Anxiety? Anger? Fear? Resistance? THANK YOU, IRS! PDF OF THE SLIDES 3/9/17 THE CHURCH AUDIT: YOU CAN DO THIS! THE ANNUAL CHURCH AUDIT

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1 07 Discipleship Ministries. Permi sin is given fr use in United Methdist cngregatins, districts, and a nual cnferences with this nte included. 07 Discipleship Ministries. Permi sin is given fr use in United Methdist cngregatins, districts, and annual cnferences with this nte included. This Webinar is made pssible b yur church s generu supprt f the Wrld Service Fund. Thank yu fr yur faithfulness. PDF OF THE SLIDES Fr PDF f slides me: Jasn Klees, Hst WebEx Cnsultant & Tech Supprt Ken Slane, Presenter Directr f Stewardship & Cnnectinal Giving WHY IS THERE SO MUCH Anxiety? Anger? Fear? Resistance? THANK YOU, IRS! THE CHURCH AUDIT: YOU CAN DO THIS! Jasn Klees, Hst WebEx Cnsultant & Tech Supprt This Webinar is made pssible by yur church s generus supprt f the Wrld Service Fund. Thank yu fr yur faithfulness. Ken Slane, Presenter Directr f Stewardship & Cnnectinal Giving 07 Discipleship Ministries. Permissin is given fr use in United Methdist cngregatins, districts, and annual cnferences with this nte included. 07 Discipleship Ministries. Permissin is given fr use in United Methdist cngregatins, districts, and annual cnferences with this nte included. PDF OF THE SLIDES WHY IS THERE SO MUCH Fr PDF f slides me: THE ANNUAL CHURCH AUDIT needs sme better PR It is a pr, misunderstd part f the life f the THE CHURCH AUDIT: YOU CAN DO THIS! This Webinar is made pssible by yur church s generus supprt f the Wrld Service Fund. Thank yu fr yur faithfulness. 07 Discipleship Ministries. Permissin is given fr use in United Methdist cngregatins, districts, and annual cnferences with this nte included. 07 Discipleship Ministries. Permissin is given fr use in United Methdist cngregatins, districts, and annual cnferences with this nte included. Fr PDF f slides me: PDF OF THE SLIDES THE ANNUAL CHURCH AUDIT needs sme better PR It is a pr, misunderstd part f the life f the THE CHURCH AUDIT: YOU CAN DO THIS! THANK YOU, IRS! Anxiety? Anger? Fear? Resistance? Jasn Klees, Hst WebEx Cnsultant & Tech Supprt Ken Slane, Presenter Directr f Stewardship & Cnnectinal Giving WHY IS THERE SO MUCH Anxiety? Anger? Fear? Resistance? THE ANNUAL CHURCH AUDIT needs sme better PR THANK YOU, IRS! It is a pr, misunderstd part f the life f the

2 THE UNITED METHODIST CHURCH The Cmmittee n Finance is required t make prvisin fr an annual audit f the recrds f all the financial fficers (including the financial secretary r church business manager and treasurers) f the church and all its rganizatins and shall reprt t the Charge Cnference. Guidelines fr handling f an accuntability f funds can be fund in the 0-0 United Methdist Church Financial Recrds Handbk and in Guidelines fr Leading Yur Cngregatin: FINANCE available at and The Lcal Church Audit Guide*, available at Cpies f this reprt shuld be filed with the recrding secretary, pastr, district superintendent and chairpersn f the cmmittee n finance Church Charge District Annual Cnference Fr the perid beginning, and ending December,. Receipts, Disbursements, and Balances (Rund t the nearest dllar) LOCAL CHURCH FUNDS (Use thse applicable t yur ) General Fund Benevlence Fund Building r Imprvement Fund Bard f Trustees' Fund United Methdist Wmen United Methdist Yuth Fellwship United Methdist Men Church Schl Name: Ttal amunt f cash in all treasuries f the church (a) Balance at Beginning f Perid (b) Cash Received and Recrded *(c) Ttal Disbursements fr Perid (-) Other Organizatins r Funds (enter name): CHARGE CONFERENCE *(d) Transfers + (-) (e) Balance End Of Perid WHAT INCREASES THE STRESS CHURCH AUDIT IS NOT When the audit is nt cnducted regularly, it mves frm being an rdinary part f the lifecycle f the church t smething extrardinary and therefre negative. Criminal Investigatin Witch Hunt Inquisitin Threat Pwer Play Vendetta Treasurer 7 8 CHURCH AUDIT IS NOT WHAT IS THE CHURCH AUDIT? getting sme numbers n the frm, getting it signed and getting the DS t take it with her r him after charge cnference. Fund Balance Reprt THIS REPORT IS TO BE COMPLETED AFTER THE END OF THE YEAR THIS REPORT DOES NOT NEED TO BE INCLUDED WITH YOUR OTHER CHARGE CONFERENCE FORMS Audit, the term as used in the Discipline, is meant t be a prcess that prvides reasnable assurance that gd stewardship is being used in handling and accunting fr the funds and ther assets f the lcal - Lcal Church Audit Guide (0) 9 0 WHAT IS THE CHURCH AUDIT? A lcal church audit an independent evaluatin f the financial reprts and recrds f the internal cntrls f the lcal church by a qualified persn r persns fr the purpse f reasnably verifying the reliability f financial reprting, determining whether assets are being safeguarded, and whether the law, the Discipline, and plicies and prcedures are being cmplied with. -- Lcal Church Audit Guide (0)

