Fin.II.C.page 1
INTERNAL CONTROL CHECKLIST
I. CASH RECEIPTS
A.
Offertory
1. Procedures for collecting offertory:
a) Who is responsible for collecting offertory?
b) Is the offertory secure after the collection? Yes _______ No _______
How?
c) Who is responsible for transporting the collection to the area where it is counted and
how long is it stored until it is counted?
2. Procedures used for counting offertory
a) When is offertory counted?
By Whom?
b) Is a tally sheet used? Yes _______ No _______ Retained? Yes _______ No _______
c) Is tally sheet total and bank deposit receipt compared? Yes _______ No _______
By Whom?
d) When is offertory deposited?
By Whom?
e) If receipts remain in the rectory, are they kept:
In an operational safe?
Locked file cabinet?
Other? (Describe)
f) Is the collection deposited intact? Yes _______ No _______
g) Who records deposits to the accounting records?
h) Is there a comparison of the tally sheet to the receipted deposit ticket?
Yes _______ No _______ (This should be done by an individual different from the one
preparing the deposit)
i) Method used to record parishioner contributions:
Envelope Company
Manual Cards
PDS Census
Other
j) Who records offertory to the parishioner contribution records?
There should bean independent comparison of envelopes to parishioner records.
k) Are contributions of $250 or more properly acknowledged? Yes _______ No _______
B.
Other Income
1. Is there any rental income? Yes _______ No _______
If yes, describe:
Describe procedures for depositing rental income
2. Were there any bequests this year? Yes _______ No _______
If yes, from whom, amount and date of receipt
Describe procedures for depositing bequest income and determine that bequests were
appropriately acknowledged
Fin.II.C.page 2
3. Do organizations submit fund-raising reports? Yes _______ No _______
Retained? Yes _______ No _______
If yes, how often?
Describe procedures for depositing receipts
II. CASH DISBURSEMENTS
1. Who initially receives and reviews all mail?
2. Are invoices reviewed and approved for receipt of goods or services, and accuracy?
Yes _______ No _______
By Whom?
3. Who prepares checks? (Checks should be prenumbered)
4. Is a check protector used? Yes _______ No _______
5. Who signs checks? (Check signing should require dual signatures over specified dollar
amounts)
6. Is a signature stamp used? (Note: it is recommended that no signature stamp be used)
Yes _______ No _______
If yes, where is it stored?
7. Does the pastor review prepared checks and invoices before signing? Yes _______ No
_______
8. Are paid invoices:
a) Retained? Yes _______ No _______
If yes, are paid invoices cancelled? Yes _______ No _______
How?
b) Filed? Yes _______ No _______
How?
9. Invoices should be paid only if original copies of invoices are submitted.
10. Checks should be written in sequence and recorded in a check register and cash
disbursements journal.
11. Voided checks should be noted as such in the register and the check should be altered to
prevent re-use.
12. The supply of unused checks should be safeguarded.
13. Are W-9 forms on file for all accounts payable vendors? Yes _______ No _______
If no, please explain.
III.
PAYROLL
1. Are all employees official and are taxes properly withheld?
2. All employee files should have the required 1-9 and W-4 forms completed. Are they properly
prepared and maintained? Yes _______ No _______
3. Verification of employee versus independent contract& status should be checked. (See
addendum).
4. Who prepares the payroll? (Check all that apply and describe)
________Parish
________Central Diocesan Payroll
_____Payroll Service Co.
5. Does the parish utilize security guards? Yes _______ No _______
6. Describe procedures for capturing hours for hourly employees, e.g. time cards, time sheets,
etc.
Fin.II.C.page 3
Time sheets should be approved by an appropriate, supervisor and the approval should be in
writing.
7. Overtime pay should always be approved.
8. Authorized time oft’, whether paid or unpaid, should be approved.
9. Are aliens properly handled for payroll and tax purposes, including clergy?
IV.
GENERAL
1. Are bank statements mailed directly to the rectory by the bank? Yes _______ No _______
2. Are bank statements reconciled? Yes _______ No _______
By Whom? (Someone different from the cash receipt and disbursement functions should
reconcile the bank account. There should also be an independent approval of the bank
reconciliation.)
3. Type of bookkeeping system used:
Standard Diocesan Journals _____
One-Write
_____
Batch-Process
_____
PDS _____
Other (Describe)
4. Are parish journals on hand and up-to-date? Yes _______ No _______
5. Are accounting records and checks maintained in a safe or locked file cabinet when not in
use?
6. Do you have a bookkeeper doing any accounting in their home? Yes _______ No _______
If yes, explain.
7. Is the pastor an authorized signer for all parish and organization bank accounts?
Yes _______ No _______
If not, why not?
8. Have all signature cards been recently reviewed at the bank by the pastor and do they all
contain currently authorized signatures only? Yes _______ No _______
9. Is there an active parish council? Yes _______ No _______
If yes, how often do they meet?
What is their responsibility?
10. Is there an active finance committee? Yes _______ No _______
If yes, how often do they meet?
What is their responsibility?
11. Does the parish have a petty cash fund(s)? Yes _______ No _______
If yes, how many?
If yes, how does it function, and what is the amount of each fund?
How often is petty cash replenished?
12. Have Trustees been named and do they hold the requisite term? Yes _______ No _______
If yes, is an annual board meeting held and minutes prepared? Yes _______ No _______
V. INSURANCE RISK
1. Are there any non-church affiliated groups using parish buildings, property or land?
Yes _______ No _______
If so, who, and for what purpose?
2. Are parish buildings or property rented or leased? Yes _______ No _______
If so, who, and for what purpose?
