Let’s look at how we can set-up church accounting guidelines for handling of the church finances. In the accounting world we refer to this as internal controls. One very common and easy to understand step is to have what is sometimes called a division of responsibilities. We often hear the term “Segregation of Duties”, it’s the same thing.
A rather simple structure for segregating duties calls for ushers to collect the offerings, a counting team to counts the money, a bookkeeper records the offerings in the accounting system and the data entry person records the offerings in the church management database. This ensures that the same person is not responsible for ALL matters relating to managing the church’s finances. The discussion below will help you to understand and appreciate some basic internal controls and how they work for you.
Segregation of Duties for Handling Cash Receipts
There are a number of activities involved here, namely, collecting the funds, counting it, making deposits and updating the accounting records. I want to begin at the collection point, that is, with the ushers.
- A simple and very effective control is to ensure that there are sufficient ushers, based on the size of your church, so that the same usher is not doing collections every week. Also, ensure that the ushers are trained in how to handle the funds collect and in particular not to open envelopes to make change for other members. You can appreciate that they may not get the right change that is needed from the first envelope and that the amount written on the outside of the envelope will not correspond when the accounting is to be done.
Another simple, but very important, internal control measure is to ensure that you have no less than two persons with the funds at all times after it is collected and while it is being taken to the accounting team for counting. Just a reminder, all funds whether cash left at the altar, funds deposited in a basket or submitted in an envelope, must be collected and submitted to the accounting team. This also includes any special offering for a guest speaker. You really leave the church exposed to undue censure where anyone is allowed to walk away from your ministry with money in a bag.
- An internal control that has global acceptance is that funds collected should be deposited in-tact. What this really means is that all of the offering collected should be deposited into the bank in the same way is collected with nothing removed or added. Where there is a need to submit funds to the minister you deposit the funds, in-tact, and write a check to the minister for the total amount that was collected. This way, the funds are properly accounted for and the contributors’ statements get updated. Notice that the procedure is easy to follow and clear for all to see.
Sunday School Offerings
- The person who is in charge of the Sunday School should ensure that at least two persons are responsible for collecting and counting the Sunday School offering. In many churches, where it is not possible to have the two-person team, bank deposit bags have provided the internal control necessary for this area. How this works is that the bank provides the bank deposit bags with two keys, the offering is placed in the bag, the bag is then locked and the key given to the Sunday School leader. The accounting team will have the other key to open the bag to do the recording and deposit.
This issue has focused on the collections aspect and you will notice that these internal control measures are practical, easy to implement, affects many areas of ministry and yet safeguard the integrity of accounting for church finances. The counting, bookkeeping and recording areas all have different internal control measures which will be looked at later.