A.        There are five persons that are necessary and certain equipment is very helpful for a secure system. First let us think about the persons. You will need two persons who will count, record and report gifts, and deposit all funds. You will also need two persons who will review all bills, pay legitimate bills and obligations, and create a monthly and year-to-date budget report. Lastly, you will need a person who will reconcile the bank statement and the church’s financial books.

 

            For equipment, it is very helpful to have a photocopy machine, a personal computer - PC or MAC, four USB flash drives, two for the counters and two for the Treasurer, some bookkeeping software, an adding machine, and a safe. There are many bookkeeping programs, but I am most familiar with QuickBooks for Non-Profits. It is easy and can do everything you need to have done from recording and reporting the gifts of each giver to writing checks and generating financial reports.

 

            Supplying to givers a report of their gifts allows them to make sure that all of their gifts have been received and recorded for the purpose they intended. Issuing monthly and year-to-date budget reports allows the board and congregation to oversee both income and expenses.

 

            These actions will not only supply the double custody, separation of functions, and oversight needed, they will also provide adequate records so that all transactions can be tracked.

 

 

A.        In general, there are two categories of income, gifts and everything else. Monies also come in at basically two times, Sunday morning and during the week. Gifts, rents, reimbursement checks, etc. that come in during the week should be placed in the safe by the person opening the mail. By holding this money in the safe it can be included with the Sunday offerings allowing just one deposit to be made each week. (The safe should be in an out of the way place, not in the office, perhaps in the heating system equipment room, where people will not see it, and few will even know it exists.)

 

            Monies that come in during the week will be retrieved from the safe by the counters and included with the Sunday offerings. From the time the ushers complete taking the offering until it is in the bank it must be in the custody of two persons. These persons are often called the Financial Secretary and the Assistant Financial Secretary. Using the Counter’s Sheet follow the process outlined below. (A copy of the counter’s sheet is at the end of the article.)

 

            1. When you begin date the Counter’s Sheet and both counters sign it.

 

            2. Each counter should go through the whole counting process completely. This should be done independently from the other counter. One might add up the checks while the other counts the cash and coin, and then reverse the process. In this way both will count all of the money and total it independently.

 

3. Once both counters have totaled all of the checks, cash, and coin compare the totals.   When the totals agree the counters can begin filling out the Counter’s Sheet.

 

            4. List the checks by name of giver and amount on the back of the Counter’s Sheet. 

 

            5. If the giver has noted that the amount of the check is to be divided between Gifts to the Budget and other items, please note that showing how much of the check should go to each item. This will allow correct posting to be done to their giving report for tax purposes, confirming with them that their money went where they wanted it to go, and it will assure that monies are credited to the appropriate projects in the account register.

 

            6. Photocopy all the checks - several can be placed on the copy window at a time.

 

            7. Make out the bank deposit slip and attach to it an adding machine tape showing each check amount, cash total, coin total, and the deposit total.

 

            8. Confirm that the Total Deposit amount balances with the counts you made in Step 2 above.

 

            9. Then fill out the front of the Counter’s Sheet and show the section totals as well as the Total Deposit amount.

 

            10. Make a photocopy of the deposit slip and give it to the person who will reconcile the bank statement.

 

            11. Enter the amount of the deposit in the checking account register, either by hand or in the computer software, and note the amount of any specific gifts given to non-budget items.

 

            12. Record the gifts of donors on their record of giving forms, either by hand or in the computer. Be sure to list the destination of the gift; budget, special project, mission offering, memorial gift, etc.

 

            13. Take the deposit to the bank and place it in the Night Deposit opening. I strongly recommend only doing business with a financial institution which offers Night Deposit service. Ask the bank to mail the deposit receipt to the person who will reconcile the bank statement.

 

            14. Photocopy only the front of the counter’s sheet and give it to the person reconciling the checking account to the bank statement. 

 

            15. File the counter’s sheet, photocopies of checks and other indications of the amount of a contributor’s gift in a secure place.

 

            16. If the record of gifts is kept on a computer back up the records on a USB flash drive and store the back up copy away from the church. This will enable the records to be recreated if the computer is stolen or damaged.

