Financial Ministry Customary

Financial Ministry Customary As of 6/2/2016 1. INTRODUCTION This document outlines the financial Customary to be used at The Church of the Epiphany. This document is intended to provide clear guidance to vestry members, ministry leaders, and the congregation on procedures that safeguard church funds and enable prompt payment of debts incurred either directly by the church or by individuals on behalf of the church. The vestry is responsible for approval of the financial policies and procedures. Vestry members are also responsible for monitoring the funds for their individual ministry areas, according to the policies and procedures outlined in this document. Recommendations for changes to this document should be submitted to the Treasurer of The Church of the Epiphany. 2. DIVISION OF FINANCIAL DUTIES Vestry Steward of all the financial resources of the parish a. Oversee the care of all property of the parish. b. Oversee the investment of the funds of the parish. c. Review and approve financial reports. d. Review and approve annual budget. e. Approve all financial and business contracts subsequent to review by appropriate ministry. f. Delegate financial duties only as specified in the Customary. g. Sr. Warden or Jr. Warden to be second signature on checks when necessary. Clerk a. Prepare the minutes of parish annual meetings and monthly vestry meetings. b. Maintain the official records of the parish. Treasurer a. Oversee the processing of all receipts collected, and disbursements made, under the authority of the Vestry. b. Oversee financial reconciliation and controls. c. Receive unopened bank statements. Page 1

d. Present financial reports to the parish at Annual Meetings and to the Vestry at their regular meetings. e. Oversee maintenance of financial records, including those of endowment monies. f. Chair the Finance Ministry. g. Second signature on checks when necessary. h. Prepare draft budget annually, with Finance Ministry. i. Oversee budget review and analysis on a monthly basis. j. Ex-officio member of the Tapestry Society Fund Ministry. k. Organize annual audit of church finances by a certified public accountant, or identifies authorized individuals to be approved by the Vestry to perform the annual audit. l. Compile the financial data for the Parochial Report. m. Review all bank and investment account reconciliations monthly. n. The Treasurer serves a three year term, renewable for an additional three year term. Financial Assistant a. Enter all financial transactions in the accounting system. b. Mail or email pledge statements to parish members at least quarterly. c. Review reimbursement requests for proper documentation and approval authority. d. Generate checks for payment of debts for which documentation is complete, and obtain two authorized signatures. e. Obtain two approval signatures for all direct debits of recurring bills and record in accounting system. f. Maintain the parish financial records. g. Prepare and review payroll for correct payee, hours worked and check amount. h. Prepare financial statements. i. Reconcile all bank statements as well as Tapestry Fund and Alves Outreach Fund investment account statements monthly. Provide to Treasurer for reconciliation review. j. Back up all financial computer system records at least monthly, preferably weekly. k. The Financial Assistant is prohibited from access to checks or cash received and bank accounts, except for limited access for fund transfers under the supervision of the Treasurer. l. Perform other duties as assigned. Counters The counters are six to eight unrelated individuals appointed by the vestry who are deemed reliable, able to maintain confidentiality, and have no involvement with bookkeeping. Two of these individuals will be scheduled each week, and will be rotated on a schedule. Their duties will include, but not be limited to the following: a. Count the alms, pledges, weekly offerings and gifts made to Epiphany and record them as to the source. b. Deposit all offerings in the operating account at Citizens Bank. c. Provide the Financial Assistant with a written record of all funds received as well as a copy of all offering envelopes and checks. Page 2

d. All receipts are to be counted on Sunday by the ushers; verified, finalized, and deposited by the counters on Monday morning. A second deposit will be made on Friday for cash and check receipts from walk-ins, mail, meals or other events that may occur during the week. e. Receipts are stored in a safe until verified and deposited. f. During the counting process, all checks and cash are to be counted twice for accuracy. g. Totals of cash and checks are noted separately and the counting sheet is signed by both counters. h. A deposit slip is prepared with a copy for the bank and a verified copy provided to the Financial Assistant after the receipts have been deposited. i. Deposits are made immediately after counting by one of the counters. j. Copies of all checks, envelopes, the counting sheet and deposit slip are given to the Financial Assistant for recording in the accounting system. (See Appendix B (1)). Tapestry Society Fund Ministry a. Invest and manage the funds which have been designated as endowment by either the donor or the vestry. b. Manage monies in accordance with agreed upon investment philosophy, which has been reviewed and approved by the vestry. c. Maintain investment accounts with current list of personnel authorized for account access. d. Ensure duplicate statements for all accounts are forwarded to the Financial Assistant. e. Make disbursements from the endowment account as authorized by the vestry. f. Tapestry Fund Ministry consists of three named members appointed by the vestry, along with the Rector and Treasurer as ex-officio members. The members will serve three year terms, and can be reappointed to a second three year term, but must rotate off for at least one year. Finance Ministry a. Meet as required to investigate and discuss financial issues facing the parish and prepare recommendations to the vestry. b. Solicit ministry, stewardship and other input as needed in order to prepare a draft budget. c. Prepare draft budget for vestry approval. d. Finance Ministry members include Treasurer (Chair), Stewardship Chair, Wardens, Rector (exofficio) and other members who may be appointed by the Treasurer, not to exceed 7 members. Office Volunteers a. Support office staff by performing various duties. b. Log in all cash and checks received in the Cash Receipts Log, note as to amount, purpose and donor. Write a cash receipt for all cash, place in envelope and secure in safe. Ensure all checks received are stamped For Deposit Only and note in the memo line the purpose of the check. 3. BUDGET Parish Fiscal Year The parish fiscal year runs from January 1 through December 31, in conformance with canons. Page 3

