INCORPORATED SYNOD OF THE
DIOCESE OF OTTAWA
PARISH FINANCIAL & FIDUCIARY
RESPONSIBILITIES
2012
MANAGING FINANCES IN THE
PARISH
What’s in the Manual?
1. Cash management
2. Accounting and bookkeeping
3. Budgeting
4. Reporting finances
5. General information
6. CBRs (Canons, Bylaws & Regulations)
7. Resources
8. Appendices – Diocesan forms, information
2012
INTERNAL CONTROLS
REF: Section 1.4, Appendix 8
 Provide assurance to stakeholders that
assets are protected from waste, fraud, and
theft
 Ensure accurate and reliable accounting
information for the provision of reports to
parish council, vestry, the Synod and Canada
Revenue Agency
 Avoid situations that could damage the
church’s reputation
2012
PRINCIPLES OF INTERNAL
CONTROL
REF: Section 1.4 and Appendix 8
 Responsibilities should be clearly
established
 Adequate records should be maintained
 Record keeping and custody should be
separated
 Responsibility for related transactions
should be divided
 Assets should be insured
2012
INTERNAL CONTROL FOR RECEIPTS
REF: Section 1.4 Appendix 8 & Section 2.5
THREE BASIC PRINCIPLES SHOULD ALWAYS
BE OBSERVED:
1. Separation of duties so that the persons handling
receipts, having custody, making deposits, and
keeping records are different people
2. All receipts should be deposited intact as soon as
possible
3. All payments should be made by cheque
(Only exception is petty cash for small
disbursements)
2012
DISBURSEMENTS AND SIGNING
AUTHORITY
 All cheques are to be prenumbered & should
require two authorized signatures
 Cheque requisition form with attached
invoices provided with cheque for signer’s
review and authorization
 A person should never authorize or sign a
cheque where they are the payee
 Never sign a blank cheque
2012
THE AUDIT
REF: Section 2.3
 All parish accounts must be audited annually
(ref: B5.02)
 In Ontario, government regulation states that if
an auditor is paid for audit services, the
auditor must be an appropriately qualified
Ontario accountant, licenced to perform audits
in Ontario
 Does not apply to “pro bono” audits
 The auditor’s role (Ref: R.5.06)
2012
PARISH TRUST FUNDS
REF: Section 2.4
Funds received and retained in the parish for
specific purposes, e.g.
 Future major building repairs
 Christian education
 New outreach project
Also relates to flow-through funds, e.g. PWDRF,
charities, etc.
Ensure that such trust funds are maintained & used solely for
the purposes designated
2012
BUDGETS
REF: Section 3.1
 Responsibility of the Corporation
 Essential tool in the management of parish finances
 Includes setting priorities and objectives of the parish
 Budgeted amounts should be realistic and achievable
 Treasurer plays a key role in providing accurate information
about the trends in income and expenditures
 Reference CBRs — bylaw 5.05, regulations 5.02 and 5.05
2012
REPORTING
REF: Sections 4.1 to 4.8
Reports required by church and regulatory law:
 Financial statements at least quarterly to
parish council
 Annual audited financial statements to vestry
 Diocesan statistical return (March)
 Charity information return to CRA (within 6
months of year end)
 Reference CBRs — regulations 5.02 and 5.06
2012
REPORTING - BEST PRACTICES
 Provide parish council (PC) with a
comparative year to date statement of income
and expenditures at each PC meeting
 Provide PC with quarterly trend analysis over
a 3-4 year period for key income categories
 Provide PC with projections of current year
income/expenditures against budget in
October, November
2012
PARISH FAIR SHARE
REF: Section 5.1, Appendix 3
 Synod's operating budget is funded from various sources, e.g.




