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Mission Area Gathering

Mission Area Gathering. The Episcopal Church in Minnesota Hibbing, MN April 25, 2015. Why is this stuff important? . “So then, each of us will be accountable to God.” (Romans 14:12)

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Mission Area Gathering

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  1. Mission Area Gathering The Episcopal Church in Minnesota Hibbing, MN April 25, 2015

  2. Why is this stuff important? • “So then, each of us will be accountable to God.” (Romans 14:12) • “We intend to do what is right, not only in the Lord’s sight, but also in the sight of others.” (2 Corinthians 8:21) • “Who then is the faithful and prudent manager?” (Luke 12:42) • “Give me an accounting of your management.” (Luke 16:12)

  3. Elements of Internal Control • Control Environment – the tone at the top • Commitment to integrity and ethical values • Governing body exercises oversight • Management establishes authority and responsibility • Commitment to attract competent individuals • People are accountable • Risk Assessment • Control Activities • Monitoring • Information and Communication

  4. Considerations for Smaller Entities • Review reports of detailed transactions • Review selected transactions • Periodically observe assets • Review reconciliations • Integrity and ethical values are held in high esteem • Whistle-blower programs • Qualified council members

  5. Internal Control Best Practices • Receipts • Dual custody in a secured area • Tally offerings on a preprinted form which is signed and dated • Receipts promptly deposited by an independent person • Forward signed tally sheets to treasurer • Reconcile deposit receipt to the tally sheet

  6. Internal Control Best Practices • Bank reconciliations and authorized account signers • Bank reconciliation prepared by someone who is not an authorized signer, is independent of the invoice approval process and has no access to general ledger • Performed monthly and signed and dated by preparer • Reconciliations should be reviewed by a knowledgeable person • Outstanding reconciling items should be researched

  7. Internal Control Best Practices • Expenditures • All expenditures should be supported by proper documentation • Approved by an authorized signer independent of the accounts payable process • No expenditure should be processed unless properly approved and supported • The person processing the invoice for payment and cutting the check should be independent of the check signing and bank reconciliation process • Check stock should be kept in a secured location when not in use • All expenditures should be reviewed by a person independent of the accounts payable process on a quarterly basis to ensure there are no duplicate payments • All new vendors should be approved by an authorized employee independent of the accounts payable process

  8. Internal Control Best Practices • Expenditures • Before issuance, invoices should be matched to the checks presented by someone other than the preparer • All service related or individual contractor vendors who are paid more than $600 per year must receive a properly completed 1099

  9. Internal Control Best Practices • Data processing and data security • Software programs are password protected; each employee has unique password • Security software should be current and all updates installed when received • Access restricted commensurate with job responsibilities • Anti-virus software on each machine • Internet use policy • Personal identity Information (PII) handled on a need to know basis • Software should be backed up on a regular basis and backups should be kept off site

  10. Internal Control Best Practices • Travel Expenses • Accountable plans with standard forms signed by preparer and approved by supervisor • IRS mileage rate used • Receipts for all expenses above a certain threshold (e.g. $25) • Business purpose noted for each expense • Pastor’s travel expenses approved by treasurer, finance committee or their designee • Annual Budgets should be in place and managed by the treasurer, pastor and congregation’s finance committee

  11. IRS Requirements • Establish Accountable Reimbursement Policy • Expense allowances are non-accountable plans • Establish an annual budget for • Travel • Continuing education • Dues • Subscriptions • Office supplies • Other ministry related expense

  12. IRS Requirements • Standard for expenses is “ordinary, necessary and reasonable” • Receipts required for expenditures above $25 • Documentation must be contemporaneous • Commuting mileage (to and from home) is not allowed • Consider adding a number of days by which expenses must be submitted (e.g. 45 days) • Expense advances are not recommended

  13. IRS Requirements • Taxpayers who itemize may deduct contributions of money or property • Since 2007 taxpayers are required to substantiate deduction through bank record (cancelled check) or statement from the charity • For single contributions of $250 or more a statement must: • Be in writing • Identify donor by name • Show separately each individual contribution of $250 or more • State whether any goods or services were provided • Quid pro quo contributions of more than $75 (ticket that includes a meal) • Inform the donor of estimate of value of goods or services received

  14. IRS Requirements • Quid pro quo contributions of more than $75 (ticket that includes a meal) • Inform the donor of estimate of value of goods or services received • Inform the donor that the amount of the contribution deductible for federal tax purposes is limited to the excess of the contribution over the value of any goods or services received

  15. Financial Reporting • Financial statements • Balance sheet • Statement of Activities (revenue and expense) • Cash flow • Attributes of financial statements • Designed to meet the needs of users • Simple and easily understood format • All inclusive • Point of comparison • Sufficient detail for decision making • Supplemented by verbal or written report pointing out critical items and areas

  16. And in conclusion……THANK YOU FOR ALL YOU DO FOR GOD’S CHURCH!

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