Sample Church Accounting Policies And Procedures Manual

6. To produce individual charitable gift receipts summaries of all donations received duringa calendar year and distributed to individuals or other charitable tax relief systems.7. To disburse all money contributed to the local church budget, keeping accurate recordsof how money is spent.8. To record all disbursements in the accounting program.9. To ensure that computer files are backed up weekly, at a minimum monthly, and the backups are stored off site. Off-site locations should meet legal and liability requirements.10. To supervise cash balances to ensure sufficient funds are maintained.11. To maintain filing system and storage system for all financial records and banking records.12. To maintain historical data and establish a retention system for old financial records inaccordance with government requirements (For example in Germany you must keepsome records for 6 years, others are for 10 years).Counting TeamThe counting team usually consists of 3-5 church members. The weekly counting team willconsist of 2 unrelated persons. Weekly counting teams should be rotated regularly so thatthe same people are not counting together all the time.1. To work according to the guidelines contained in this manual.2. To prepare an offering count sheet, including a list of all designated offerings and checksreceived.3. To verify that the amounts written on the offering envelopes matches the contents of theenvelopes.4. To restrictively endorse all checks received as required by the bank5. To sign and date the count sheet, verifying everything recorded is correct.Finance Team1. To work according to the guidelines contained in this manual.2. To review bank statements monthly.3. To propose an annual budget that covers the ministry, administrative, personnel, andpractical needs of the church.4. To oversee and monitor the budget and to propose changes as needed to the budget.5. To evaluate the on-going financial status of the church. As part of this the Finance Teamshould recommend to the church the amount of reserves the church should hold.6. To recommend to the church the approval of specific restricted/designated fund accounts.7. To assure compliance to all of the financial policies as contained in this manual.TrusteesTrustees represent the church in all legal matters regarding the church. (In Germany, forBEFG member churches, they will hold the power of attorney from the Bund.)1. To work according to the guidelines contained in this manual.2. To represent the church in all legal matters concerning the property, personnel, and otherlegal documents of the church.3. To ensure that adequate insurance is carried by the church.4. To assist the Finance Team in determining legal aspects of the financial guidelines suchas record retention policy.5. To provide for an audit of the church financial records on a regular basis as determinedby the church.6

6. To ensure that the church is in compliance with legal aspects as required by the city,county, and/or country where the church is located.Section 2 – Internal ControlsFinancial YearThe financial year is [January 1 – December 31].Banking Authorization The church will approve all persons authorized to have bank access (sign checks, makebank transfers, online banking, etc).[Two signatures] will be required for all disbursements.No more than one person in a family will hold bank authorization.No more than [one] staff member will hold bank authorization.No checks will be signed blank.Borrowing Authority Only the congregation, meeting in a regular or specially called meeting with proper notice,may approve the borrowing of any funds from any source.All contracts and/or loans are signed by the Trustees after congregational approval.ReservesReserves are funds that are set aside over time to help meet unexpected expenses orsignificant increases. There are a number of ways to build reserves but one way is to setaside all or a portion of net income (income – expenses) each year. Most experts agree thatchurches should have 3-6 months of operating costs in reserves. If your church has a largelong-term debt, you may want to consider having an additional year of debt payments inreserve.Receipts PolicyThe Finance Team, elected leadership, and staff should familiarize themselves with theircountry’s rules on restricted/designated gifts especially where these gifts are for specificindividuals. In most countries, these gifts do not qualify as charitable gifts for tax purposes.Donors should be notified of this and the church should not issue receipts or letters ofacknowledgement. IMPORTANT: When gifts are received for a specific individual, thesegifts may be considered taxable to the recipient (check locally as to what may betaxable and if they impact any benefits they are receiving from the government; seealso Benevolence).Unless noted, all receipts are considered non-restricted receipts and are to go into the generalbudget. Those gifts that are restricted (designated) may only be accepted if the FinanceTeam has approved an account for designation or is a church budget item.Money received for any purchases (such as fundraisers or dinners) will not be recorded as acontribution or receipt.All monies from offerings, fundraising events, and activity events must be recorded in thechurch’s financial records.7