3 Grups t be Included in the Audit We Methdists are instructed by the Discipline t audit nt nly Internal the financial Cntrls ffices f Review the lcal church, but all its rganizatins. That means that the treasuries that are t be audited include: As part f the audit, it is essential that the internal cntrl structure fr receipts electric and bill, etc.) may be paid withut recurring apprval; nn-rutine expenses must be disbursements prcedures be reviewed regardless f the size f the The Trustees if their funds are held separately apprved internal prir t payment. cntrl structure is the prcess that assures the lcal church s peratinal efficiency and Memrial Fund (if any) effectiveness, that its financial reprting is reliable, that it is cmplying with the Discipline and Lcal Church Fundatin r Endwment funds with laws, and that its assets are safeguarded. The internal cntrl prcess Reprting shuld be and in place Review All ther separate treasuries r bank accunts maintained by a grup using the same n paper as well as in practice. Internal cntrl systems that are nly plicy and are nt emplyer s tax identificatin number as the church, including, fr example: enfrced are n better than having n system at all. United Methdist Men All accunts shuld be recnciled mnthly Pastr s discretinary fund Smene ther than treasurer shuld review bank recnciliatin at least semiannually The fllwing guidelines are intended t assist thse with financial respnsibilities United Methdist Yuth fund including lcal bank statements, invices, checks written, and financial reprts churches t identify and implement basic internal cntrl prcedures. These Church schl minimum The Treasurer shuld make detailed reprt f budget and designated fund activities t standards shuld be increased fr churches with higher vlumes f transactins, the and Finance shuld Cmmittee be at least quarterly Others cnsidered fr lwer vlumes f transactins. Ideally, all lcal churches will meet these minimum standards and these prcedures shuld be reviewed t ensure practice f each f In additin, the accunts held by the United Methdist Wmen these (UMW) during at each the annual church evaluatin. shuld Tax Reprting Requirements be audited each year. UMW funds are different frm ther church ffices in that, accrding t The Bk f Discipline, they are wned by the UMW lcal unit and are nt wned by the lcal W-s must be issued fr emplyees, including pastrs, and 099s issued fr Cnsequently, the funds shuld nt be cnslidated with Receipts all ther and funds. Disbursements The financial nnemplyee cmpensatin by January fr preceding year (federal law requirement) reprting, prcedures perfrmed and results f prcedures perfrmed shuld be presented Payrll tax frms and depsits dne as required fr payrll amunt (federal law separately. Treasurer and Financial Secretary shuld nt be the same persn and shuld requirement) nt be in payrll reprting shuld be cmpleted fr the IRS and SSA by the same immediate family residing in the same husehld apprpriate due date fr filing methd Cunting team (at least tw unrelated persns) shuld cunt fferings and Husing dcument allwance r exclusins apprved annually at charge cnference and kept n Infrmatin Required fr the Audit ttals nt treasurer and nt financial secretary file (federal law requirement) Offerings shuld be depsited the same r next business day Fr audits perfrmed by a qualified member f the church r ther vlunteer, Offering the cunt persn(s) details shuld be given t financial secretary fr recrding must btain access t the fllwing infrmatin and materials (at a minimum) Offering during ttals shuld the audit: be given t the treasurer r financial secretary Other t General recrd depsit Requirements The Financial Secretary s depsit lg shuld be cmpared t the bank statement t. Cpies f all church plicies and prcedures related t finance and verify treasury depsits functins (by bank recnciliatin reviewer) Prepare list f all church prperty fr insurance purpses include item descriptin, and cpies f minutes apprving thse plicies. At least tw persns shuld be listed as authrized signatures n all accunts. serial number This and value. Cpies f all minutes frm the finance cmmittee, the trustees, shuld the administrative als be the case fr setting up electrnic payments (r EFTs). Fr Prepare EFTs, ne list f safety depsit bx cntents update authrity as needed access shuld bard, the previus charge cnference(s), and any ther entity thse listed individuals n the prir shuld page. be a Trustee r a member f the Finance Cmmittee be allwed (ther by tw unrelated peple. Listing f all bank and investment accunts, including the persn than authrized the Secretary t sign r n Treasurer). Cmputer recrds are backed up and passwrd prtected fr security each, and including any special use accunts under the cntrl The f the Treasurer pastr(s) is and authrized in t make electrnic payments f bills. The Treasurer Ideally, fur shall individuals are required fr regular financial prcedures: financial secretary, the name f the maintain supprt fr every electrnic payment just as with the supprt treasurer, fr paper persn t review and apprve invices and persn t review bank. All financial statements fr each mnth f the year, plus December checks. f the prir year and recnciliatins. It is pssible fr this t be accmplished with individuals if prper January f the subsequent year (a furteen mnth perid). Financial plicy and authrity guidelines shuld be written and apprved segregatin by the Finance is achieved.. Bank and investment accunt statements fr the same perid. Cmmittee (there is a template available n the Cnference Treasurer s Office website).. Bank recnciliatins fr that same perid. Invices shuld be required fr all payments frm all accunts The steps utlined in this sectin have been cmpiled int a checklist fr easier use during an 7. Original bks f entry, which will be the general and subsidiary Smene jurnals; ther fr thse than the treasurer (with authrity by Finance Cmmittee) audit. This shuld checklist is included as Appendix B. When all the audit review steps have been bks that are cmputerized, a print-ut f all transactins by accunt apprve fr invices the entire fr payment cmpleted, the auditr shuld review the wrk dne with the church treasurer and financial year. Typically, the Treasurer shuld make payments nly after the invice secretary, is apprved. endeavr A t answer any lingering questins, then cnsider preparatin f the reprt plicy may be implemented where rutine, budgeted expenses f (i.e., the rent/mrtgage, audit. Rev. 0 Page 7 f 0 Rev. 0 Page 9 f 0 Rev. 0 Page 0 f 0 ULTIMATE GOALS OF AUDIT. Prtectin fr lcal church leaders. Trust and cnfidence f dnrs. Cntinuity in turnver. Accuntability & transparency. Restrictins are respected. Checks & balances fr funds received and expended. MARY WAS THE TREASURER FOR 0 YEARS. DOES MY CHURCH NEED AN AUDIT? Every lcal DOES MY CHURCH NEED AN AUDIT? The lcal church Finance Cmmittee shall make prvisins fr an annual audit f the financial statements f the lcal church and all its rganizatins and accunts. DOES MY CHURCH NEED AN AUDIT? The lcal church Finance Cmmittee shall make prvisins fr an annual audit f the financial statements f the lcal church and all its rganizatins and accunts. The cmmittee shall make a full and cmplete reprt t the annual charge cnference. ( 8.d). 7 8

