and NOT getting took Keeping the Books - PRC Leader Dev. Day

Transcription

1 Keeping the books and NOT getting took 1

2 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. 2

3 Signposts of a Financially Healthy Congregation (PC USA Stewardship Manual)» 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. 3

4 Signposts of a Financially Healthy Congregation (PC USA Stewardship Manual)» 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. 4

5 Signposts of a Financially Healthy Congregation (PC USA Stewardship Manual)» 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. 5

6 Signposts of a Financially Healthy Congregation (PC USA Stewardship Manual)» 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. 6

7 Signposts of a Financially Healthy Congregation (PC USA Stewardship Manual)» Plans long-range for its program objectives and financial needs. Budget development is a long-term process. 7

8 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. 8

9 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%. 9

10 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. 10

11 Fraud Triangle Model Pressure - perceived financial need Perceived opportunity Rationalization 11

12 General fraud prevention tactics (Brotherhood Mutual Insurance Company) Step 1 Financial Policy Put the church s financial policy in writing Keep expectations consistent and clear Step 2 Prevent plea of ignorance Give those involved in financial matters access to the written policy, so the offender can not claim they did not know Step 3 Conduct annual checks and audits Conduct annual background checks and credit reports on those who have access to church funds Require annual external audits 12

13 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. 13

14 Church Accounting Software: Aplos Software ChurchWindows PowerChurch QuickBooks Shepherdbase ACS Technologies 14

15 Affordable. QuickBooks Advantages 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. 15

16 3 Common Mistakes When Choosing Software bb Considering only one option bb Not getting a trial or demo bb Just asking your friends what they re using 16

17 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? 17

18 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 18

19 Proper reporting Budget vs. Actual January 2015 January 2015 General Fund Actual Budget January Over 12 Month Actual YTD Budget YTD Actual Actual YTD (Under) Budget Income Donations & Offering 110,000 77, ,000 77,500 92,681 90,000 32, ,500 Miscellaneous 500 1, ,667 1,797 1,797 (1,167) 20,000 Rental Income ,053 1,053 (67) 11,000 Income Before Transfers In 111,350 80, ,350 80,083 95,531 92,850 31, ,500 Transfers in 0 0 Endowment 5% Total Returns 264, , , , , , , Total Income 376, , , , , ,359 31,267 1,162,188 Expense Worship 4,541 4,358 4,541 4,358 3,664 3, ,300 Education 338 1, ,396 1,175 1,175 (1,058) 16,750 In-Reach 3,210 2,062 3,210 2,062 2,425 2,425 1,148 22,515 Out-Reach 13,789 18,196 13,789 18,196 12,698 12,698 (4,407) 218,350 Personnel 62,557 58,443 62,557 58,443 62,931 62,931 4, ,837 Operations 6,723 4,871 6,723 4,871 6,965 6,965 1,852 67,450 Buildings & Grounds 17,227 9,808 17,227 9,808 8,668 8,668 7, ,700 Communication 853 1, , (772) 19,500 Discipleship (45) 6,000 Total Expense 109, , , ,260 99,160 99,160 8,434 1,225,402 Net Income 266, , , , , ,199 22,834-63,214 19

20 Fund accounting General Company Ledger Endowment Capital Campaign Revenue Revenue Revenue Pledges Pledges Pledges Cash Offering Cash Offering Cash Offering Check Offering Check Offering Check Offering Endowment Endowment Endowment Rent Rent Rent Total Revenue Total Revenue Total Revenue Capital Fund Day Care Center Total of all Funds Expenses Expenses Expenses Staff Staff Staff Building Building Building Worship Worship Worship Music Music Music Christian Education Christian Education Christian Education In-Reach In-Reach In-Reach Out-Reach Out-Reach Out-Reach Operations Operations Operations Communication Communication Communication Total Expenses Total Expenses Total Expenses 20

21 Review and Questions Signposts of a Financially Healthy Congregation Preventing fraud Choosing accounting software Chart of accounts Reports Fund accounting 21

22 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. 22

23 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. 23

24 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. 24

25 Scenario #3: Missionary support A. 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 25

26 Scenario #4: The Certificate of Deposit When 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. 26

27 Parish Resource Center Kate Good Executive Director of Parish Resource Center Kristina Szoke Manager of Accounting and Reporting Services, PRC Solutions 27