Budget Accounting Policies a. The parish uses a modified cash accounting method for financial statements. b. The budget year corresponds to the parish fiscal year. Budget Development and Approval Process a. October to November Finance Ministry solicits Ministry budget requests for the coming fiscal year. b. October to November Stewardship Ministry solicits pledges for the coming fiscal year. c. November to December Treasurer creates a draft budget for the coming fiscal year by: Estimating pledge income based on pledge cards received Estimating plate income based on historical information Estimating endowment income (if applicable) Estimating expenses based on budget requests, prior year expenses d. November to December Finance Ministry reviews draft budget and makes adjustments in order to arrive at a balanced budget. Revisions to income and expense estimates based on new information are also made at this time. e. December Finance ministry endeavors to present a balanced budget to the vestry based on the information available f. December/January Vestry reviews and votes on proposed draft budget. g. January Vestry submits the proposed budget to the parish at the Annual Meeting for review. Budget Revision Process a. Principle of balanced budget applies during revision process. b. The budget will be reviewed by the Finance Ministry and adjusted as needed after June 30 and September 30. The adjustments will be reported to the vestry by the treasurer. c. Requests by an existing ministry or project for additional funds of less than $500 must be approved by the Finance Ministry and reported to the vestry by the treasurer. d. Requests by an existing ministry or project for additional funds of more than $500 must be approved by the Finance Ministry and the vestry. e. The vestry must approve requests by a new ministry or project for funding. f. All budget revisions must be documented in writing and filed with the financial records of the parish. g. A record of original and revised budgets will be maintained and current working financial statements will reflect the fact that they are revised if this is the case. Page 4

Internal Controls a. Principle of balanced budget applies during development and revision process. b. Monthly review of approved budget versus actual expenditures by the treasurer and provided to Finance Ministry and vestry. c. Requests for funding in any amount by a new ministry subsequent to budget approval must be reviewed and approved by the vestry in order to ensure its consistency with the overall parish mission. 4. EXPENSES AND DISBURSEMENTS Procedures for Expenditures a. All expenditures will be made only from the Operating Account at Citizen s Bank. b. Expenditures may only be made if there exists an approved budget and such expenditures will not put the ministry or account over its approved or revised annual budget. c. Ministry Chair, Project Chair or Manager responsible for the specific budget must verify that they remain within their budget for the year by checking the appropriate box on the expense reimbursement form. d. Request for reimbursement or charitable contribution credit must be accompanied by the expense receipts and/or original vendor bill. e. Expense Reimbursement forms should be filed in the Financial Assistant s office. f. Anticipated expenses that are not part of the approved budget must be authorized through the budget revision process. (See BUDGET, Section 3) Reimbursements/Vendor Payments a. Financial Assistant collects payment requests. b. Financial Assistant reviews payment requests for appropriate approval authority. c. Expense receipts must accompany requests for reimbursement. d. Requests for direct payment to a vendor must include the vendor invoice accompanied by an appropriately approved request for payment form and include the following: The vendor s name, address and phone number Ministry name A description of expenses The expense account number The social security number (or IRS form W-9) of the vendor if not incorporated. e. Financial Assistant insures that the checking account has sufficient balances to cover disbursements and, under the supervision of the Treasurer, makes transfers from other accounts as necessary. f. Once all of the appropriate approvals have been secured, the Financial Assistant generates a check for payment to the vendor. Page 5

g. Financial Assistant generates checks weekly. h. Financial Assistant provides the Junior Warden and the Buildings & Grounds Ministry Members a monthly detailed listing of Buildings & Grounds account expenditures. i. Treasurer reviews and reconciles check payee and amount with expense request forms. j. Treasurer and Jr. Warden, Sr. Warden or other individual authorized by vestry signs checks. All checks require two signatures. k. Checks will be mailed to vendors by an office volunteer. l. Financial Assistant posts checks in the accounting system, and files by payee all payment request forms and approved bills together with the check stub. Travel Expense Guidelines Staff with budgeted mileage expense accounts shall be reimbursed for actual mileage expenses incurred on parish business up to the maximum IRS automobile mileage reimbursement rates in effect at the time of travel. Internal Controls a. Separate duties between person authorizing payment, person preparing checks for payment and person signing check. b. Payments made against original invoices and documents only. c. All source documents filed. d. Expense request form checked against invoice when received. e. All checks have two signatures. f. All checks computer generated, numbered and used in order. g. Disbursements by wire are not authorized. h. Voided checks are cancelled and retained. i. Signing blank checks is prohibited. j. Online payments are limited to credit card bill. k. Online transfers from the Epiphany operating account are limited to the Epiphany Money Market Account, the Rector s Discretionary Account, the Outreach Account, or the Vantage Bank Money Market Account. These transactions are initiated by the Financial Assistant with the approval of the Treasurer. 5. CREDIT CARD USE Credit Card Guidelines a. Personal items may not be charged at any time for any reason. b. There will be NO cash withdrawals. c. Only pre-approved ministry-related items are appropriate to be charged. d. A Church Credit Card Purchase Approval Form with an estimate of the expenditure(s) will be required in advance of the purchase, approved by an authorized individual. In case of emergency, (i.e. major water leak, heating system failure, etc.) it may be necessary to immediately address the situation to safeguard the facility and then seek approval after the Page 6

