internal controls mississippi conference umc david stotts, cpa treasurer/director of financial...
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Internal Controls
Mississippi Conference UMCDavid Stotts, CPA
Treasurer/Director of Financial Administration
2008 Discipline 258 4 c
The committee on finance shall establish written financial polices to document the internal controls of the local church. The written financial policies should be reviewed for adequacy and effectiveness annually by the committee on finance and submitted as a report to the charge conference annually.
Key Point
Church leaders have a special fiduciary obligation to make sure that all church assets are protected and used properly.
15% of all churches are victimized by unscrupulous employees or members.
5250 UM churches in the US167 UM churches in Mississippi
General Objectives
Safeguard AssetsReliability and accuracy of financial
recordsCompliance with managerial policies
General Objectives Provide
Accurate recordingReliable reports for effective planning
and budgetingEfficiency of current operations
Unreliable Financial Records and Misappropriated Funds Result From
Separation of dutiesEstablish a Crisp Organization StructureRecruitment of qualified personnelAdopted and written accounting
procedures manualMonitoring of accounting workArena of trust
Separation of Duties
Authorization of transactionsRecording of transactionsCustody of assets
Internal Controls Must Be Beneficial-Financially and Emotionally
Remove temptation for misappropriation Prevent a cloud of suspicion Save time and expense in record
reconstruction Improve error detection Reduce confrontations Reduce board division Reduce chance of losses Reduce embarrassment and negative media
Internal Controls
Organization Chart Accounting procedure manual Separation of duties Safe guard of assets Safe guard accounting records Internal audit committee Annual Audit Personnel screening Bonding
Cash Receipts
Use offering envelopesUse checks-not cashReceipts counted by 2 peopleSecure area for countingVerify envelope amountsRestrictive endorsements
Cash Receipts (Continued)
Deposit DailyDeposit in tactUse of lock boxReports-Financial Secretary, Treasurer,
internal auditMail/Drop off-not by one maintaining
accounting recordsNever cash checks payable to church
Cash Receipts (Continued)
Never cash checks out of depositMaintain contribution recordsPeriodic notices to membersMaintain copies of notices sent to
membersAccount for any differences to internal
audit committee
Cash Disbursements
Requisition slips-indicate budget line item
Prenumbered purchase ordersApproval of invoicesFoot and verify invoicesCheck authorization formPre-numbered checksMachine prepared checks
Cash Disbursements-continued
Signers inspect supporting documents2 signaturesSupporting documentation canceled
when paidRetain void checksNever make checks to “Cash”Safeguard blank checks
Cash Disbursements-continued
Expenses in correct periodPetty cash for minor disbursementsVouch petty cash expendituresAre transfers between bank accounts
authorized
Reconciliation
Bank accounts not reconciled by person involved in writing checks
Surprise audit of Petty CashReconcile books to Financial Statements
Other Assets
Lock box for valuables2 signatures to get into lock boxInventory of securities, valuables,
equipment, noncash assetsInsurance adequacy
Resources
The Church Guide to Internal Controls by Richard J. Vargo
GCFA website gcfa.org
Conference website Mississippi-umc.org
Conference wide Risk Managers Phil Hinton Gallagher 601-956-5810
David Stotts, CPA-Conference Treasurer 601-354-0515 [email protected]