Individual charitable gift receipts summaries of all donations received during a calendar yearwill be distributed to individuals before [specific date for each country] each year accordingto the country’s laws.The term “love offering” is often used to describe special offerings. Normally, a “love offering”is for a person or group. These may be considered taxable income. Know the laws for yourcountry before giving to an individual. It is usually the best practice to give through anorganization. Taxable income should be reported by the individual; if on staff, taxable incomeshould be reported by the church to the payroll service. Offerings taken to defray the costsof an event (such as a conference, camp, or revival) should be called a “special offering”instead of a “love offering.”Designated & Restricted FundsThe terms designated funds and restricted funds are often used interchangeably. However,there are significant differences between the two. Designated funds are monies set asidefrom the general funds for a specific purpose. For example, your church may decide to setaside a certain percentage of your budget/income for property improvements. Restrictedfunds are monies given, collected, or donated for a specific purpose. The big differencebetween these two is that the church can decide to move designated funds back to thegeneral funds. Restricted funds must be used for the purpose they were given, unlesspermission is granted by the donors or a significant amount of time has elapsed. See notesbelow for suggestions concerning this.[Church name] has a number of restricted/designated funds. It is important that each of thesefunds are properly established, receipted, disbursed, and accounted for. For that purpose,the following policy will apply: The church may establish such designated and restricted funds and accounts as areneeded to further the ministry of the church. The church, through the Finance Team, may establish one or more separate bankaccounts for such designated/restricted funds. Multiple designated/restricted funds maybe held in one account so long as separate accounting is made. No restricted funds shall be received by the church except where the church has approvedor established the fund and its related project or activity. Gifts with an unapprovedspecification will be returned or, at the discretion of the Finance Team, held conditionallyuntil the church can decide whether it wants to approve this restricted fund. Members wishing to establish a new restricted fund should consult with the pastor, theTreasurer, or the chair of the Finance Team to request the church’s consideration of theirspecified use and any alternatives. Documentation of the purpose of each designated/restricted fund, the date ofestablishment, responsible church team, expected completion date, and how remainingmonies are to be distributed shall be kept by the Financial Secretary. . Restricted funds will be restricted solely for the specified use and may not be diverted toother purposes without the written authorization of the donor. Because of this, it isadvisable to use broad categories so that unused fund balances may be used for similarprojects.When establishing and/or promoting a restricted fund or offering, your church may wantto have the following statement as part of its policy:Should at any time in the future the church vote to close [the named restricted] fund, allremaining monies in the fund go into the [general budget/other restricted fund] of thechurch.8

In promoting restricted offerings, this disclaimer should be printed to reserve the right tomove funds.Cash Policy Cash (from the Sunday offering or other event) should never be given out in exchange fora check. In specific circumstances where non-local currency is collected (example, USDin Germany), a check can be written for the cash so that it may be remote deposited in abank or local currency can be exchanged.Checks will never be accepted that are made payable to cash.Petty Cash The church will not maintain Petty Cash for security or other reasons.Or The church will maintain one petty cash fund of [500 ] with [250 ] set aside primarily foroffice expenses and [250 ] for ministry expense. The office staff will maintain this fundthrough procedures coordinated with the Treasurer. This account will be reconciled bythe Treasurer at least monthly and will be recorded in the accounting system.When the petty cash fund reaches [200 ], the fund may be replenished either through theSunday offering (AFTER it has been counted) or through a cash withdrawal from the bank.Cash advances should only be paidTransferring Money between AccountsAt times it may be necessary or beneficial to transfer money between a savings and checkingaccount or between a two different currency accounts.The Treasurer is authorized to transfer up to the equivalent of [10,000 ] between the church’s[U.S. Dollar] account and its [EUR] account on a monthly basis with approval of the chair ofthe Finance Team. Transfer of amounts greater than this require the approval of the entireFinance Team and should be reported at the next church business meeting.Disbursement PolicyBudgeted Items: The church will approve persons authorized to approve disbursements. These personswill be knowledgeable of the budget and question anything irregular. All expenses must be accompanied by an original receipt. Recurring expenses such as utility bills, telephone bill, gifts to the IBC and union, that areadopted as part of the church budget may be approved by the [pastor]. Expenses from other budget line items must be approved by the [ministry team leader].Single expenses over [300 ] must be approved by the [Finance Team]. Purchases of [1,000 ] or greater must have [two] quotes provided before a purchase is tobe made. Items budgeted must have the approval from the Finance Team before acommitment is made. Once expenses have been approved and items purchased the Financial Secretary willprepare checks or bank transfers. The Financial Secretary will file all documents and retain them according to the church’srecord retention policy.9