investment income
grants
fees
contributions from all parishes
 Contributions from parishes are called "Parish Fair Share" or
PFS
 PFS takes into account the ability of each parish to pay
 When parishes report income at year-end, the figures are
reduced by allowable deductions to give an assessable income
(AI)
 AI for each parish is the basis of the proportional percentage of
the total of all parishes' AIs
2012
PARISH FAIR SHARE
(PFS)
The key components of PFS are:
 Assessable income (AI)
 Deductions from assessable income
 Averaging of last 3 years AI
There is a PFS appeals process
- Prior to the calculation of PFS, a request can
be made to the fair share review committee
for a review of major anomalies in income
2012
PARISH FAIR SHARE
(PFS)
 The PFS calculation is based on the average of the
parish's assessable income for the most recent three
years
 Purpose of averaging is to even out anomalies that create
significant swings in some parishes' apportionment
figures from one year to the next
 Once the PFS percentages are known, the Synod's budget
is proportioned out to each parish
2012
PARISH FAIR SHARE
(PFS)
PARISH’S 3-YEAR NET INCOME
x
DIOCESAN BUDGET
All parishes’ 3 yr net income
=
YOUR PARISH’S CONTRIBUTION TO THE DIOCESAN BUDGET
2012
PARISH FAIR SHARE
“THE FORMULA”
Current Year total parish income (statistical return)
$320,000
Less:
Flow-through to outreach/appeals
$(14,000)
Allowable capital exemptions
(35,000)
ECOPS
(56,000)
Fair Share Review Subcommittee adjustments
11,000
$(94,000)
Equals: Parish’s assessable income
$226,000
Add: Assessable income for previous two years:
Year 1
220,000
Year 2
240,000
Equals:Parish’s 3 year total assessable income
$686,000
Parish’s 3 yr. average assessable income
(A)
$228,667
All parishes' 3 yr. average assessable income
(B)
$9,300,000
Parish’s 3 year average (A) expressed as a2012
% of (B) = (C)
2.458%
PARISH FAIR SHARE
“THE FORMULA”(cont.)
FAIR SHARE CALCULATION:
Diocesan Budget (D): $2,047,300
The parish’s 3 year average % (C) times the 2011 Diocesan budget (D)
This results in the parish’s Fair Share: 2.458% X $2,047,300 = $50,323
2012
PARISH FAIR SHARE
2012
SUPPORT GRANTS
REF: Section 5.2
Support Grants
 Parishes in financial difficulty
 Funded in part from trust fund income &
Synod budget
Must apply by November 1st for next year
on special form
Applications considered by Financial
Affairs committee
2012
ECOPS (REF: Section 5.3)
EQUALIZED COST OF PRIESTLY SERVICES
Parishes are no longer wholly
responsible for the costs of a particular
clergy(s), but pay a fair share of a total
COPS pool, which is the total cost of all
stipendiary clergy in the Diocese
(excluding housing)
2012
ECOPS
EQUALIZED COST OF PRIESTLY SERVICES
ORIGINAL CONCEPTS
To make individual clergy gifts accessible to
all parishes
To make COPS proportional to a parish’s
ability to pay
To improve on the Equalization Assessment
and Grant systems previously used
To create a more stable year-to-year system,
allowing for better long-term planning
2012
ECOPS
EQUALIZED COST OF PRIESTLY SERVICES
With ECOPS the costs of all stipendiary clergy
are pooled and then distributed according to
the ECOPS Formula = Base COPS +
Equalization:
–Base COPS = base stipend on stipendiary scale,
travel allowance, and benefits (excluding housing); for
2012=$49,081
–Equalization = Equalization Total (i.e. Total COPS
minus Total Base COPS) x PFS%
2012
ECOPS
EQUALIZED COST OF PRIESTLY SERVICES
STIPENDS PAID
TRAVEL ALLOWANCES PAID
COST OF BENEFITS
$2,600,000
600,000
1,100,000
TOTAL OF ALL CLERGY COSTS
$4,300,000
TOTAL OF ALL BASE AMOUNTS
(3,300,000)
DIFFERENCE = EQUALIZATION AMOUNT $ 1,000,000
2012
ECOPS
EQUALIZED COST OF PRIESTLY SERVICES
 Implementation is being done gradually over a
maximum five-year period
 A 2% per year ceiling on ECOPS increases over the
implementation period, calculated in addition to the
regular annual increase to clergy stipend, travel, and
benefits
 Equalization Assessments are no longer being
charged to parishes = savings
 Gives a parish a reduction in Base COPS for the newly
ordained assistant curates for 3 years
 PFS calculation now exempts the costs of all
stipendiary clergy from parish assessable income
2012
PARISH INSURANCE
REF: Section 5.4 and Appendix 1(a)
DIOCESAN INSURANCE COVERS:
Property and contents (Replacement Value)
General liability ($2 million) - covers all employees
including voluntary workers while engaged in activities on
behalf of the parish
Umbrella liability ($8 million)
Boiler
Crime
Abuse
Employment practices
Directors & officers
Loss of income
2012
PARISH INSURANCE
REF: Section 5.4 and Appendix 1(a)
It is important to note that, in order to keep
premium costs at an affordable level,
deductibles at the parish level are set at
$2,500. The Diocese covers deductibles
between $2,500 and $25,000 from its
Insurance Reserve Fund
2012
3RD PARTY LIABILITY INSURANCE
REF: Section 5.5 and Appendix 1(b)
Why 3rd party liability insurance?