 

            17. The next time you backup the records use an alternate USB flash drive.

 

 

A.        Yes, there are a number of steps, but each one will help assure secure handling and recording of income, but the process moves quickly once the counters are accustomed to it. None of the steps should be skipped. Some churches arrange with their bank to drop off the money uncounted on Sunday afternoon and the Financial Secretary and Assistant go to the bank on Monday, retrieve the Night Deposit bag and then count and record the monies. Other churches return the monies to the church’s safe until Monday. If this is done the safe should use double security. This can be done using a safe with both a combination and key lock, or give part of the combination to one person and the rest of the combination to the other person. If this is to be done, make sure there are two persons available to open the safe during the week as monies are received.

 

 

A.        A chart of accounts needs to be created. This sounds a great deal more complicated than it is. Most church budgets have several income categories and expense categories. A chart of accounts is simply a way of organizing those categories. A sample chart of accounts is shown below.

 

            Income

                        Gifts to the Budget

                        Rentals to the Budget

                                                Totals to the Budget

 

                        Gifts to Special Projects

                                    WMO

                                    AFC

                                    OGHS

                                    MMBB

                                    Youth Mission Trip

                                                Totals to Special Projects

                                                Total Income

 

 

            Expenses

                        Building Operations

                        Ministry Programs

                        Personnel Costs

                        Mission Giving

                                                Total Expenses

 

 

A.       1. Near the first and fifteenth of each month the Treasurer and Ast-Treasurer will work together to review the bills to make sure all purchases are legitimate, create, and sign checks to pay the bills and obligations. The review of the bills is important so that the church does not pay for things it did not buy, such as someone else’s purchase being posted to the church’s account. The review is also important to make sure that no personal items have been charge to the church accounts.

 

            2. They will mail the checks to pay bills or give the checks to the appropriate persons.

 

            3. If a computer is being used, each time the Treasurer pays bills the books shall be backed up on a USB flash drive and the backup copy removed from the property. This is important so that records can be recreated in the case the church computer is stolen or destroyed. The next time the books are backed-up an alternate USB drive should be used.

 

 

A.        1. The bank records reconciler will receive from Financial Secretary and Assistant a copy of the front of the Counter’s Sheet, the deposit receipt from the bank, and the monthly bank statement showing the amounts deposited during the month. These amounts must agree.

 

            2. This person shall go on to complete the reconciliation of the statement.

 

            3. This person shall also draw to the attention of the Treasurer and the Board any checks uncleared for more than two months or any other unusual or suspicious transactions.

 

            4. Once the accounts are reconciled a reconciliation report shall be printed out with copies given to the Treasurer and the Board.

 

            5. The reconciliation report shall be attached to the bank statement and placed in the file for that account.

 

 

A.        You can protect this data by using passwords. In QuickBooks you can set up one password for the records of gifts and another password for the bank accounts records. If you do this only those authorized to access the information should have the passwords, and choose passwords that are not easily guessed.

 

Q.        I think you mentioned an audit. What is that?

 

A.        An audit is a review of account activity by a person or persons who have not been involved in the day-to-day financial activities. The United Methodist Churches produce an excellent Audit Guide for smaller churches that cannot afford a CPA. They have given permission for our churches to download and use the instrument so long as you do not use it for profit or sell it. It can be obtained at www.gcfa.org/PDFs/Local_Church_Audit_Guide.pdf . One recommendation they make is that a couple of similar size churches audit each others books.

 

 

A.        Yes! Studies have shown that most regular contributors give less during the year than they had planned. This is because they will miss a gift or two and then either forget their commitment and stop giving for the year, or just never catch up. And effective solution, can easily raise giving by 15 to 20 percent in many churches, is instead of distributing the offering envelopes at the beginning of the year send the envelopes for one month each month with a letter. The letter can be to promote some special offering, in which case it would include the envelope for that offering. The letter might be seasonally inspirational, Thanksgiving, Memorial Day, or highlight some activity in the life of the congregation. The letter does not need to mention giving at all, but with the giving envelopes in it, people will be reminded. This is a proven way to increase giving and help remind those who mean to give more than they might otherwise during the year.

 

Q.        If we need help can we contact you?

 

A.        Yes, of course! Lou Engle, 1059 Piper Sonoma, Eugene, OR 97404, 541-688-2168, This e-mail address is being protected from spambots. You need JavaScript enabled to view it .