2011 Nacc Financial Mgmt & Integrity

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  • 1. MaintainingFinancialAccountabilityand Integrity July 6, 2011 Tommy Greer, CPA Blackburn, Childers &Steagall, CPAs and Consultants

2. One size doesnt fit all,some principles do. 3. Whats the Purpose of the Organization? We Are Provided Resources So We CanChurch Love God, Love Others (Greatest Commandment) Reach Others for Christ (Fishers of Men) Equip Gods People to Do The Above Make disciples who make disciples (Ephesians 4:12) Provide Financially for our Teachers/Leaders(1 Timothy 5:17-18 & 1 Corinth. 9:8-18) 4. Not For Profit Accounting Overview Net Assets Unrestricted Temporarily Restricted Permanently Restricted DONOR INTENT 5. Restricted Contributions or Designated Giving Donor-imposed restrictions as to use or time Gifts for building programs, specific program services or projects, or endowments will be recorded as a restricted contribution. Policy on soliciting, accepting and/or specialfundraisers Pledges - To Record or Not To Record? 6. Train, Train, and then Train Some More 7. Train, Train, and then Train Some More 8. Board Governance &Management - A Big Deal 9. #10 on IRSs Dirty Dozen Tax Scams was Abuse of Charitable Organizations and DeductionsBishopEddie Long "My goal is to help improve accountability and good governance so tax-exempt groups maintain public confidence in their operations. to spark discussions surrounding transparency and accountability among all types of churches and religious organizations.Senator Charles Grassley of IowaGrassley Jan 2011 10. Governance Board / Elders StaffGood Stewardship Finance BodyTeam 11. With Finances this starts with The Finance CommitteeYour Finance Team!13 12. Best Team 13. Best team to manage finances?GODs Finances! 15 14. Best Team 15. Attributes and Responsibilitiesof a Finance Committee Member Active(meet regularly) & Knowledgeable(of non-profit/church operations) Committed, loyal and puts best interests of entity first Review and approve significant finance decisions Assist staff in strategic planning regarding Finances Leads comprehensive Budget process from beginning toend Monitors results as a control but also to ensure financialsuccess Assists in assuring proper controls and oversight are inplace Fill knowledge gaps as needed / resource for staff Helps plan for Stewardship Training 16. Finance Actively EngagedBoard /Elders Finance PurposeStaffof Org.Team Body 17. Fraud in the Church? No Way !!! 18. Fraud in the Church June 9, 2011 19. Should my Organization have an Audit? 20. Internal ControlsBudgeting / Monitoring proceduresOther Internal controlsIf necessary Agreed Upon Proceduresperformed by CPA or someone elseoutside the organization 21. Budgeting Controls Usually cash basis, important to budget for capital improvements, debt &reserves Usually prepared based on prior years results, or zero based(start fromscratch). Participation by department heads and others is essential Approval process with buy in along the way. Monitoring-the budget should be compared to actual results on a periodic basisby Staff and Finance, usually monthly. Unexplained variances should beexamined. Cost/benefit should always be considered in developing the budget processgiven the resources, size and complexity of the organization. Finance provides oversight, not necessarily decide specifically how money willbe spent - set guardrails 22. Budgeting 2012June 2011 FinanceSet Revenue Elders Approve Nov. 2011 ApprovesExpectation BudgetBudget Finance worksCongregationCommunicate with Staff toApprovesDec. 2011 Balance Budget BudgetStaff/Ministries Finance Finance/Staffprepare 1compiles initial Monitor Budget All 2012pagersBudgetMonthly 23. Budgeting-StaffInvolvement Staff/Ministries prepare 1 pagers 24. Budgeting 2012June 2011 FinanceSet Revenue Elders Approve Nov. 2011 ApprovesExpectation BudgetBudget Finance worksCongregationCommunicate with Staff toApprovesDec. 2011 Balance Budget BudgetStaff/Ministries Finance Finance/Staffprepare 1compiles initial Monitor Budget All 2012pagersBudgetMonthly 25. Compilation of initialBudgeting Budget 26. Budgeting 2012June 2011 FinanceSet Revenue Elders Approve Nov. 2011 ApprovesExpectation BudgetBudget Finance worksCongregationCommunicate with Staff toApprovesDec. 2011 Balance Budget BudgetStaff/Ministries Finance Finance/Staffprepare 1compiles initial Monitor Budget All 2012pagersBudgetMonthly 27. Budgeting-StaffInvolvementCongregation ApprovesBudget 28. Budgeting 2012June 2011 FinanceSet Revenue Elders Approve Nov. 2011 ApprovesExpectation BudgetBudget Finance worksCongregationCommunicate with Staff toApprovesDec. 2011 Balance Budget BudgetStaff/Ministries Finance Finance/Staffprepare 1compiles initial Monitor Budget All 2012pagersBudgetMonthly 29. Monitoring of Giving to Budget 30. Budgeting 2012June 2011 FinanceSet Revenue Elders Approve Nov. 2011 ApprovesExpectation BudgetBudget Finance worksCongregationCommunicate with Staff toApprovesDec. 