Over-Spending of Budgeted Items: The Finance Team may approve spending over the budget, up to [1,000 /10%], within anapproved budget line item. In the case of unavoidable excess expenses, the FinanceTeam may grant approval for expenses exceeding the [1,000 /10%] limit as long as fundsare available. All spending over budget will be reported to the church at its next businessmeeting. If the budget over-spending is more than [1,000 /10%], the church mustapprove an amendment to the budget showing this increase.Unbudgeted Expenses: For emergency/urgent expenditures for unbudgeted expenses, the Finance Team maygrant emergency approval up to [5,000 ], as long as funds are available to cover theexpenses. A record of the spending will be reported to the church at the next businessmeeting. The emergency approval should only be done in an emergency situation whenthere is not enough time to secure congregational approval.Restricted/Designated Accounts: A disbursement from a restricted/designated account may only be for what the funds werereceived. A restricted/designated account may not be overdrawn for any reason. When a restricted/designated account has a “sister” general budget account, the fundsfrom the restricted/designated account must be used first before using funds from thebudget account. Restricted/designated accounts should be used in a timely manner.BenevolenceBenevolence is part of who we are as churches. However, governmental regulations canimpact what we can do, who we can help, and if donations to benevolence can be consideredtax deductible. It can impact not only the church and donors but also the recipient. Oneprinciple is clear – you need to have a specific written benevolence policy in place. Contactyour local tax advisor and Baptist union for assistance in developing your policy and adviceon the best way to administer your fund.Section 3 – Internal ProcessesWorship Service Offering Two people should handle the money at all times.During the worship service, the ushers will bring the collected offering to the front of thechurch (in view of all members) or secure it in a specified location.After the service, the counters for the day will pick up the offering and take it to a securelocation.Count loose money, record it on the offering report, and set it aside. Open offering envelopes, verify the amount on the front of the envelopes matches theamount in the envelope, and make notations in red ink of any discrepancies. Bothcounting partners will initial any changes.Record the offering envelopes on the count sheet. It is recommended that envelopeshave a member/donor number instead of a name to maintain the confidentiality of thedonor. Total the amount of money removed from the envelopes, the amount listed on the front ofthe envelopes, and the amount listed on the count sheet. The totals should agree.Restrictedly endorse all checks as required by the bank.10

List checks on the count sheet. Total the amounts of the checks and the amounts listed on the count sheet. The totalsshould agree.List any designated offering amounts on the count sheet.Total the amount of money received for the general fund and for any designated funds.Sign and date the count sheet.Deposit money in local bank and if necessary transfer to main account.Offering envelopes must be kept with the count sheets and retained according to thechurch’s record retention policy.Other Receipts and OfferingsOther receipts and offerings may consist of contributions received during the week (in themail or by bank transfer), fundraising events, youth events, or mission trip events.Contributions: Contributions are handled by the Financial Secretary. Any cash or check contributions should be handled in the same way as listed above forworship service offerings. It is best if a second person verifies any cash and check contributions and signs the countsheet. Contributions received by bank transfer should be printed and recorded in the accountingprogram. All money should be deposited at least weekly.Events: Receipts collected for an event should be counted by two people at the even

Will we have church credit cards? If yes, who should have them and what limit? Will we have church debit cards? If yes, who should have them and what limit? Who will have bank authorization? How many signatures will be required to disburse money? What financial reports do the Finan