fact. If this occurs, it will be the responsibility of the Jr. Warden to document the incident with the associated costs and provide this information to the Vestry, Treasurer and Financial Assistant. In these cases, as in any case, verbal, email or text approval may be obtained, to be followed with signature approval as soon as possible. e. The individual requesting the card must maintain custody of the card until it is returned to the church. Credit Card Procedures a. The card will be maintained in a secure location by the Financial Assistant. A copy of the guidelines and procedures will be given to the card user prior to signing out the credit card. b. Monthly credit card limit will not exceed $1,000. c. The requestor must have an estimate of the total expense of the purchases they are requesting PRIOR to requisitioning the card. The card will not be signed out for open ended purchases. d. If the requested charge amount exceeds $1,000, approval must be obtained from the Sr. Warden and/or the Jr. Warden. e. If the requested charge exceeds $2,500 approval must be obtained from the Vestry. f. The card user will sign/initial the credit card user log and the out date will be entered in the log when the card is picked up. g. The card user will be given the credit card and an Expense Record form. The card must be returned within 3 (three) days of the date it is signed out along with marked receipts and an Expense record form with a complete description of the items purchased and the ministry for which the purchase was made. h. When the credit card is returned, the credit card user log will be initialed and dated to record the return of the card and the receipt of the completed Expense Record form. i. The above process will also apply to the Pacific Pride credit card which is used as needed for fuel. Internal Controls a. Card is stored in a secure location with limited access. b. Card is made available only with approved purchase request. c. Receipts are provided when card is returned. 6. RECEIPTS Cash Receipts a. Cash pledges and plate offerings are counted immediately after the service by two ushers, sealed in an envelope with amount noted, signed by both ushers, and put in the safe. b. It is the responsibility of Altar Guild members to count the Wednesday noon service and Wednesday evening service receipts. This should be done by two unrelated individuals. See Appendix B (3). Page 7

c. It is the responsibility of the Vestry Person of the Month to initiate the counting of Sunday morning breakfast receipts and the Wednesday dinner receipts, fill out the envelope and deposit in the safe. This should be done by two unrelated individuals. d. Cash brought to the office is documented in the Daily Receipt Log, noted as to the date, purpose, and donor, initialed, secured in an envelope with the same information and put in the safe. The donor is given a cash receipt Check Receipts a. Checks from the offering plate are counted, and stamped For Deposit Only. The checks are sealed in an envelope with number of checks noted, signed by both counters, and put in the safe. b. Checks brought to the office are stamped For Deposit Only and documented in the Daily Receipt Log, noted as to the date, purpose, check number, and donor, and put in the safe. c. Checks in the Sunday breakfast and Wednesday dinner receipts will be added and noted on the envelope. Special Events a. Funds collected at any special event, including all fundraisers, Wednesday dinners and Sunday breakfasts will be counted by two unrelated individuals. b. Checks will be tallied, stamped For Deposit Only, and recorded on the envelope. c. Cash will be counted, noted as to denomination, totaled, and recorded on the envelope. d. All collections will be put in an envelope, documented, signed by both counters, sealed, and put in the safe as soon as the event is concluded. Deposits a. The week s collections will be taken from the safe and reconciled to the Daily Receipts Book, by two counters. b. The Sunday offerings will be verified. c. All checks will be stamped For Deposit Only, copied and tallied. d. Event envelopes will be copied, and all cash will be verified. e. The count sheet (Appendix B (1)) will be filled out, signed by both counters, and a deposit slip made out. The counters will take the deposit to the bank, and bring the validated deposit receipt back to the Financial Assistant. Reconciliation The Financial Assistant reconciles deposit slips to bank with the record of monies received and reports any discrepancies to the Treasurer. Page 8

Stocks, Bonds, Precious Metals a. Upon receipt of any stocks, bonds or precious metals donated to the church treasury (not for resale as a part of a scheduled fundraiser), the treasurer and/or financial assistant will immediately secure the item(s) in a safe location and notify the Rector and wardens. The treasurer will also notify the vestry as soon as possible, but no later than the next scheduled vestry meeting. b. The item(s) will not be held indefinitely as a part of the treasury. The treasurer, with the wardens and rector s knowledge, will initiate action as soon as possible to find a suitable market to exchange the item(s) for currency. c. Upon the sale, exchange or other disposition of property for which the church signed an appraisal summary or Form 8283, Noncash Charitable Contributions, for item(s) valued at less than $5,000, the treasurer will file Form 8282 Donee Information Return within 125 days after the disposition. A copy of Form 8282 must also be given to the donor. d. For any donated property valued over $5,000, the donor must get a qualified appraisal. The church is not a qualified appraiser for the purpose of valuing the donated property. Internal Controls a. Cash Plate offerings verified by two people upon receipt and immediately delivered to a secure location. b. Amount of Cash Plate offering verified by Counters and signed record maintained. c. Checks are stamped For Deposit Only. d. Treasurer (who is not the party making bank deposits) receives and reviews bank statements. e. Financial Assistant (who has no access to the cash or checks) reconciles bank deposits made by counters with parish record of monies received. f. Standard form used to record plate offerings. g. Statement to donors reflecting check and other envelope contributions. h. Stocks, bonds and precious metals are secured immediately, proper personnel are notified, and items are exchanged for currency as soon as possible. 7. ACCOUNT MANAGEMENT Banking Accounts a. Changes to account instructions, dividend and interest payment directions, addresses and other account specifications require the signature of both the Treasurer and the Sr. Warden. b. The Treasurer is authorized to make internal bank transfers. The Financial Assistant is authorized to make internal bank transfers under the supervision of the Treasurer. c. The Treasurer, Jr. Warden, Sr. Warden and another vestry member approved by the vestry have check signing authority. d. The list of authorized signatures is updated with the banks annually immediately following the Parish Annual Meeting in January. The update is initiated by the Treasurer once the appropriate individuals have been identified and approved. Page 9