4 YOUR CHURCH S ANNUAL INCOME? Less than $0,000 $0,000 t $00,000 $00,000 t $0,000 $0,000 t $00,000 $00,000 t $70,000 $70,000 t $ millin Mre than $ millin DO WE NEED A PAY FOR AN AUDIT? Accrding t GCFA s Guide If receipts are less than $00K/year, a vlunteer audit cmmittee is fine. Receipts mre than $00K, then the recmmendatin is fr a CPA cnducted audit (cnsult the Audit Guide). 9 0 Lcal Church Audit Guide Recmmended Prcedures Appendix A. Obtain a cpy f () the previus year end s balance sheet (statement f financial psitin) and statement f incme and expenses (statement f activities) fr the year then ended and () the balance sheet and year- t- date statement f incme and expenses available as f the end f the current year (the Test Perid ). Fr bth sets f statements, agree each amunt n such financial statements t the crrespnding amunts in the church s general ledger. (Nte: The statements used shuld be the same nes prvided t and used by the church s Finance Cmmittee.). Using the balance sheet as f the end f the Test Perid, identify any credit accunt balances included in the Assets sectin f the church s balance sheet r debit balances included in the Liabilities r Equity r Net Assets sectins f the balance sheet. Fr all such balances identified, btain an explanatin frm the church s accuntant f the nature f the accunt and why it has a credit (fr asset accunts) r debit (fr liability r net assets accunts) balance. Summarize such explanatin(s) in yur reprt t the finance cmmittee.. If the balance sheet at the end f the Test Perid reflects an accumulated deficit, ask the church s accuntant t explain the surce r surces f the funding fr that deficit, and prvide the explanatin in the final reprt t the Finance Cmmittee. (Nte: surces f funding fr the deficit might include ne r mre f the fllwing: bank brrwings, negative wrking capital (e.g., accunts payable and ther shrt- term liabilities exceed cash balances), restricted assets used t supprt nging church peratins).. Cash balances - Obtain cpies f the mnthly bank statements and crrespnding bank recnciliatins fr each church bank accunt fr the end f the Test Perid and fr ne ther mnth end during the Test Perid, and perfrm the fllwing: a. Agree the balance per bank frm the recnciliatin t the crrespnding ending balance f the bank statement, and the balance per bks (r general ledger) t the crrespnding amunt in the church s general ledger. b. If any bank statement cash balance exceeds $00,000, btain written cnfirmatin f such balances directly frm the bank r banks. c. If there are depsits in transit included in the bank recnciliatins, agree such amunts t the fllwing mnth s bank statements. If such depsits are nt recrded by the bank in the church s bank statements in the fllwing mnth within three business days fllwing the preceding mnth end, btain an explanatin fr the delay frm the church s accuntant, and include that explanatin in the final reprt t church s Finance Cmmittee. d. If there are utstanding checks included in the recnciliatins, select fifteen checks frm the fllwing mnth s bank statement(s) that have dates n r befre the date f the end f the bank recnciliatin tested. Agree the amunts f selected checks t the crrespnding utstanding check amunts included in the list f utstanding checks included in the bank recnciliatin being tested. (Fr example, t test the cmpleteness f the list f utstanding check list used in the bank recnciliatin fr December 0, select checks frm the January 0 bank statement with dates n r befre December, 0) and agree them t the crrespnding amunts included n the December 0 bank recnciliatin.) e. Prve the mathematical accuracy f the ttal dllar amunt f utstanding checks included in the bank recnciliatin(s) by adding the list(s) f utstanding checks and agreeing that amunt t the ttal amunt used in the bank recnciliatin(s). Page f 0 Appendix A leads yu, step by step, thrugh the audit prcess. Cmpare the reprts f treasurer and financial secretary with bank statements, invices, etc. Fllw the mney! Hw is it treated at different steps alng the way (plate dnatins, electrnic r mailed dnatins, depsits, etc.) Dcument that dnr designated mney and incme earned frm designated funds are being used crrectly.