 Because of facility users’ operations or actions,
parishes and the Diocese are open to possible suit
from third parties.
 This Policy covers legal liability for bodily injury to, or
damage to property of, participants and others.
 Diocesan insurance does not cover the actions of 3rd
parties.
 Essential that appropriate insurance be obtained if
outside users of parish facilities cannot provide proof
of insurance – this can be arranged through the Synod
Office
2012
3RD PARTY LIABILITY INSURANCE
REF: Section 5.5 and Appendix 1(b)
•When a person or group not associated with your parish is
about to rent or use your facilities (indoor or outdoor) for an
event that your church is not sponsoring, you ask if they
have "third party liability insurance"
•If the answer yes, request a copy of their insurance
certificate, for your file
•If the answer is no, you should provide relevant details in the
User Group Program Overview and Rates document
www.ottawa.anglican.ca/Insurance_Property_Liability_Other.html
•Collect the appropriate premium
•Complete the Third Party Liability Insurance Form,
requesting basic information about the event
•Mail the form and premium cheque
to the Synod office
2012
CONSOLIDATED TRUST FUND
(CTF) REF: Section 5.9
 Established in 1970 to assist parishes in task of
managing & investing sums received in trust, a
bequest or a sale of property (usually a rectory)
 The Financial Affairs Committee (FAC) responsible
for the day-to-day activities of the CTF; its
Investment Subcommittee helps meet this
responsibility
 Each time a parish makes a contribution to the
CTF, it is credited with a certain number of units of
the fund based on the unit value at the end of the
quarter in which the monies are received
2012
CONSOLIDATED TRUST FUND
(CTF)
 The unit values of the CTF can fluctuate in the
short term depending on market circumstances
 The "total return" combines the annual change in
value of the units as well as the annual dividend
received
 This reflects the total benefit that the benefit
holder has gained by holding units in the CTF
 CTF has consistently paid annual dividends even
during down markets - enables parishes to rely on
a steady flow of income 2012
CONSOLIDATED TRUST FUND
(CTF)
 A dividend is paid to the unit holder (parish),
based on the number of units held in the CTF
 The Investment Policy Statement outlines the
objectives of the fund as well as specifics
regarding its asset mix
 This policy guides the money managers in
investment of the assets
 The portfolio is invested to provide income as well
as to preserve the capital for the long term, taking
inflation into consideration
2012
CONSOLIDATED TRUST FUND
REF: Section 5.9 Appendix 4
Securities and monies received by way of gifts or
bequests are to be deposited to the CTF in trust
for the parish
Exception:
If funds are required within 18 months of receipt, and approvals have
been given, then:
 Invest locally – GIC, etc.
 Avoids possible downswing in CTF value in the short term
See CBRs Bylaw 3.21(4)
2012
RECTORY TRUST FUND (RTF) POLICY
REF: Section 5.12
 Parish may either withdraw or borrow from its RTF
 Withdrawal is not subject to parish fair share
(10% contribution to Church Extension Fund instead)
 Borrowing – since funds belong to parish there is no
interest charged
 Application to FAC after approval from vestry
 Allowable uses – capital or pay down CEF loans
– not for operating expenses
2012
CHURCH EXTENSION FUND LOANS
REF: Section 5.13, Appendix 5
 The fund provides loans to parishes
 For new buildings
 Expansion or renovations of existing buildings
 Rates are reasonable & based on current
bank rate less up to 3%
 Never below 4% or higher than 12%
2012
FAC (Financial Affairs Committee)
SUBMISSIONS
Parishes must obtain the approval of FAC for:






withdrawing any significant amount from the CTF
undertaking any mid- to large-size capital projects
withholding a gift or bequest
applying for a loan from the CEF
permission to sell properties
approvals of leases
 FAC also responds to other specific finance-related
requests from parishes
 It meets 2nd Wednesday of each month (summer
excluded)
2012
FAC (Financial Affairs Committee)
SUBMISSIONS
Before making a submission, be sure to
review the Application Form instructions
and the Decision Rights details
(Manual, Sections 5.18 & 5.19)
Copies of the Application Form and the
Decision Rights matrices are shown in
Appendix 5(a) & 5(b)
2012