Operations 103Finances 1. Cash & Fungible Assets 2. Income
3. Expenses 4. Budgets 5. Reporting 6. Audits & Financial
Reviews 7. Financial Health 8. Tax & Legal 9. Insurance for
Employees 10. Insurance for the church
Slide 4
Tech Issues Do not un-mute yourself by clicking the red
microphone If you are called on to speak, David will un-mute your
mic. The recording will be posted shortly after class.
Slide 5
Todays Topic This topic sounds simple until you begin to define
it. Churches need great cash flow management. They often handle a
significant amount of cash on Sundays and during the week. There
must be adequate procedures in counting the offering, as well as
security of offerings and offering boxes. Churches must handle cash
advances and cash for youth trips.
Slide 6
Todays Topic, cont. There are often cash surpluses and cash
reserves. If stock is given, the church must decide to sell or hold
it. This class will define cash and fungible assets, giving policy
and practices on cash management. Along the way, we will examine
the cash practices of a large church.
Slide 7
Chris Gunnare Chris is the Chief Operations Officer at the
Lutheran Church of Hope in West Des Moines, Iowa. The church has
9,500 in worship and Chris has come out of the business community
to his present position. Through this leadership role in the
church, he provides guidance to the following ministries: worship,
production, fellowship, administration, finance, hospitality,
facilities, communications and Caf Hope.
Slide 8
Chris Gunnare Chief Operating Officer Lutheran Church of Hope
West Des Moines, Iowa
Slide 9
Internal Controls What are they? The American Institute of
Certified Public Accountants defines it as all the coordinate
methods and measures adopted within an organization to safeguard
its assets Internal controls are a set of policies and procedures
to prevent deliberate or misguided use of funds for unauthorized
purposes.
Slide 10
Internal Controls Why Do We Need Them? "abstain from all
appearance of evil (I Thessalonians 5:22). "he must have a good
report of them which are without, lest he fall into reproach and
the snare of the devil (I Timothy 3:7) "Let all things be done
decently and in order. (I Corinthians 14:40)
Slide 11
Internal Controls Why Do We Need Them? Internal controls help
to provide reliable data by ensuring that information is recorded
in a consistent way that will allow for useful financial reports
They also help prevent fraud and loss by safeguarding assets and
essential records. Internal controls promote operational efficiency
by reducing unnecessary duplication of effort and guarding against
misallocation of resources. They encourage adherence to management
policies and funding source requirements.
Slide 12
Internal Control Audit Best way to get independent, outside
appraisal of your internal controls Fall of 2011, we had our first
Internal Control Audit. We plan to schedule another control audit
in 2014-2015 We received 26 recommendations.
Slide 13
Internal Control Audit (cont) Dont have to agree with all;
Recommendation N Post revenue and expenses separate versus net We
(CFO & council) choose to keep it as is
Slide 14
A pastor of a Lakeland church is accused of stealing more than
$5,000 from the church, according to an investigation by the State
Attorney's Office in Bartow. The former bookkeeper of a South
Jersey parish has been charged with stealing more than $245,000
from his employer. CLEVELAND, Ohio -- A longtime priest at St.
Helena Church on Cleveland's West Side has pleaded guilty to
stealing $176,000 from the Romanian Catholic institution, a
prosecutor said. Priest stole $1.3 million in church money The
former St. Matthew Parish secretary who embezzled more than
$200,000 from the church has been sentenced to prison Aug. 24, 2012
- PHILADELPHIA A former executive of the Philadelphia archdiocese
is due in court Friday to be sentenced for stealing more than
$900,000 from the church.
Slide 15
Handling Cash Weekly Offering Collection Secure Counters
Deposit Post Multi-Site Mid-Week Offering Class Fees
Fellowship/Coffee $ Bookstore Coffee Shop
Slide 16
Weekly Offering - Collection We use 24 ushers with 32 baskets
for our worship center, 4 ushers with 8 baskets for our chapel
Volunteer Hospitality Captain oversees collection All baskets
brought to hospitality room Uniformed police office outside/inside
room All cash/checks is sorted, bagged and brought to safe by 3
ushers and uniformed officer
Slide 17
Weekly Offering - Secure Safe has a rolling bin where the usher
and office can drop offering in safe Digital safe keeps log of
whose access code opens the safe Safe is professionally bolted to
concrete floor in locked room, in a remote location (not
visible)
Slide 18
Weekly Offering - Counters We have twelve teams of four Team is
by invitation only Volunteers have background & credit report
checked on bi-annual basis. No family members on same team. Teams
are rotated every two years We have our finance assistant there for
support They enter all gifts on member contribution report They
count all cash, fill out deposit ticket and place in sealed cash
bag from bag and sign seal.
Slide 19
Counters Bag is dropped in safe Checks are placed in batches of
100 checks and totaled Entire team signs of on report which reports
totals for weekend
Slide 20
Deposit Monday morning the finance coordinator records the cash
bag number in her log book as well as the amount of deposit (cash
& change) Copy of deposit ticket stapled to the counter report
(to be filed). Note the third copy remains in deposit book in
teller safe (for CFO / Treasurer review) Monday morning check are
remote deposited by finance secretary, batch report attached to
counter report
Slide 21
SHELBY TOWNSHIP, Mich. (WJBK) - St. Therese of Lisieux Catholic
Church in Shelby Township was robbed of tens of thousands of
dollars after Easter Sunday services. They drilled through the safe
and got away with almost $50,000. Safe, money stolen from church in
Dixfield, Maine Authorities are searching for the person took a
safe from a Concord church. GULFPORT, MS (WLOX) - Burglars broke
into a Gulfport church and went away with a safe and hundreds of
dollars in cash. JOHNSON CITY, Tenn. - According to police, the
person or persons got into the church by kicking in an air vent in
the back of the building and then went on a destructive spree,
looking for valuables along the way. Johnson City Police say all
locked doors inside were kicked in and the rooms ransacked. A safe
was ripped off the floor and the offering box was torn off the
wall.
