Sample Church
2010 Committee Audit
December 2010 Audit
DATE
I.
ORGANIZATION
Church is a not-for-profit organization existing under the laws of the State. The vestry is
responsible for the preparation and fair presentation of the financial statements in accordance
with the cash basis of accounting and for the designing, implementing, and maintaining internal
control relevant to the preparation and fair presentation of the financial statements.
The parish administrator is responsible for entering all the cash receipts and cash disbursements
into the system and the preparation of the monthly financial statements. Before the financial
statements are presented to the vestry, the Vestry Treasurer reviews them.
The last audit of the fiscal year 2009 had the following recommendations:

It was recommended that the treasurers’ report be expanded in its analysis and followup of vestry approved special expenditures be noted in the treasurers’ report.
Additionally the administrative secretary and secretary to the vestry must establish a
procedure for adequate filing and storage of vestry meeting minutes.
o Per the treasurer and head of the finance committee, this recommendation has
been implemented. We reviewed the vestry minutes and they were filled in a
binder.
The following observations and recommendations are from the 2010 audit:
II.
FINDINGS
Bank Account
 At year-end, there were two bank accounts with Anytown Bank. An Operating account and a
Designated fund account. Both accounts are reconciled in QuickBooks and the proper
reconciliation reports are attached to the bank statements. Both accounts were off by $6.00 in
December. The difference is the result of a bank transfer made to correct a deposit but the
book transfer was not done. The error was corrected the following month.
 It was noted that on several occasions the bank reconciliation was not done until two months
after the statement date.
o Bank statements need to be reconciled as soon as received. This will ensure any
discrepancies or errors are corrected immediately.
 There were two instances where bank transfers were done however; there was no description
or authorization for the transfer.
o All transfers need to be documented and authorized.
 An individual who does not have signature authority on the checking accounts reconciles the
bank statements however; the reconciliations were not approved and signed by the Vestry
Treasurer.
o All bank reconciliations accounts should be reviewed and signed by the Vestry
Treasurer.
Cash Receipts
 The church utilizes two systems. The ACS People module is used to track and record all
contributions and pledges. QuickBooks is used for the financial accounting. The totals from
the ACS proof report are entered into QuickBooks as Cash receipts
 Count sheets are completed however only for cash deposits.
o Noted three instances (out of 15 tested) where the count sheet was not filled
out correctly. The cash amount was written on the total check line instead of
the cash line. It is important that the count sheets be filled out correctly and
signed by both counters.
o Listing checks on the count sheet as opposed to photocopying them would
reduce copying costs and increase efficiency.
Disbursements
 The church’s policy is to have two signers on every check. All checks written out of the
operating account were reviewed.
o There were 25 instances in the Operating account where the check did not have
two signatures. It is important that the policies implemented by followed.
 All checks written out of the Designated account were reviewed.
o There were 10 instances where the check did not have two signatures.
Investments
 In July, the Endowment Account CD for $10,408.36 was closed and the funds transferred into
the operating account.
o The motion for approval to close the account and transfer the funds into the
operating account could not be located in the vestry minutes.
Restricted Accounts
 Temporarily restricted net assets consist of gifts available for the following:
215 Special Church Funds
501.95
21509 Salvador Fund
552.49
2151 Ladies of Church
920.93
21510 Altar Guild Fund
21514 Men of Church
21516 Africa Mission Fund
21517 Vacation Bible School
2152 Youth Fund
28.24
100.00
60.00
337.83
1,072.53
2154 Acolyte Attire Fund
269.03
2155 Music Fund
400.00
2158 Building Fund
898.00
21591 Flower Fund
21592 Memorial Fund
21955 Clergy Gifts
21957 Outreach Fund
412.00
1,300.00
456.00
175.00
21958 Bookstore
1,072.03
21960 Organ Fund
1,691.00
21961 Preschool Fund
21963 Fellowship Fund
21964 Sabbatical Fund
21965 Mission Trip
21966 Misc Deposit Fund
Total 215 Special Church Funds
0.00
2,130.17
0.00
114.00
2,000.00
$xxxxxx
 The cash account associated with the restricted assets is $xx,xxx.00. There is a $130.00
difference between the cash account and the restricted funds. The difference needs to be
researched.
Payroll
 The church had four employees on the payroll at year-end. No discrepancies were found
relating to payroll. All quarterly reports were filled. The Payroll Tax Payable of $xxx.35 on the
balance sheet at yearend was payable in January 2011 however there is $434 in accrued
payroll taxes on the balance sheet that could not be verified. A journal entry should be done
to clear the account.
Debt
 May 21, 2010 a cash receipt for $ xx,xxx.00 was received and deposited into the operating
account. The deposit was miscoded in QuickBooks. The deposit was recorded as
miscellaneous income however the deposit was actually a loan. An entry needs to be made to
reclassify the $13,000 from miscellaneous income on the profit and loss statement to a
liability account on the balance sheet.
 May 9, 2008 church modified a $ xx,xxx.00 loan, which had an outstanding balance of $
xx,xxx.00 with Anytown Florida Bank. The Note was extended until May 5, 2013 at 6.89%
interest. The loan shall be due and payable for $ xx,xxx.00 commencing on June 5, 2008 and
continuing on the same day of each month thereafter until fully paid. The balance at yearend
2010 per the statement is $ xx,xxx.00. The balance of $ xx,xxx.00 on the balance sheet does
not agree to the yearend statement from the bank. A journal entry for the difference of $
xx,xxx.00 should be made on the books to reconcile the balance.
 Church signed two promissory notes on July 1, 2002 with XXXX. The original balances on the
notes were $ xx,xxx.00 and $ xx,xxx.00. The loan on the balance sheet is split between three
accounts. It is recommended that all three accounts be consolidated into one. Additionally
the amounts do not reflect the true amount owed to the at year-end. The total owed
including past due apportionments for 2008, 2009, and 2010 is $392,371.00. An entry needs
to be done to correct the balance.
Total confirmed debt at December 31, 2010 is as follows:



Note Payable
Note Payable Diocese
Anytown Florida Bank
Total Debt
13,000.00
392,371.00
404,995.42
$xxx,xxx
 There is $xxx,xxx in the Accounts Payable Clearing account on the balance sheet, which needs
to be researched and cleaned up.
Pledges
 No findings. The church utilizes ACS People to track all pledges and contributions. All
individuals are given a number that corresponds to the number on their pledge envelopes.
Fixed Assets
 A fixed asset listing that included balances was provided out of QuickBooks. There needs to
be a more detailed listing of the assets listed on the balance sheet. There also needs to be a
procedure in place for the acquisition and disposal of assets.
III.
INTERNAL CONTROL RECOMMENDATIONS
 The Accounting Policy and Procedures manual should be completed. This will help with all
future audits.
 All balance sheet accounts need to be reconciled every month. This will catch any errors
that may have been made and ensure that all balances are correct.
 The bank statement and bank reconciliation need to be signed and reviewed by the
treasurer every month.
 The church should consider reducing the requirement amount on checks needing two
signatures to maybe $500.00. The policy now is that all checks require two signatures
however obtaining two signatures seems to be a problem.
 The monthly financials presented should reflect the actual financial data compared with the
approved budget.
 The church needs to have a detail listing of all assets at a minimum for insurance purposes.