r e s p o n s i ble f i n a n c i a l S t e w a r d s h i p
without impeding ministry. We have four accounting staff — two full-time and two part-time. This enables us to maintain a distinct segregation of duties, which promotes efficiency and accountability between roles. Separate staff members process deposits, pay the bills, perform bank reconciliations and prepare financial reports. We also use technology to help facilitate this segregation by limiting access to certain software components and by tracking who makes particular transactions. Without this segregation of responsibilities, it becomes much easier for losses to go undetected and for integrity to more easily be brought into question. In churches where this separation isn’t feasible, it’s necessary to get creative; other personnel or volunteers must be enlisted to maintain a healthy checks-and-balances level, and to safeguard church funds. Ministry often directly intersects with financial controls in the area of expenses and resource allocation. To facilitate ministry while at the same time controlling budget spending,
Eastview uses a combination of check requests and staff credit cards with preset limits. Budget funds are released quarterly, and large capital purchases must be approved by the executive pastor. Regardless of size, every purchase must be documented with a receipt and entered in our purchase order system. Also, checks exceeding a certain threshold amount must be countersigned by a member of the pastoral leadership team. Directors meet regularly with the executive pastor and review their ministry budgets. In some cases, the above processes can impact ministries; but, the reduced risk of abuse and higher level of accountability support the financial control. To build on the financial leadership of our past and maintain the highest levels of integrity going forward, church leaders must constantly reevaluate the controls and safeguards in place to protect the resources with which their ministries have been entrusted. In churches where this is done well, we’re more likely to see ministry succeed and God’s provision increase. CE Mark Zimmerman is the pastor of finance at Eastview Christian Church in Normal, IL.
Creating a healthy control environment At LifeChurch.tv, risk management strategies are in place to protect information, financial assets and non-cash, intangible resources. As church leaders, we understand that we’re called to steward the financial resources God has entrusted to us. The cornerstone of stewardship is an effective process of internal control. But, what is “internal control?”
A solid foundation The Committee of Sponsoring Organizations of the Treadway Commission (COSO) is widely regarded as the authoritative source on the establishment of an internal control framework. COSO defines internal control as “a process, effected by an entity’s board of directors, management and other personnel … designed to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations.” The foundation upon which an effective internal control process is built is the control environment. Commonly referred to as the “tone at the top,” the control environment consists of the attitudes, values, awareness and tone of the church’s governing body and senior leaders. Taking the high road of financial accountability requires that church leadership demonstrate: heart for financial accountability, a willingness to be dili-
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gent, and an acceptance of policies and procedures. These values are elements of a healthy control environment. Should every action or transaction be the subject of an internal control policy and procedure? Absolutely not! If that was the case, our churches would become seas of bureaucracy, with no time or energy left for ministry. Instead, within a healthy control environment, we’re able to engage in an ongoing process of financial risk assessment: identifying the risks to the church’s ministry, and assessing for each risk the likelihood of its occurrence — along with the magnitude of its impact, should the risk become reality. As each risk that poses a great threat to the church is identified and assessed, we may choose to accept the risk, if the likelihood of occurrence and/or magnitude of impact is very low; eliminate the risk by avoiding the activity altogether, if the likelihood of occurrence and/or magnitude of impact is high; or mitigate the risk by implementing effective internal control activities.
Common risk management strategies For the remainder of this article, we’ll address some areas of financial risk that are common to all churches, and the
By Cathi M. Linch
control activities we’ve chosen to put in place here at LifeChurch.tv. Cash receipts: Policies and procedures for processing the offering are documented. Each person assisting with the processing of the offering is required to have previously completed training. A minimum of two people must be present while the offering is being processed — no exceptions! The offering is processed in a secure location, away from high-traffic areas, behind a closed door, and often in the presence of a hired security officer. Cash receipts are promptly deposited. (We deposit checks immediately using electronic deposit software.) Cash disbursements: Each staff member has an approval authority limit, based on his or her position and experience. Invoices or check requests in excess of the requestor’s approval authority limit are processed only upon secondary approval by the requestor’s supervisor. Policies and procedures for personal reimbursement of business expenses (including limitations on travel and meals) are documented. Each staff member must submit substantiating documentation for expense reimbursements within 60 days of incurring the expense. All personal reimbursements require supervisory review and approval. Purchasing cards: Each staff mem-