5 Review accunting cntrls systems that reduce the pssibility f lss, inapprpriate use f funds, r errrs. Segregatin f Duties assurance that mre than ne persn is invlved in critical steps in handling mney s that there can be checks and balances. Reasnableness f systems and prcedures in light f all factrs, including the size f the church and its budget. 7 7Recrds that shw dnr s intent fr the use f gifts made t the lcal 8 Cnfirm that tax reprting requirements are being met in a timely manner Review church prperty and insurance plicies, nting values and when they were last updated. 0

6 Review maintenance f imprtant church recrds (and access). Are electrnic recrds backed up regularly? Paper dcuments kept safely? 0 WHO YA GONNA CALL? A church member, accunting experience Smene in the banking field Smene wh manages a business Great: smene nt yet in leadership Tw r mre are great. NOT: treasurer, financial secretary, finance chair (relatives f any f these) AUDIT TEAM EXCHANGE? GET REQUIRED INFORMATION READY ü Treasurer, ü Financial Secretary, ü Finance Chairpersn separately. Infrmatin Required fr the Audit Fr audits perfrmed by a qualified member f the church r ther vlunteer, the persn(s) must btain access t the fllwing infrmatin and materials (at a minimum) during the audit:. Cpies f all church plicies and prcedures related t finance and treasury functins and cpies f minutes apprving thse plicies.. Cpies f all minutes frm the finance cmmittee, the trustees, the administrative bard, the previus charge cnference(s), and any ther entity listed n the prir page.. Listing f all bank and investment accunts, including the persn authrized t sign n each, and including any special use accunts under the cntrl f the pastr(s) and in the name f the. All financial statements fr each mnth f the year, plus December f the prir year and January f the subsequent year (a furteen mnth perid).. Bank and investment accunt statements fr the same perid.. Bank recnciliatins fr that same perid. 7. Original bks f entry, which will be the general and subsidiary jurnals; fr thse bks that are cmputerized, a print-ut f all transactins by accunt fr the entire year. Rev. 0 Page 7 f 0 FOLLOW THE ROADMAP! QUESTIONS? THANK YOU!

7 Thursday, May, 07, :0PM CDT Electrnic Giving: What Are Yu Waiting Fr? Mney has gne digital, cmmunicatin has gne digital, educatin has gne digital the church can embrace the digital culture withut lsing the human relatinships that mean s much t all f us! Jin us as we share sme f the ways stewardship can (and must) thrive in the digital wrld! Thursday, July, 07, :0PM CDT The Annual Campaign Tlbx Will yur church be planning an annual campaign this year? It is an imprtant piece, but it is just a piece f what culd (and shuld) be a larger stewardship strategy fr yur Jin us as we explre the annual campaign resurces, time-tested tls and a year-rund strategy t keep genersity befre yur peple all the time! 7 7