Banking Account Reconciliation a. Bank statements provided online, reviewed by the Treasurer. b. Treasurer makes a preliminary review of statement for: Inconsistent check numbers Proper signatures Cash balances Payees Notices of changes to account information c. Treasurer initials statement and forwards to Financial Assistant d. Financial Assistant reconciles accounts within three business days of receipt of statement. e. Reconciliation of accounts includes: Comparison of inter-organizational bank transfers to be sure that parish financial statements reflect both sides of the transaction. Investigation of items rejected by the bank. Comparison of cleared checks with the disbursement journal as to check number, payee and amount. Accounting of check sequence within the month and from month to month. Examination of cleared checks for authorized signatures. Investigate and cancel checks that have been outstanding for more than 6 months. Financial Assistant reports any inconsistencies and changes to account information to Treasurer/Finance Ministry. Treasurer reviews completed bank reconciliation. Completed bank reconciliation filed with financial records of the parish. Restricted Funds All permanently restricted funds are segregated in the financial records and financial reports with a clear indication of the nature of the restriction. Donor s wishes are recorded in the accounting system, and a copy of the information (i.e. check, letter, etc.) is retained in order to document the donor, date, amount and intended purpose of the donation. These funds are used only for their intended purpose. If restricted gift purposes cannot be fulfilled as expected, every effort shall be made to obtain written permission from the actual donors and grantors, or heirs. If the church is unable to identify all of the donors in order to repurpose the gifts, the vestry should meet to determine how such funds should be handled. Donors and grantors may retain the right to request return of gifts or grants when restricted funds will not be used as intended. Donors should be made aware of tax implications if charitable deductions were taken in prior years and those funds are then returned to the donor. Page 10

Discretionary Accounts A vestry resolution is on file for ready reference stating that discretionary accounts may only be used for charitable purposes and may never be used for personal expenses associated with the custodian of these funds. All other church related expenses are processed through the general operating account. Every discretionary account expense must be documented with receipts and the name of the individual or organization that was the recipient or beneficiary of the funds. The independent individual who reconciles this account monthly will also confirm that these records are complete. See also Church of the Epiphany Vestry Resolution Concerning Discretionary Funds, Appendix B(4). Tapestry Society Fund and Other Investment Accounts a. The Tapestry Society Fund is maintained with State Street Global Advisors, Boston, MA, through the Episcopal Church Foundation. b. Changes to account wiring instruction, dividend and interest payment directions, addresses and other account specifications may be made by the Tapestry Ministry Chair, with duplicate account statements reflecting changes sent to the Treasurer and the Financial Assistant. c. The Tapestry Society Ministry is authorized to trade in investment accounts. d. The Tapestry Society Ministry Chair and the Treasurer have withdrawal authority on the investment accounts. e. Withdrawals from the Tapestry Society Fund will be made payable to the Church of the Epiphany Operating Account and deposited or transferred only to that account. f. Access to the Tapestry Society Fund investment account is password protected with only Tapestry Ministry Chair and Treasurer having access. g. The Tapestry Society Fund account password will be changed annually by the Tapestry Ministry Chair following the Parish Annual Meeting in January. h. The list of authorized signatures on the Tapestry Society Fund account is updated as needed upon a change of ministry members. i. The Alves Outreach Fund is maintained with the Diocese of Alabama s Pooled Investment Fund. It is managed by the Tapestry Society Ministry under the authorization of Epiphany Outreach Ministry. j. Records of requests for disbursements from either of these accounts are kept with the financial records of the parish. Investment Account Reconciliation a. Duplicate account statements received and reconciled by Financial Assistant. b. Discrepancies in requested disbursements relative to actual disbursements reported to Finance Ministry and Vestry. c. Changes to account specifications reported to Finance Ministry and Vestry. Page 11

Internal Controls a. All bank statements are received and initialed by Treasurer. b. Notices to changes to account information (i.e. address, dividend instructions, signing authority, etc.) are sent to the Financial Assistant who will notify the Finance Ministry and Vestry. c. Financial Assistant (person without account authorization) reconciles all statements to the accounting system. d. Finance Ministry reviews account discrepancies. e. Financial Assistant (person without account authorization) reconciles investment account activity and reports changes to account information to Finance Ministry and Vestry. f. Financial Assistant receives duplicate statements reflecting account activity and reconciles to disbursement requests. g. Passwords are regularly updated after the annual meeting. h. List of authorized signatures are updated upon each ministry member change. 8. FINANCIAL REPORTING Financial Reports a. Treasurer presents financial reports to the Parish at Annual Meetings and to the Vestry at their regular meetings. b. Treasurer organizes annual audit of church finances. c. Financial Assistant prepares monthly financial statements showing profit and loss compared to budget and a balance sheet. d. Treasurer prepares the financial portion of the annual parochial report. Internal Controls a. Assure periodic review of church financial condition by the Vestry. b. Provide basis for annual audit of financial records and annual parochial report. 9. FUNDRAISING Fundraising Customary From time to time, the parish engages in fundraising activities outside of the annual Stewardship Campaign. Fundraisers may be used to raise funds for either capital, operating, or charitable expenses. The Finance Ministry may make recommendations to the Vestry regarding the need for a fundraiser and the use of any funds generated; however, final approval for any fundraising activity and the use of funds must be given by the Vestry prior to any fundraising activity taking place. Page 12