2011 Balance Budget BudgetStaff/Ministries Finance Finance/Staffprepare 1compiles initial Monitor Budget All 2012pagersBudgetMonthly 31. BenchmarkingGrant Thornton Board Governance Survey for Nonprofits 32. Benchmarking ECFA Best PracticesECFA has developed a series of best practices whichencourage organizations to strive for even higherlevels of excellence.ECFA Best Practices (PDF)ECFA Best Practices - customized for churches (PDF) 33. Other Internal Controls All cash received is deposited daily and all deposits require participationby at least two persons. Cash disbursements are permitted only by check and never made out ofofferings or other cash receipts. Checks are prepared only when approved supporting documentation isreceived. Reconciled Bank Statements and Debt Statements are reviewed monthly. Donor records are maintained and reconciled to financial statements. Individual receipts or statements are mailed to donors. Monthly financial statements are prepared timely for review by financecommittee. 34. Basic Accounting Records to be Maintained Good Accounting Software (FCC Shelby) Bank Accounts and Timely Reconciliations to GL not just checkbook Detail Listing of Property and Equipment Inventory of salable products Accounts payable detail listing Debt schedules and related statements from lender Detail gift/donations report Pledges receivable detail report Employees expense report 35. Agreed Upon ProceduresContributions:Mail confirmation to donors representing contributions amounts of $5,000 or morefor the year ended December 31, 2010.On a test basis, weekly collection sheets will be traced to the bank statements andreviewed for completeness, authorized signatures, mathematical accuracy, andtimeliness of deposit.On a test basis, individual contributions of $500 or more will be traced from theweekly contribution reports to the original contribution envelope.The year-to-date contribution listing will be footed and compared to receiptsposted to the general ledger.Distributions:On a test basis, individual cash disbursements will be reviewed for properapproval, support, and classification. 36. Transparency Full Disclosure - we have nothing to hide! 37. Transparency thru our Websites Elevation Church Charlotte, NC 2010 Annual Report 38. Elevation Church - Charlotte, NC 2010 Annual Report 39. Special Tax Issues Donor giving statements/receipts must be prepared and distributed. Compensation of ministers Income tax withholding-not required but probably should(if not estimated taxpayments) Entitled to housing or parsonage allowance Not subject to FICA or Medicare; subject to SE Exempt from SE tax if Form 4361 is filed during first two years Employee business expenses through accountable plan Excess benefit transactions & private inurement Prohibited lobbying and political activity Form 990 Unrelated business income tax 40. Compensation of MinistersStaff - Sample W-2 41. Compensation of MinistersMinister - Sample W-2 42. -Federal church reportingrequirements-Charitable /Designated contributions-Business expense reimbursement-Tax changes & Tax liability reduction-Clergy retirement plans www.YourChurchResources.c om $39.95 Book or CD 43. Current Issues to Consider Paperless Cloud Software Use of Portals TV/Radio vs. Internet opportunities Dashboard Reporting Endowments When was your last Long Range Plan done? 44. E-GivingOpportunitiesAuto bank transfersDebit CardsCredit CardsFinancialreportingon website 45. Outreach / Missions 46. Current Issues to Consider Down economy or slow to recover economy Contributions while Demand for Programs Membership Increasing or Decreasing Group over age 65 to increase 35% over nextfew years(attendance up? Planned giving?) Financially dependent on few major donors 47. Best Practices Finance Committee Active & Knowledgeable Good accounting and internal control systems Comprehensive Budget process from beginning toend Timely reporting, monitoring and transparency Invests in training & technology Stewardship training 48. Weaknesses Weve Noticed Little or no oversight by a Qualified Finance Committee orBoard Lack of Internal controls especially separation of duties Payroll properly accounting for ordained ministers wages Understanding of restricted funds, net assets & related donorrecords Support or documentation for disbursements before paid Level of Accounting knowledge by staff due to lack of training 49. In the End. Successful Corporate Stewardship is based on: An understanding that it all belongs to God, A foundation of management integrity, Good accounting and internal control systems Investing in training & technology Budgeting, reporting, monitoring and transparency Persons charged with governance Planning for the Future.. 50. Other Questions? Email Tommy Greer: Tommy@BCScpa.com Visit - www.BCScpa.com Register for free newsletter htt