3. Does the parish conduct lawn fetes or picnics with amusement rides provided by outside
vendors? Yes _______ No _______
If so, who?
Fin.II.C.page 4
4. Has the parish recently, or is it about to, enter into any capital repair or maintenance contract
‘with outside vendors or independent contractors? Yes _______ No _______
If so, who, how much, and for what purpose?
5. Is the parish indemnified on rentals or contract work? Yes _______ No _______
Do contractors present insurance certificates? Yes _______ No _______
6. Is the ABC brought in when construction work is greater than $20,000?
Yes _______ No _______
Are proper approvals made, including the Parish Finance Council and the required Diocesan
approval? Yes _______ No _______
VI. SAFEGUARDING OF ASSETS
A. Bank Accounts
1. The number of bank accounts should be strictly limited to those absolutely required.
2. All accounts should be open in the name of an entity, not an individual.
3. Authorized check signers should be limited and checks in excess of a certain dollar
amount should require the signature of two responsible individuals.
4. Uncontrolled facsimile signatures or signature stamps should be prohibited. If a signature
stamp is used, we recommend dual signatures over a specified dollar amount.
5. All wire transfers or automated clearing house (ACH) transfers should be pre-authorized
by two responsible individuals.
6. How are credit cards care for?
Who are they issued to?
7. Does the parish have a debit card? Yes_____ No______
If yes, number of cards issued?
B. Marketable Securities/Investments
1.
2.
3.
4.
5.
The custody of marketable securities/investments should be segregated from accounting.
Independent custodians and investment managers should be utilized whenever possible.
Transfers to/from investment accounts should have proper approval.
Two individuals should be present whenever securities or other valuables are inspected.
Purchases/sales activity should be reconciled with brokers’ or managers’ statements.
C. Accounts Receivable, e.g. tuition, pledges
1. Periodically, the detail for the accounts receivable/notes receivable/pledges receivable
subsidiary records should be compared with the control account and reconciled by an
independent person. Accounts should also be periodically confirmed by the debtor.
2. All adjustments for discounts or allowances should have specified approval.
3. All adjustments for bad debts should have special approval. Additionally, a record of all
bad debts written off should be maintained and periodically reviewed to minimize the
danger of collections being received and not recorded.
4. The accounts should be aged regularly and the delinquent accounts periodically reviewed
by a responsible official.
5. Custodial accounts and amounts received for others should be adequately segregated in
the activity records and transmitted to the ultimate recipient on a timely basis. Whenever
possible, amounts reported by contributors (such as parishes forwarding special
collections) should be reconciled or compared with amounts ultimately disbursed to the
agency.
6. Tuition variance should be reconciled and adjustments made for forgiveness. Pastor
should approve tuition aid.
Fin.II.C.page 5
D. Payroll
Personnel policies should be adopted to ensure that only reasonably competent and honest
persons are hired and retained. While the selection of honest, capable employees does not
ensure that errors or irregularities will not occur, such selection will enhance the likelihood
that they will not.
Typically, there are four functions that are accomplished through the payroll cycle. They are:
1.
2.
3.
4.
Personnel administration and employment file maintenance.
Timekeeping and payroll preparation.
Payment of payroll.
Preparation of payroll tax returns and payment of taxes.
A summary of internal control features follows:
1. Rates of pay and pay changes should be appropriately approved.
2. No individual with access to payroll records should also be permitted access to personnel
record.
3. Persons responsible for preparation of payroll checks should be different from those
signing and distributing the checks.
4. Imprest payroll bank accounts should be used.
5. Preparation of payroll tax returns should be based upon well-defined set of policies that
carefully indicate when each form must be filed, as well as when specific taxes are due.
F. Purchasing Cycle
There are typically four primary functions in the purchasing or acquisition cycle. They are:
1. Processing purchase orders
2. Receiving goods and services
3. Recognizing the liability
4. Processing and recording cash disbursements
Processing Purchase Orders - The request for goods or services is the starting point for the
cycle. Proper authorization for acquisitions is an essential part of the function because it
ensures that the goods or services purchased are for an authorized purpose, and it prevents
the purchase of excessive or unnecessary items. It is essential, therefore, that purchasing
authority be established.
a) For capital or other major expenditures, a competitive bidding process should be
established.
b) After the acquisition request has been approved, the order must be initiated to
purchase the goods or services.
c) Where it is cost beneficial, a purchase order system should be used.
d) All purchase orders should be renumbered and should include sufficient columns and
spaces to minimize the likelihood of unintentional omissions on the form when goods
are ordered.
e) A responsible official should check to see if available budget dollars remain to support
the purchase.
Receiving Goods and Services - The receipt of goods and services from the vendor is a critical
point in the cycle, because it is the point when the associated liability is usually first recognized.
a) When goods are received, adequate control requires an examination for descriptions,
quality, and condition.
Fin.II.C.page 6
b) The individual responsible for the examination should prepare a receiving report
verifying that all is in order.
Recognizing the Liability - The proper recognition of the liability for the receipt of goods and
services requires accurate and prompt recording.
a) When the vendor’s invoice is received, the descriptions, price, quantities, terms and
freight on the invoice should be compared with the information on the purchase order
and, where applicable, the receiving report.
b) Typically, extensions and footings are verified, and an account distribution is entered
on the invoice.
c) Budget authorization and availability should also be examined.
Processing and Recording Cash Disbursements - As previously discussed, the most important
controls in the cash disbursement function include the signing of checks by an individual with
proper authority, separation of responsibilities for signing the checks and performing the
accounts payable function, and careful examination of the supporting documentation by the
check signer.