IRS Compliance All fundraising activities must be conducted in accordance with the IRS guidelines for fundraisers by religious organizations and the laws of the State of Alabama. Budgeting a. Fundraisers designed to generate operating funds will be listed in the operating budget. b. Fundraisers designed to generate capital funds or to repay endowment funds will not be included as part of the operating budget. c. Persons incurring expenses for a fundraiser will follow the same process as outlined in Section 4. Expenses and Disbursements. 10. FIXED ASSETS/PROPERTY Leases and Rentals a. All lease and rental agreements and rates must be reviewed by the Finance Ministry. b. All lease and rental agreements and rates must be approved by the Vestry and authorized in writing by the Sr. Warden or the Treasurer. c. Insurance requirements for lease and rental agreements should be reviewed by the Vestry. Capital Expenditures a. Capital budgets for projects over $2,500 must be prepared by the Buildings and Grounds Ministry with the Junior Warden. They must be approved by the Finance Ministry and must remain within the approved annual budget. b. Any capital project in excess of $2,500 that falls outside of the approved budget must be reviewed by the Finance Ministry and approved by the Vestry. (See BUDGET, section 3). c. Any capital project below $2,500 that falls outside the approved budget must be approved by the Finance Ministry and approved by the Vestry. Page 13

d. Insurance policies should be reviewed by the Finance Ministry subsequent to capital improvements in order to ensure proper coverage. e. Capital Expenditures under $2,500 will follow normal expense procedures as noted below. (See EXPENSES AND DISBURSEMENTS, section 4). f. Properly identify all fixed/capital assets, as follows: A description of the item, and its location Serial numbers or any other identification numbers Cost/value at acquisition Date acquired Funding source Restriction on user or disposition Competitive Bidding a. Any expenditure in excess of $500 requires two competitive bids. b. Any expenditure in excess of $1,000 requires three written competitive bids. c. Bids should be submitted to the Jr. Warden. In conjunction with the Jr. Warden, the Buildings & Grounds Ministry will review and approve successful bids and inform the Finance Ministry and Vestry. Any bid received, reviewed and approved by the Buildings & Grounds Ministry for an unbudgeted item will be presented to the Vestry for final approval. d. The following factors should be considered in reviewing bids and awarding contracts: Cost Bidder's previous record of performance Timeliness of response and delivery Fully Insured Contractors Only References e. Contracts may only be signed by the Sr. Warden, or Jr. Warden. (See FINANCIAL AND BUSINESS CONTRACTS, section 11). Reimbursements/ Vendor Payments Jr. Warden reviews property related vendor bills for accuracy and submits to Treasurer's Office. Internal Controls a. Vestry approves all capital expenditures and dispositions. b. Properly identify property and equipment. c. Establish competitive bidding process for expenses in excess of $1,000. Page 14

11. FINANCIAL AND BUSINESS CONTRACTS Contract Authorization a. The Sr. Warden or Jr. Warden may enter into financial or legal agreements on behalf of the parish, after proper approval by the Vestry. b. Subject to parish Customary, the Vestry may authorize other members to sign contracts. c. No other parishioner or employee of our parish may enter into any financial or legal agreement or any agreement, oral or written, on behalf of the parish. d. No rental agreement may be entered into without the authorization of the Sr. Warden in consultation with the Vestry. Contract Bidding a. Contracts in excess of $500 require two verbal/written bids, if possible. b. Contracts in excess of $1,000 require three written bids, if possible. c. Award of contract subsequent to bidding process can be made only as noted above under Contract Authorization. Brand Name/Sole Source Services Process All contracts awarded under the sole source process will contain the following: a. A brief description of the supplies/services to be acquired. b. A clear, concise statement of the facts justifying the sole source for goods or services. If the justification is urgent, then the time constraint and the reason why only one contractor can meet the requirement shall be explained; and/or If the justification is the unique capabilities possessed by only one contractor, then state the reasons why no other contractor has or can obtain these capabilities and why these capabilities are essential to the church. A statement that the proposed sole source is the only known source that can satisfy the church s requirement. However, statements such as No other sources are considered qualified shall not be considered a basis for sole source justification; and A statement of actions to be taken by the requestor to preclude the necessity for future sole source acquisition of the same supplies/services. c. Requesting ministry shall submit documentation to the Vestry for final approval prior to acquisition of goods or services. IF the reason for the sole source is identified by section b.1. above, a special Vestry meeting or an email vote may be called by the Senior Warden or the Rector for approval. 12. PAYROLL Page 15

Payroll Policies a. Rector should maintain all personnel files to include: Employment application and/or letter of employment Authorization of pay rates and effective dates IRS form W-4 Department of Justice Form I-9 (if applicable) b. Financial Assistant should maintain a record of hours worked with appropriate authorization along with a copy of IRS form W-4. c. The CPA Firm of Dollar & Watson should maintain record of gross pay, deductions and withholding maintained in order to support quarterly tax return filing. Payroll Procedures a. Time sheets prepared by employee and submitted to Financial Assistant monthly on or before the 28 th of the month. b. When applicable, supervisor signature is present on time sheet as authorization. c. Financial Assistant calculates the employee s hours for input into the payroll system. d. PowerChurch payroll module will be used to maintain a record of vacation and sick time. e. Payroll is forwarded to the CPA Firm of Dollar & Watson for on the 13 th and the 28 th of the month for direct deposit processing. f. The payroll register, which includes employee s name, hours, earnings, and deductions is reviewed by the Treasurer monthly. g. Bank statements received by the Financial Assistant and reconciled with internal records. h. Financial Assistant updates financial statements to reflect payroll expense to appropriate cost centers as necessary (i.e. kitchen manager). i. Treasurer reviews payroll expense in the financial statements. j. Treasurer prepares an approved payment request for account payable to all third party deductions. k. The CPA Firm of Dollar & Watson ensures that all payroll tax deposits are made on a timely basis, and the Treasurer ensures that payroll tax returns are filed on a timely basis. Internal Controls a. Supervisors review and approve hours worked when applicable. b. Maintain record of time, attendance and payroll deductions. c. Maintain record of vacation and sick days. d. Financial Assistant maintains record of pay rates and effective dates. e. Separate payroll banking function from payroll preparation function. f. Financial Assistant reconciles processed payroll in the monthly bank reconciliation. g. Insure timely filing of payroll tax returns and payment of tax deposits. Page 16