Slide 22
Post Our giving module is interfaced with our GL (Item K from
internal audit) Finance coordinator posts the balancing entry each
week to the GL from audited counter report. Finance coordinator
confirms deposit amount and post cash over/short to GL
Slide 23
Multi-Site We have three locations (all schools) Each have 4
teams of Ushers (similar to main site) Ushers complete mini-teller
sheet Checks, teller sheet, cash place in numbered sealed bag
(number on teller sheet). All ushers sign over the seal Bag is
brought to main site and dropped in safe for processing by main
site counter team
Slide 24
Mid-Week Deposit Processed by volunteers on Wednesday Mid-Week
report is filled out containing the total deposit (checks &
cash) amount Mid-Week report also provides the GL detail (account
numbers and amount for each) All Mid-Week sources have separate
internal controls Coffee offering Fellowship offering Caf Hope
deposit
Slide 25
Cash Over-View Safety in numbers (two good, four better) Get
amount counted & verified Get to bank AUDIT your controls
Volunteer Audit Team = 8 accounting folks Groups of 2 will audit
each unit several times per year Report of findings to CFO,
Treasurer Review trends
Slide 26
JANESVILLE The former secretary of a Janesville church wrote
nearly $90,000 in forged checks to herself over 10 months last year
An accountant uncovered 70 checks forged for herself from First
Congregational United Church of Christ between January and October
of 2012. A Granger woman pleaded guilty Tuesday to using the postal
service to help embezzle $119,000 from a South Bend church she
worked at for eight years. Loprest worked as a secretary at Hilltop
Lutheran Church from 2001-2009. When the churchs bank contacted
leaders about an overdraft fee in 2009, they found out they were
nearly bankrupt. For several years, Loprest had been transferring
money out of the banks investment account. She would have the
checks delivered to the church, then deposit them into their spend
account and use the money for personal expenses. VIOLET, La. A
church secretary in St. Bernard Parish was arrested for what
authorities said was systematic embezzlement of more than $100,000
from her church. May 13, 2013 Stillwater Okla. - Dana Sue Eckhart
43 years of age, has been arrested and charged with embezzling more
than $141,000 from the UMC Stillwater, since 2009. According to
authorities, UMC Stillwater informed police that Eckhart had
written unauthorized checks to herself, her husband and others from
2009 through 2012. The church also questions hundreds of purchases
by Eckhart utilizing church- issued credit card. Dana Eckhart
pleaded not guilty and is free on $50,000 bond and due in court for
preliminary hearing sometime in June 2013.
Slide 27
Check Writing Segregation of duties (from internal audit B)
Authorization to execute transaction Recording of the transaction
Custody of assets involved in transaction Signing of check Opening
of bank statement Reconcile Checking Account
Slide 28
Credit Cards Send employee the statement at end of month
Employee have receipts for ALL charges Each expense must be
budgeted / approved prior to purchase Employee states details on
receipt and proper GL code Unauthorized expenses or mission
receipts must be paid back within 10 days
Slide 29
Other Controls Electronic Wire Our process (Audit F) ACH
Payments Always ensure following internal controls similar to a
writing a check Stock Gifts We use a broker who receives all stock
We sell all securities upon receipt
Slide 30
Cash Flow Management Since cash flow describes how and when
money comes into the church and is spent, cash-flow management
involves projecting income and expenses with the goal of paying
bills on time and creating a surplus for growth.
Slide 31
Cash Flow Management Project revenue each June for following
fiscal year Use historical data to project future giving
Slide 32
Cash Flow Management Project expenses each July for following
fiscal year Payroll should be 50% of general fund giving 10% of
general fund goes to external mission partners & projects
Operational budget is set using historical data (utilities,
interest, phone, internet, etc) Program budget set based on
strategic objectives, allowing us to move resources based on what
we are focusing on
Slide 33
Cash Reserves / Surpluses Liquidity simply means available
funds. The goal of liquidity management is to have enough funds
available for current expenses and new ministry opportunities.
Managing liquidity is tougher than it seems because income doesnt
always come in when expenses need to be paid. And we always have
unexpected expenses. Cash Flow Fluctuation + Unplanned Events +
Potential Opportunities = Operating Liquidity Balance Target
Slide 34
Cash Reserves / Surpluses How much cash do you have in reserve?
Is it enough? 60 to 90 days of expenses is average Does your senior
pastor know? Does your council know? Do you have/need a sweep
account? How much interest is your reserve earning? What interest
rate are you paying on loan(s)? Work with experts in your area you
trust Work with ECCU (link on xpastor.org) Excellent white papers
on many subjects we covered today
Slide 35
Send Questions via Chat to Tami
Slide 36
Malphurs, Aubrey & Steve Stroope. Money Matters in Church:
A Practical Guide for Leaders. Grand Rapids: Baker Books, 2007.
Read Chapters 1 & 2: Developing and Communicating Your Theology
of Financial Stewardship & Developing Donors. From Chapter 1:
The New Testament Greek word for steward is oikonomos manager. Read
the passages that deal with this word (page 23) From Chapter 2:
Where does your church teach about money? Sermons, adult classes,
small groups, fund-raising drives? Some or all of these? (page
31)