sheet reconciled by a person not counting. Individuals who assist with the counting team switch periodically.
  • When processing accounts payables and payroll, the individual requesting payment will have the ministry leader in charge of the area approve the expenses. When the requesting individual is the ministry leader, the individual whom they report to will approve the expenses. Check (or payment) signers/approvers will not sign/approve any payment to themselves or any related family member.
  • Any potential conflict of interest should be avoided, whether for related family members or when the individual has a financial or meaningful interest in the other party.
  • Reconciliations shall be done by a second individual who has not requested or approved the transactions or entered the transactions into the accounting system.
  • Financial reports specific to each area shall be provided monthly to the ministry leader in charge of the area. Overall financial statements shall be provided monthly to the senior pastor, finance director and treasurer. Giving summaries will be provided to the congregation as often as deemed appropriate. Financial reporting to the congregation as least annually as determined by the Elder Board.
  • We will seek to maintain our accountability to those in authority over us such as governmental entities. We will attempt to comply with all requirements and regulations placed upon us and report any issues we become aware of to the appropriate party.

Ensure confidentiality of all non-public financial and private information.

  • This includes all donor records, payroll records, vendors and expense payments. Any non-public information will be disclosed on a need to know basis for church business purposes only, unless granted by the individual whose information is in question or required by a governmental entity.
  • We will destroy any sensitive information on a timely basis as determined by our records retention policy.
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  1. That’s an excellent set of policies. We use a “three-way” reconciliation process on the donation side:
    Donation processing (1) handles the lockbox and credit card receipts, inputting them in the donor system. That system posts to the general ledger via pre-defined posting schemes(2). The design of the posting schemes is maintained by the accounting system design manger, not part of transaction processing. Then the treasury folks (3) compare the downloaded data from the financial institutions with the postings in the accounting system (from the donor system). Any discrepancies are immediately addressed.

    One of the by-products of this is that the bank reconciliation (by treasury) work is greatly reduced.

    One other comment on policies. Too many exceptions to policy defeats the purpose of having the policies. “Simplicity and consistency yield accuracy and timeliness”.

  2. Mark Jones @ 2013-09-04 09:54

    John, thanks for sharing a practical example of how your organization has put a process in place which supports your policy and ultimately your values. It’s great to see that it also increases your productivity in the finance area.

  3. I like your finance team values and agree with them and would like to use them for the team I’m on, but I do not believe they would implement any of these. Even though we have a policy and procedure for our team which includes protecting church funds, the team mostly works up a budget a each year.
    I have spent about 5 years re-educating myself on church management and trying to implement separation of duties (the church has one person, the church secretary who does it all, was told when the secretary who did it all for 25+ years would retire things would change, but that hasn’t happened), a count team (Pastor doesn’t want a count team because of another church that had a count team and because of their rotation too many people knew who gave and how much!), approval system for all transactions (was told this was not needed since we have a budget that has been approved!) to no avail.
    Our church secretary counts the offering with one other person; then she enters the donations in our software; she also prepares the checks to pay bills and payroll and signs the checks, we have a second signer on all checks (but they don’t really review or approve any of the transactions) unless there is an emergency then she can sign up to $500. I am trying to implement a dual approval for online transactions but don’t know if it is being done, hope to find out soon. The one thing I’ve tried to implement is having the bank statement 1) reconcile by me (I’m a bookkeeper) or 2) reviewed by another person from the team to check for any irregularities but both of these were denied by the pastor. I am rotating off of the finance team the first of the year and was hoping to have written policies and procedures but spent the summer and fall setting up our bookkeeping on a software program.
    The finance team motto is 2 Corinthians 8:21. Otherwise the Team is not proactive in the financial affairs of the church and this was a goal of mine. I’m concerned about the safety of church funds because a church in our area was embezzled of $85K in the past 6-7 years. I trust the secretary but the church really should implement policies. I am frustrated to say the least when leaders of the church are not as concerned about the safety of church funds and the workers who manage those funds. I know the Lord is in control and for the past 55 years this church has been protected but it has not grown very much. Any suggestions would be very helpful.

  4. Mark Jones @ 2013-12-05 12:45

    Ruby, this really sounds like a tough situation. I want to commend you for attempting to make these changes. It is really hard for churches and church leadership to make changes if there hasn’t been any problems or issues that others are aware of.

    I might suggest that you approach this situation with your pastor and leadership by talking about the goal of protecting them personally, including the church secretary. If there is ever an issue, which could just be an allegation, the personal integrity of the individuals involved are immediately put into question. And without separation of duties or dual custody, it comes down to one person’s word about their actions and character. In these situations, there is typically no easy way to prove they were not at fault. We put these practices into place because we want to protect the witness of the individuals involved as well as the church itself.

    There have been many cases of church embezzlement where the individuals involved in the crime were very opposed to any changes which would bring to light the nature of the embezzlement. I’m not suggesting this is the case at your church but you do have to ask why an individual is not willing to allow for adequate separation of duties and dual custody.

    I’d also suggest that you or other individuals of your finance team audit the work that is being done occasional. This will help ensure that nothing improper is occurring and set up some needed accountability.

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