13. INSURANCE General Guideline a. Responsible stewardship demands protection of the Church's people and property from certain risks. b. It is the responsibility of the Vestry to ensure that the Church's people, buildings and their contents are kept adequately insured. c. The Vestry should review overall insurance coverage at least every other year. Building Insurance a. The determination of current property value is critical for insurance purposes and coverage amounts; the Jr. Warden will ensure that the insured value of parish property is reviewed annually by the Vestry. b. Flood insurance is not included in most property policies. The need for this coverage should be determined by the Vestry. c. Reproduction Cost, Replacement Cost, Sale Value are all distinct and acceptable valuation methods for insurance purposes. Content Insurance a. A complete inventory of parish contents should be maintained with a copy stored in the parish's designated off-site safe storage facility. (A video recording provides excellent detail for this type of record keeping.) b. The Vestry should review content coverage and ensure that significant new purchases are added to the insurance policy at the time of acquisition. Blanket Fidelity Bond The Canons of the Episcopal Church require that money custodians be adequately bonded. The Diocese of Alabama maintains a Fidelity Bond or all parishes and diocesan agencies. This insurance protects against loss from employee dishonesty (including volunteers who handle church funds) and forgery and alteration of documents up to a limit of $500,000 for each parish or agency. The cost of this bond is paid from diocesan covenant funds. The following practices are required by the insurance carrier in the handling of funds: Two signatures are required on all checks. Bank statements must be reconciled each month by a person who is not authorized to make deposits or sign checks. Page 17

Failure of any parish to comply with these requirements may void coverage in the event of a claim. To ensure that adequate protection is in effect, the Vestry is asked to review the above requirements annually and certify that the parish is in compliance with them. This is done with the parish s annual audit report. Workers' Compensation Insurance With few exceptions, the law requires employers to carry workers' compensation insurance on their employees. The Church of the Epiphany pays for this coverage annually through the Diocese of Alabama. Liability Insurance General liability insurance should provide coverage for bodily injury, property damage and personal injury BOTH on and off premises. By definition, an insured should include: Episcopal clergy, employees, Vestry members, Wardens, ministry members, member of boards, directors and trustees of the organization while acting within the scope of their duties as such; any member or volunteer of the named insured but only with respect to their liability for activities for the named insured or activities authorized by and performed on behalf of the named insured. Personal injury liability protection covers such exposure as libel, slander and right of privacy as well as mental anguish and should be included in the comprehensive general liability portion of the policy. Sexual misconduct liability should be part of the protection purchased under the general liability insurance. Sexual misconduct should be explicitly defined in the coverage as sexual abuse, sexual harassment and sexual exploitation. If it does not include these specific items the policy is very limited and should be reviewed. Additional insurance is required if properties are leased by the parish. The need for other types of coverage (as listed below) should be reviewed by the Vestry. Directors and Officers Liability Insurance covers the risk of loss by those serving as officers of a congregation (e.g. Vestry) Umbrella Liability Insurance two fold protection in the case of lapses in the primary policy, usually quite inexpensive. Accident Insurance Boiler and Machinery Insurance/Equipment Breakdown Insurance 14. INDEPENDENT CONTRACTORS Contractor Policies a. The Financial Assistant should maintain all files to include: Letter of Agreement or contracts IRS Form W-9, as appropriate b. The Financial Assistant should maintain record of work done with appropriate authorization. Page 18

Contractor Procedures a. Jr. Warden signs request for payment, contractor work sheet or invoice as authorization that Work was accomplished in accordance with the contract Contractor may be paid in accordance with the terms of the contract b. Prior to receiving pay for work done, all contractors must provide a completed IRS Form W-9 or similar form showing tax identification number (or social security number) and address. c. The Financial Assistant will check the 1099 box in the accounting system for these individuals. d. These individuals or entities should receive a 1099 MISC form after year end, if they received $600 or more of self-employment wages for the year. e. Each January, the Financial Assistant will provide contractor pay information in excess of $600 to the CPA Firm of Dollar & Watson for the preparation of Forms 1099 MISC. Internal Controls a. Jr. Warden reviews and approves work done when applicable. b. Financial Assistant maintains record of compensation. c. Periodic reconciliation of compensation and contractor files. d. Insure timely filing of tax records. 15. COMPUTER SYSTEM PROCEDURES General guideline a. A duplicate copy of active system files should be maintained off site (currently Carbonite). b. The Financial Assistant is responsible for backing up active financial files weekly. Computer back-up procedures The Financial Assistant is responsible for ensuring that Carbonite is backing up the hard drive of the accounting system at least weekly. A hard copy of monthly statements should be kept by the Financial Assistant as part of the financial records of the parish. 16. RECORDS MANAGEMENT Page 19

The Vestry has a custodial responsibility for the records of the congregation. Policies, such as this, will eliminate accidental or innocent destruction. In addition, it is important for administrative personnel to know the length of time records should be retained to be in compliance. Records Management Policies a. A secure off site location will house copies of permanent parish records as well as a record of parish contents. b. A fire retardant safe will be maintained at the parish office for all significant parish documents and other significant records. c. Additional parish records will be kept in a secure location in the parish. d. The Treasurer is responsible for the proper retention of records related to the financial history of the parish. Definitions Permanent Records Permanent records are those that have enduring informational value to the congregation, parish and the community. This value may be administrative (building plans, annual reports), fiscal (trust funds, property inventories, restricted gift documents), legal (meeting minutes, deeds, correspondence), evidential (subject files, publications, photographs), intrinsic (memorial registers, cancelled mortgage deeds). Act of Incorporation Annual Balance Sheet Annual Financial Statements Audit Reports Bequest and Estate Papers Budgets, Approved and Revised By-laws Certificates of title to property Constitution and By-laws with revisions Contracts Conveyances Stewardship records Legal Correspondence Memorial Gifts register Minutes of Vestry, and Ministries Mortgage Deeds Parish Profiles Pledge Registers Customaries Real Estate Surveys Tax Exempt Certificates Page 20

