Sample Internal Controls Policy for Medium Churches
Acknowledgement
Appreciation is expressed to the Smackover First United Methodist Church for allowing
access to their Policies and Procedures Manual as a resource for large churches. Blanket
permission is given to edit and use this material as needed to adapt to local circumstances.
This is a sample document only, and not suitable for every church situation.
FIRST UNITED METHODIST CHURCH - SMACKOVER, AR
POLICIES AND PROCEDURES
Form A — Credit Card Check out Form
Form B - Credit Card Charges Form
Form C — Check Requisition Form
Form D — Purchase Requisition / Order Form
Form E — Travel / Expense Voucher Reimbursement Request Form
Form F — Talley Sheet
Form G — Affirmation Form
Church Organizations
A.
Financial Accounts:
Any organization which maintains a financial account, (checking, savings, certificate
of deposit, etc.), that is associated with First United Methodist Church - Smackover's
name (FUMC) or the use of FUMC federal ID number on the account, must have all
statements of account mailed to FUMC's office each month. The following is a list of
current accounts known:
(List all known accounts here)
A file will be set up in the FUMC office for each organization and a copy of the
monthly statements will be maintained in these files. The name, address, and
telephone number of the person who controls the account for each organization
should be provided to the office and kept on file.
B.
Statement of Purpose:
Each organization needing a separate checking account will provide a “Statement of
Purpose" describing a general intent or purpose of the organization.
C.
New Financial Accounts:
In order to establish a new FUMC — Smackover affiliated checking account, or
special fund the organization requesting the account must have approval of the
Finance Committee. A written request should be submitted to the FUMC office with
an explanation of the purpose for the account. The request will be reviewed at the
next Finance Committee meeting, and a decision will be communicated to the
organization within one week of meeting.
Expenditures
A.
Credit Card Purchases
Credit cards will be kept in the church office and signed in and out (form A) when
used. Under no circumstances are credit cards to be lent out or used by anyone other
than the person the card is signed out to.
A credit card charges form (form B) must be supplied for each credit card purchase
and signed by the person making the charge and also signed by the financial secretary
or pastor. This form is to be completed before purchase is made or within 72 hours of
purchase.
Receipts, should be attached to the credit card charges form. For Internet purchases
please print out any type of receipt that the site provides. For phone purchases, a
detailed description of the charge must be provided and a request must be made that a
receipt be mailed to the church office.
Under NO circumstances are FUMC's credit cards to be used for personal reason. If a
card is used for person reason, the person's use of card will be revoked, request for
reimbursement will be made and charges will be filed if payment is not received.
(List all known current church credit cards here)
B.
Requisition Requests
A purchase order form (form D) must be signed by the person requesting payment. It
should also be signed by the financial secretary or the pastor. The form is to be
completed before purchase is made.
When receipts become available, they must be submitted to the financial secretary,
who will attach them to the purchase order form.
C.
Reimbursement Requests
Any request for reimbursement must be accompanied by an expense voucher (form
E)with the required receipts attached. Receipts required in the form must be attached.
This form may be used for cash advances if deemed necessary by the financial
secretary and pastor. A separate form must be completed after the trip or event clearly
showing expenses and accompanied by appropriate receipts.
D.
Documentation Requirements
Checks will be prepared by the financial secretary twice monthly. The checks are
then submitted to the church treasurer for signatures.
The checks should be accompanied by the proper invoices, receipts and forms. Any
check with out the required attachments supporting the disbursement should NEVER
be signed.
The FUMC Financial Secretary will not be given the authority to sign checks.
E.
Church Charge Accounts
The finance committee will annually review church charge accounts and designate
authorized purchasers. Current Charge Accounts include:
(List Current Charge Accounts here)
Collections and Bank Deposits
A.
Sunday Offering
Sunday offerings will be counted and verified by two unrelated people, preferably
ushers.
The designated counters will take the offerings to the church office immediately after
it is collected. The two counters will then tally all cash, coin, and checks, fill out a
tally sheet (form F) and sign off in ink.
The offering, the tally sheet and calculator tape will be placed in a pre-labeled
envelope and placed in the church safe following the church service.
