Church Internal Controls [proposition]

1. Church Internal Controls [proposition] Pastor Moeletsi Lesaoana

2. Cash Receipts Controls

3. Who collects the offering? • Who counts the offering? • Who goes to the bank? 1. Appointed Structure

4. Does the church have a written, up-to-date accounting procedures manual or policy? - Why this manual? • Places responsibility and assures continuity of practice. 2. Financial Policy

5. Does the financial secretary’s or treasurer’s activities involve only keeping the records of cash collections and preparing the support for disbursements? • The separation of duties is the keystone of a church’s internal control system. • Keeping the recordkeeping function distinct from the cash handling function will go a long way in reducing the church’s risk of misappropriation of funds. 3. Separation of duties for the Treasurer

6. Are the accounting records safeguarded at all times? - Are computer files backed up and the backup copies properly stored? Are paper records stored at home or in the church safeguarded from being destroyed, altered, or tampered with? 4. Records Keeping

7. In churches that have a new treasurer every year, the church will be certain to have each treasurer’s work reviewed. • • The auditor can identify and correct any deficiencies before they become standard operating procedures. • • A written policy of annual audits precludes any treasurer from feeling paranoid about the members not trusting him or her. 6. Are the accounting records and the underlying internal controls audited annually?

8. Envelopes serve to 1) protect members’ offerings until they can be counted, and 2) provide the basis for recording the contribution in the church’s accounting records. • The envelopes should be retained by the treasurer or financial secretary until after a contribution report has been provided to members. 7. Do you use offering envelopes?

9. Bank depositing of offerings lessens the burden that the treasurer will carry and it also lessens any miscalculations that may occur while counting the Tithes. 8. Are members encouraged to bank deposit their Tithes?

10. Is the handling of offerings always controlled by at least two people? • Is the handling of other receipts of cash always controlled by at least two people? 9. Handling of Offering and other receipts of cash

11. Is cash counted in a secure area? 10. Safety

12. Do the money counters verify that the contents of the offering envelopes are identical to the amounts written on the envelopes by the members? 10. Verify the Envelopes

13. Is cash deposited as soon as possible after receipt? • Is allcash received deposited in the bank? • All Cash receipts should be deposited intact, that is, without being reduced by disbursements (Expenses) 11. Banking

14. Is cash safeguarded in a safe, lock box, or similar protective container when at the church? 12. Cash safeguarding

15. 13. Cash Payments Controls

16. Are all requisition slips prepared all disbursements (Expenses)? • Is a cheque authorization slip prepared to support the disbursement of funds? 14. Requisitions

17. Are invoices for goods and services approved by a qualified person before payment is made? • Are invoices checked for accuracy before being paid? 15. Approving of payments

18. Are all disbursements of cash, except for minor items, made by Bank cheques? • Upon minor item a Petty Cash Account must be created. 16. Payment Methods

19. Do all cheque signers inspect all supporting documents before signing? 17. Before signing a Cheque

20. At least two signatures required for all cheques. • This is strictly an internal control and often not enforced by the bank. • Prevents one person from being in charge of cash. • Blank checks should not be signed! 18. Signatories

21. Are supporting documents canceled when cheques are issued? • Stamp “Paid” on the paperwork. If a cheque voucher is used, attached the paperwork to the voucher. 19. Supporting Documents

22. Are all voided cheques marked and retained? 20. Void Cheques

23. Are blank, unused cheques safeguarded at all times? 21. Safeguarding of Cheque book

24. Are expenses always recorded in the correct accounting period? 22. Accuracy or expenditure records

25. Is a petty cash fund used for minor disbursements of cash? • No major payments should be paid from the Petty Cash • Are vouchers prepared for all disbursements from the petty cash fund? 23. Petty Cash Box

26. Are transfers among bank accounts properly authorized? 24. Direct Bank Transfers

27. Bank Reconciliations

28. Are reconciliations of all bank accounts prepared monthly by a person not involved in writing checks? • Bank statements should be mailed to a member of the internal audit committee or someone designated by the committee to reconcile the accounts. • Monthly reconciliations should be retained for use during the yearly audit of the books. 25. Who reconciles your books

29. Is the petty cash fund reconciled on a surprise basis at least once a year? 26. Petty Cash reconciliation

30. Other ChurchNo-Cash Assets

31. Are valuables (securities, jewels, valuable documents, etc.) afforded protection in a bank safe-deposit box? • Are two signatories appointed for access to the safe-deposit box? 27. Bank Safe-deposit box

32. Is an updated inventory of securities, valuables, equipment, and other major non-cash assets maintained? • Are scheduled reviews made to determine if insurance coverage is adequate? 28. Assets Register

33. Presentation by: Ps Moeletsi Lesaoana 074 350 8735 info@churchadmin.co.za www.churchadmin.co.za Thank you