Wills, Testaments, Codicils Other, as noted in Chapter 9 of the Episcopal Church Manual of Business Methods and Church Affairs Definitions Records to be maintained for a maximum of 7 years Records to be maintained for a maximum of 7 years include much of the information relating to the financial and personnel matters of the parish. Personnel Files and Records for all employees until 7 years subsequent to termination. Including: o Application o Job description o Earnings records o Form I-9 o Tax Status forms o Medical records o Attendance and leave schedules o Evaluations o Employment status history o Record of written and oral warnings Financial Records o Account payable files o Bank Deposit Books and Statements o Cancelled Checks o Cash Journals o Check Register, stubs, cancelled o Computer accounting records o Employment Taxes, contributions, payments, withholding o Inactive Contracts o Invoices and paid bills o Payroll o Receipts o Tax Forms o Workers compensation claims o Other, as noted in Chapter 9 of the Episcopal Church Manual of Business Methods and Church Affairs Definitions Records to be maintained for less than 7 years Records to be maintained for a period of between 2 and 7 years include much of the interim (monthly) financial reporting of the parish, and general correspondence Monthly financial statement (2 years) Unsuccessful employment applications (1 year) Page 21

Transactional Correspondence (5 years) Bank reconciliation (2 years) Other as noted in Chapter 9 of the Episcopal Church Manual of Business Methods and Church Affairs Internal Controls a. The Financial Assistant will maintain the safe combination in a secure location together with a record of its contents. b. The Financial Assistant will make an annual review of safe contents to ensure all listed items are accounted for and report any discrepancies to the Vestry. c. The Financial Assistant will maintain a list of the location of all major categories of parish records as well as a detailed list of the location of permanent parish documents. 17. FINANCIAL CUSTOMARY AMENDMENT PROCESS a. This manual should be reviewed annually by the Finance Ministry and Treasurer. b. Proposed amendments to this Customary will be submitted in writing to the Finance Ministry. c. Subsequent to Finance Ministry approval, written amendments will be presented to the Vestry by the Treasurer for final approval. d. A written record of amendments will be maintained in the parish records. 18. APPENDIX A: DEFINITIONS ACCOUNT is a basic unit of double-entry bookkeeping. ACCRUAL ACCOUNTING is the preferred method for congregations. Revenue is reported when earned and expenses are reported in the period for which they are incurred. ASSETS are the accounts on the congregation s Statement of Financial Position that represent the economic resources owned. AUDIT is a structured review of the congregation s books of account to assure that financial statements are fairly stated, to protect the congregation s assets and the persons handling the monies or investments of the congregation. CASH ACCOUNTING is an acceptable method for congregations. Revenue is reported when received and expenses are reported when paid. Page 22

CHART OF ACCOUNTS is an account structure that allows for classification of transactions, preparation of financial statements, and appropriate budgeting. The chart of accounts should set up asset, liability, net asset, revenue, and expense accounts for each fund. DEPRECIATION is the method of reporting the use of assets. The cost of the asset is expensed over the period of its useful life, rather than fully at the time of acquisition. DESIGNATED ACCOUNT is one that has been designated for certain purposes by the Vestry. DISCRETIONARY FUNDS are a class of temporarily restricted or designated funds, the expenditure of which is under the authority of the clergy person, to be used primarily to address the needs of the congregation and community members, in accordance with the Manual of Business methods in Church Affairs. DOUBLE-ENTRY BOOKKEEPING is a system whereby at least two offsetting entries must be made to record a transaction. The entries are referred to as DEBITS and CREDITS. At all times, the total amount of debits must equal the total amount of credits. If so, the books are said to be in balance. ENDOWMENT FUND is one in which the principle of the fund is to be maintained inviolate, with only the income being available for use. The income may or may not be restricted as to its use. FUND is a self-balancing set of asset, liability, and net asset accounts. Funds are used to separate resources whose use may be limited by donors or Vestries. GAAP is the Generally Accepted Accounting Principles that require financial reports and accounting practices to follow certain guidelines. GENERAL LEDGER is a summary account book of all the accounts set up individually. LIABILITIES are the accounts on the congregation s Statement of Financial Position that represent obligations to outsiders. MODIFIED ACCRUAL ACCOUNTING is an acceptable accounting method for congregations. Revenue and expenses are reported either using the cash or accrual method. Usually, expenses are reported using the accrual method and income is reported using the cash method. NET ASSETS are assets minus liabilities. They are equivalent to the retained earnings accounts for a commercial entity. RESTRICTED ACCOUNT is one that has been restricted for certain purposes by the donor. An account is TEMPORARILY RESTRICTED if the terms of its use can be affected by the completion of conditions. An account is PERMANENTLY RESTRICTED if the terms of its use are perpetual. The congregation is legally liable to ensure that the account is used according to the restrictions defined by the donor. REVENUES are the inflow of assets from contributions, sale of goods or services, and investments. Page 23

STATEMENT OF FINANCIAL POSITION is the primary financial statement that provides information about the congregation s assets, liabilities, and net assets, and about their relationship to each other at a particular point in time. The statement is sometimes called a Balance Sheet. STATEMENT OF ACTIVITIES provides information about: (1) the effects of transactions and other events and circumstances that change the amount and nature of net assets; (2) the relationship of those transactions or other events to each other; and (3) how the congregation s resources are used in providing various programs and services. The statement is sometimes called the Income Statement or the Statement of Cash Receipts and Disbursements. Page 24

