Introduction to the Financial Review Checklist The Episcopal Diocese of Southwestern VA

Transcription

1 Introduction to the Financial Review Checklist The Episcopal Diocese of Southwestern VA Ø If parishes or institutions do an internal or external financial review, they must complete this Financial Review Checklist and submit it to the diocesan office. Ø Sections I to V should be completed by all parishes, mission, or institutions using this form. Sections VI, VII and VIII should be completed if applicable. Ø Required Attachments include: o Year-end Treasurer s report. Please comment on any variances of 10% or more in any budgeted item. o Parochial Report only page showing total income and expenses. o Copy of Audit Committee Findings and Recommendations on Policies and Procedures, if any. I. Understanding the Bookkeeping System Required What is the basis (Manual of Business Methods) of the accounting system and does it cover all Parish funds? II. Understanding and Verifying the Financial Reports Required How often are financial reports produced? III. Cash Required Reconciliation of all Parish funds. IV. Audit Documents Reviewed/Confirmed Required What is the scope of the accounting system, what reports are produced, and how are they used? V. Pledges/Support Required Record keeping for annual pledges, designated gifts, special fund raisers and capital campaigns. VI. Liabilities: Payroll Taxes & Clergy Housing Other indebtedness N/A if no 1099 or W-2s are issued and there is no debt (outstanding or unfunded). VII. Investments N/A if none or if held by DIOSWVA VIII. Trust and Endowment Funds N/A if none or held by DIOSWVA

2 Financial Review Checklist The Episcopal Diocese of Southwestern VA To be used by audit committees in parishes, missions, and institutions Church Name City/Town Convocation Rector (if applicable) Senior Warden Junior Warden Treasurer Federal Tax ID# Date(s) Review Conducted: Review Members: Date Received by Vestry Review for the period of January 1, to December 31, Financial Review Certificate To the Rector and/or Wardens and Vestry: The audit committee has inspected the financial and asset position of the church in accordance with the guidelines of the Diocese of Southwestern Virginia. Steps have been taken to see that the financial statements and reports present fairly the assets and liabilities of the parish; that the receipts and expenditures and changes in all fund balances for the review year are in accordance with the principles authorized by General Convention of the Episcopal Church, and of the Diocese of Southwestern Virginia; and that the parish has engaged in a planning process regarding its future capital and financial requirements. Our inspection and certificate are not to be construed as an audit and opinion rendered by a Certified Public Accountant. (Signature of Reviewer/Chair) (Date) 1

3 FINANCIAL REVIEW I. Understanding the Bookkeeping System (Required) Yes No Has the audit committee agreed that the audit shall cover all funds of the church? Are the Treasurers permanent files retained in a secure location that supports his/her work? Does this include original cash receipts and disbursements records? Does it include a file of published and accepted Financial Reports? Does it contain payroll and General Ledger books or comparable information? Do checks exceeding a certain level require two signatures? If yes, $. Is the primary bookkeeper a paid employee of the church? Note: A secure back-up of information can be critical to your record-keeping. Treasurers or account custodians are required by Episcopal Church canons to be bonded. All churches in the Diocese of Southwestern Virginia using Church Insurance Company for their Property and Liability coverage are insured with at least $25,000 of Fidelity Bond insurance. II. Understanding and Verifying the Financial Reports (Required) Yes No Working from the Treasurer s final year-end reports: Do they include a year-end balance sheet in separate fund form? Do they include a Revenue and Expense statement for all funds of the church? Is the Revenue and Expense statement in comparative form? Meaning, does it reflect prior year/budgeted amounts/variance to budget/etc.? Is the Vestry aware of instances when actual expenses exceed budgeted amounts? Are any bank accounts in excess of FDIC insurance limit of $250,000? If so, has the church considered an additional bank account in order insure coverage of funds? III. Cash (Required): Yes No N/A Is/are the checking account(s) reconciled monthly, including debit cards and on-line banking transactions? In a sample of 5% of paid checks: Do paid checks have authorized signatures? Do payees, amounts & dates match the disbursements register? Are disbursements approved in writing by an authorized party other than check signer? 2