On the
next business day the financial secretary and the pastor will retrieve the sealed
envelope from the safe; open and recount the offerings and sign off (in ink) for
verification.
The financial secretary will then record offerings to appropriate funds, fill out and
make the bank deposit.
Any offerings that are hand delivered or mailed to the church office will be placed in
the church safe until the next deposit is made.
Individuals that bring cash contributions to the church office should receive a receipt
with a copy of the receipt retained by the office.
B.
Communion Offering
Communion offerings are kept separate from the Sunday morning offerings.
The Communion offerings should be collected by two unrelated people. (For
example, the Communion Steward and another designated person).
The two counters will count, verify, and sign off (in ink) and place the offerings in
pre-labeled envelope. This will be placed in the safe along with the Sunday morning
offering envelope.
On the next business day it too will be retrieved from the safe by the financial
secretary and the pastor. The financial secretary and the pastor will recount the
offering, verify and sign off (in ink).
C.
Fund Raisers
Money collected at other FUMC events should be counted by two unrelated
individuals that were designated for that particular event.
A tally sheet should be filled out and signed (in ink) by the two counters and turned in
to the financial secretary within 24 hours of the event. The financial secretary will
place the offerings in the church safe until the following day's deposit is made.
D.
Memorial and Honorarium Gifts
Money or other gifts given for memorials and honorariums go to either a designated
or undesignated fund. The financial secretary will notify the family or person
memorialized or honored with a card or letter noting the name(s) of the donor but not
the amount of the gift. A notice of the gift will be published in the worship folder
unless the donor requests otherwise.
Money and other gifts may be designated for special projects approved by the
appropriate committee or board. Under no circumstances will designated money be
used for any purpose other than what the funds were designated for without specific
permission from the giver.
The memorial committee will determine how undesignated money given in honor or
in memory of friends and loved ones is to be used.
Assets
A.
Bonding: The Book of Discipline requires that treasurers be adequately bonded.
B.
Insurance
A member of the trustees will review church insurance policies each year to insure
adequate coverage.
C.
Bank Reconciliations
Adequate steps should be taken to confirm accuracy of balances shown in all
financial accounts. Balances of these accounts shall be compared to monthly
reconciliation accounts. Differences will be documented using reconciling
items.
Reconcilations should be completed monthly. All accounts should be reconciled to a
ledger on a regular and timely basis.
Proper segregation of duties should be maintained over all bank accounts. The
person(s)responsible for reconciliation should not be the same person(s) who
authorizes transactions.
Reconciliations will be reviewed and monitored by members of the Finance
Committee. The reconciliation is the responsibility of the Financial Secretary. It is
their responsibility to accurately prepare, approve and clear reconciliations in a timely
manner.
Committees / Employees
A.
Committees
Each of FUMC's incoming committee members should receive a copy of the
Procedures and Policy Manual. They will be asked to sign a form (form G) noting
they have read and understood the aforementioned.
B.
Employees
All employees should receive a copy of the Procedures and Policy Manual. They will
be asked to sign a form (form G) noting they have read and understood the manual.
Finance Committee Responsibilities
A.
Bank Statements
The finance chair or chair of trustees should receive the bank statements directly from
the bank, in person, or in a designated P.O. Box that only the Finance Chair or the
Chair of Trustees has a key to.
They should review the statements noting lack of authorized signatures, unusual
vendors, etc.
The statements should be signed off and passed on to the financial secretary so that
he/she can reconcile the statements and prepare a monthly finance report.
B.
Credit Cards
Credit card statements should also be received in this same manor; reviewed and
signed off on and handed over the financial secretary for processing.
C.
Revenues
The deposits from the bank statements should be compared to the financial statements
each month. If anything is questionable the deposits and the required attachments
should be reviewed.
D.
Church Audits
The finance committee will insure that a "review of agreed upon procedures" of the
church's internal controls, financial records, year-end financial statements be
conducted annually.
This can be done by an independent member of the congregation with financial
knowledge or even the treasurer of a neighboring church.
The Book of Discipline does not say that an audit/review must be performed by a
professional or that it must conform to generally accepted auditing standards. Persons
who handle the church funds should not perform the review/audit. Nor should the
pastor.