19. APPENDIX B: FORMS 1) Count Sheet and Instructions 2) Purchase Request Form 3) Event Collection Envelope 4) Vestry Resolution on Discretionary Funds Page 25

Appendix B (1) Count Sheet and Instructions The Church of the Epiphany Date Count and List CHILREN S OFFERING, BREAKFAST MONEY, SODA MONEY (if any), WEDNESDAY DINNER AND WEDNESDAY OUTREACH AND CONTRIBUTIONS and record below. INDIVIDUAL OFFERINGS - USHERS CASH + CHECKS # OF = TOTAL CHECKS CHILDRENS OFFERING $ $ $ OFFERING IN ENVELOPES $ $ $ OFFERING CASH (BILLS + COINS), CHECKS $ $ $ OTHER $ $ $ SUB TOTAL $ $ $ COUNTED BY: SIGNATURE/PRINT NAME DATE SIGNATURE/PRINT NAME DATE USHERS DO NOT COMPLETE BELOW THIS LINE COUNTERS CASH + CHECKS # OF CKS = TOTAL SUB TOTAL (Please enter subtotal from above) $ $ $ BREAKFAST (COUNTED ON MONDAY) $ $ $ WEDNESDAY DINNER (IN ENVELOPE) $ $ $ WEDNESDAY SERVICE (Healing & Outreach) $ $ $ OTHER $ $ $ LOG BOOK $ $ $ GRAND TOTAL $ $ $ TOTAL CURRENCY - COUNTERS Ones Fives Tens Twenties $ $ $ $ Other (50 s, 100 s) $ Coins Total Amount $ $ TOTAL AMOUNT OF COINS AND CURRENCY........$ CHECKS Number of Checks (Make copies of checks) TOTAL AMOUNT OF CHECKS... $ GRAND TOTAL (Checks and Currency).... $ Verified by & Date: Page 26

INDIVIDUAL OFFERING SECTION - USHERS INSTRUCTIONS 1. Take Counting form from drawer and complete as follows. 2. Carefully count each envelope. Please place total amount of cash in the cash column and the total amount of checks in the checks column that corresponds with the envelope name. MAKE SURE IT IS NOTED ON THE MEMO LINE OF CHECK WHAT THAT CHECK IS FOR. (Children s Offering ETC) Also count the physical number of checks and place in the # of checks column. ALSO STAMP EACH CHECK WITH THE DEPOSIT STAMP. Place cash and checks back in corresponding envelope. Total the amount of each row that corresponds with the envelope and place Total Amount in the Total Column 3. Notice there is a row for OFFERING ENVELOPES AND OFFERING CASH. Offering Envelopes This will be mostly cash but count and place on form separately from the loose cash in the offering plate. Place money back into envelope Offering Cash This will be the amount of bills and coins that are loose in the offering plate. Checks Loose Check Total may be placed in column for Checks on the Offering Envelope Line. 4. Total each vertically column: CASH CHECKS # of CHECKS TOTAL Then add the Total Column horizontally. The total column should equal vertically and horizontally. Please sign and date. Place form and money in bank bag and place in safe. AMOUNT OF CURRENCY - COUNTERS 1. Take money from envelopes. As you take money out verify amount of cash and checks that ushers calculated and physical #of checks per envelope. Then place cash together by face value. MAKE COPIES OF ALL ENVELOPES AFTER VERIFYING AMOUNTS. MAKE SURE IT IS NOTED ON THE MEMO LINE OF CHECK WHAT THAT CHECK IS FOR. AFTER VERIFYING COPY SUB-TOTAL AMOUNTS TO THE COUNTERS SUB-TOTAL LINE. COUNT AND ENTER BREAKFAST AND OTHER ENVELOPES SUCH AS HEALING SERVICE ETC. (WEDNESDAY ENVELOPES WILL BE FOR COUNTERS ON FRIDAY). 2. Total the cash by face value and place in appropriate space provided. 3. Then calculate the Grand Total of cash. The Grand Total amount of cash should equal Grand Total amount of cash in the Individual Offering Section. 4. Take all checks and make copies. Please place checks on the copier so the copy will run vertically on the page. It will take more checks to fill the page using less paper and making it easier to input data. Page 27

5. Run a tape calculating the amount of the actual checks and number of checks, also run a tape using the copy of the checks. Verify totals match and then place total in Total amount of checks space. Also enter the number of checks in space provided. The total amount of checks should equal Total Amount of Checks in the Individual Offering Section. STAMP CALCULATING TAPE WITH DEPOSIT STAMP and place with Checks. 6. Your Grand Total is the total amount of cash and checks and this amount should equal the Grand Total Amount in the Offering Section. 7. Sign the VERIFIED BY line and complete deposit, both counters take deposit to bank or place deposit in night deposit bag, lock and one counter take to bank and return the deposit slip to the Financial Assistant immediately. Page 28

Appendix B (2) Church of the Epiphany Purchase Request Form Church of the Epiphany Purchase Request Form How to request a purchase 1) Complete "Item Description, Budgeted (Y/N) Budget Line and Amount" section of form and sign as Requestor. 2) Have Budget Line Item Approver (see list on back) sign BEFORE purchase 3) Complete purchase of items requested and fill-in bottom portion of form. 4) Attach receipt or invoice to form and return to file box in the church office. Purchased From & Item Description Budgeted Budget Line to be Charged Est. Amount Actual Amount Yes / No Yes / No Yes / No Yes / No Yes / No Yes / No Yes / No Yes / No Requestor s Name Requestor s Signture/Date Approver's Signature/Date Purchase Method: (circle one Check Church Credit Card In-store church account Personal (to be reimbursed) Other Purchase Date Payable To: Address: 2015 Church of the Epiphany Page 29

Purchase Authorization List Page 30