4 Does the process for counting receipts require at least two people? Are those persons also required to be unrelated? Are receipts records compared with bank deposits for the year? Are all transfers between accounts able to be traced? Does a clergy-controlled discretionary fund exist outside of the primary church accounts? Does documentation support any checks written to "Cash"? In the absence of primary signatories to the accounts are there sufficient secondary signatories to avoid the need to sign blank checks? Does the annual financial report to Vestry outline and explain any significant budget variances (+/- 10% is a standard)? Are there any unusually large deposits, withdrawals or disbursements? (If Yes please provide explanatory note) The people counting funds should never be those able to authorize disbursements. All clergy-controlled discretionary funds must be a part of this review. However, concerns over pastoral confidentiality may be addressed by having a person with financial skills from outside the parish review clergy discretionary funds and report back to the audit committee. IV. Financial Documents To Be Seen/Reviewed (Required): Yes No N/A Vestry/Vestry Committee minutes to confirm approval of annual budget and regular financial reports. Vestry/Vestry Committee minutes to confirm annual housing allowance. List of those persons authorized for check signing, fund withdrawal or transfer, and disbursing approval Review of last year's financial audit and internal control letter. (If there were recommendations from previous year s audit, were they approved and complied with?) General Ledger Bank statements for audited year, plus last statement for previous year and first for current year. Paid checks and deposit slips (Sample at least 5% of checks). Payroll records with Forms I-9, W-2, W-3, W-4 and State and Federal withholding records. Savings Account statements. Other investment records. If computers are used for financial or parishioner data, are files backed up at least weekly? Supply clergy should receive a 1099 form for their compensation. Back-up of all electronic financial records should be in a secure site. 3

5 V. Pledges/Support (Required): Yes No N/A Do the records of total receipts agree with the amounts recorded in the cash receipts journal? Are total contribution budgets periodically compared to actual, and are significant differences investigated? Do acknowledgements of contributions in excess of $250 include a statement that any goods or services provided consist solely of intangible religious benefits? Are future bequest and gift files, such as proceeds from life insurance policies or sale of property bequeathed to a parish, maintained on a current basis? Are files kept on life income, endowment, and annuity gifts, including information on the nature of the principal, investment of the principal, or use of the principal income, as well as correspondence with donors or beneficiaries? Are separate records kept on gifts received as designated funds? VI. Liabilities (Not Applicable if no 1099s or W-2s are issued or debt) including Payroll Taxes & Clergy Housing: Have total wages been reconciled with quarterly Federal Form 941, Form W-2, and Form W-3? Have total withholding taxes been reconciled with Form 941? Has it been determined that all Federal & State withholding taxes were remitted on a timely basis, to avoid hidden penalties? Are pension payments up to date for all eligible employees? Was a proper housing allowance resolution adopted for all employed clergy and was this resolution recorded in the minutes by the vestry or vestry committee? Other indebtedness: Has all required indebtedness been properly authorized by appropriate church officials (vestry/vestry committee/diocese)? Do unpaid balances per church records match balances as reported by any/all creditors? Is a detailed schedule of all loans prepared, including name of creditor, date of origin, original amount of debt, interest rate, payment schedule, monthly payment, unpaid balance, loan purpose, and authorizing body? Yes No N/A 4

6 ASSETS VII. Investments (Not Applicable if none or if held by the Yes No N/A DIOSWVA): Has the vestry reviewed or created an investment policy statement in the last three years? Does your church use an outside money manager/broker? If yes, primary manager is. Is the primary manager/broker either a member of the parish or a relative of a member of the parish? If a manager/broker is used, have you reviewed their level of compensation (fees & commissions) in the last three years? Is the 12/31/XX market value of securities established as the date of this asset review examination? Are broker s reports examined for securities bought or sold through, or compensating that brokerage? Were security purchases or sales authorized by appropriate vestry (or committee) action and recorded in the minutes? Have receipts records of dividends and interest been compared with record of securities held? Is there a complete list of securities, trusts and endowments held? Watch for excessive fees. The primary manager of investment funds should not be a member or the parish or related to a member of the parish. VIII. Trust and Endowment Funds (Not Applicable if none Yes No N/A or if held by DIOSWVA): Do you have an active planned giving program in use at your church? Has a list of trust and endowment funds been obtained, including their terms and locations of the investments? Has there been an examination of the deed of trust or agency agreement for each trust and endowment fund? Have the agency accounting records been checked to determine whether or not the terms of the trust or endowment funds are being properly followed? Make planned giving a priority for your church. Take advantage of Project Resource. Trained Project Resource leaders in our diocese can offer expertise for developing a planned giving program. Creating a brief, written history of each endowment and trust fund in your parish is beneficial for ensuring your parish s corporate memory. It can assist vestries and boards with stewarding the use of fund in accordance with designations or restrictions. Keep a copy of bequests given to your church on file. 5