In looking at systems of internal control needed in the handling of church finances, we need to examine the control measures needed during the actual collection other of the offerings. In particular the spotlight is now on what happens when someone wants change from a large bill.
Remember, internal controls and procedures are not about a lack of trust in the people doing the tasks but these controls actually serve to protect them from wrongful accusations and is a practical, tangible deterrent to fraud. So let us look at what should and should not happen when some requires change.
The Petty Cash system
Requiring change is a normal, recurring situation so a practical and effective internal control to implement is the operation of a petty cash system.
- The custodian of the cash would be the head usher who would be provided with say $100 worth of change in small currencies of ones, fives and tens. The break out of small change is what the experienced head usher thinks will work. By the way, the petty cash is for Sundays only.
- Ideally, at the end the service or perhaps at the end of the day, the petty cash is handed over to the accounting team who will lock it away until the next week.
- Regular checks should be made to have the large bills changed out and to confirm that it always amounts to the amount set aside.
- Always make sure that everyone is aware of how much the petty cash the usher has.
The Offering Envelope
Internal control best practice is for all donations collected by the ushers to be delivered intact (as collected) to the counting team. If the usher opens an offering envelope to make change for a member this is considered to be tampering.
Let’s be real. If this practice is allowed (opening the envelope to make change) the church will open itself up to a lot of complications and scrutiny. Here is the picture that is painted by this behaviour.
- Multiple envelopes will be opened until the change is found because it is highly unlikely that the usher will find the correct change needed from the first envelope opened.
- The information on the outside of the envelope will not match the funds on the inside.
- The counting team will not be able to verify how much contribution was made by the donors whose envelopes were opened.
- Donors and members statements will not be properly updated because the amounts could not be verified.
- Funds may be misplaced or misappropriated during the search for the right denominations and
- There can be no assurance that all the offerings collected were actually submitted to be counted.
Tampering with envelopes, because this is what it amounts to regardless of the usher’s good intentions, does nothing to protect the integrity of the ushers from unwarranted suspicion and the donors will not have the confidence that good stewardship is being practiced with the funds collected. The internal control put in place by the church is to have this action totally banned. That is, it’s against church policy for the ushers to open any offering envelope.