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by: Josefina Kautzer

FinancialReporting MSCM8615

Marketplace > Villanova University > OTHER > MSCM8615 > FinancialReporting
Josefina Kautzer
GPA 3.57


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Class Notes
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This 5 page Class Notes was uploaded by Josefina Kautzer on Wednesday October 28, 2015. The Class Notes belongs to MSCM8615 at Villanova University taught by JamesBorden in Fall. Since its upload, it has received 24 views. For similar materials see /class/230545/mscm8615-villanova-university in OTHER at Villanova University.


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Date Created: 10/28/15
Fifty Internal Control Practices for Every Church Reference The Church Guide to Internal Controls Church Law and Tax Report Richard J Vargo 1995 These controls are the most reasonable for all churches large and small to use to reduce the risk of embezzlement and the generation of unreliable nancial reports General Internal Controls N Are speci c accounting functions handled by the individuals or groups who are assigned these functions in the church s organizational chart bylaws or manual of operations 0 Who collects the offering Who counts the offering Who goes to the bank Getting cash to the bank looks like a Laurel and Hardy movie in some churches as those people who hold the Sunday offering look for someone to take it to the bank Consultants to churches and certi ed public accountants have no intention of keeping pastors from the nancial information necessary to operate their churches Information should be freely transmitted as necessary But internal control is best maintained when those given responsibilities by the organization chart carry out their duties precisely as planned Does the church have a written uptodate accounting procedures manual 0 Places responsibility and assures continuity of practice Does the nancial secretary s or treasurer s activities involve only keeping the records of cash collections and preparing the support for disbursements o The separation of duties is the keystone of a church s internal control system 0 Keeping the recordkeeping function distinct from the cash handling function will go a long way in reducing the church s risk of misappropriation of funds Are facilities locked when not in use Page 1 of 5 9 V39 gt1 9 0 D ID ID ID ID I UIbUJNt I Are the accounting records safeguarded at all times 0 Are computer les backed up and the backup copies properly stored Are paper records stored at home or in the church safeguarded from being destroyed altered or tampered with Is an internal audit committee operational 0 An internal audit committee is usually made up of members with accounting or business backgrounds They perform some tests of the accounting records Their tests should be done annually at a minimum Are the accounting records and the underlying internal controls audited annually 0 In churches that have a new treasurer every year the church will be certain to have each treasurer s work reviewed 0 The auditor can identify and correct any deficiencies before they become standard operating procedures 0 A written policy of annual audits precludes any treasurer from feeling paranoid about the members not trusting him or her Are new personnel screened o 70 of all embezzlers are repeat offenders 0 Some screening must occur and may involve as little as a few telephone calls to references former supervisors neighbors and so on Are all employees who have access to cash bonded o Blanket bonds are popular with churches because all employees may be covered Your parish insurance policy should provide this coverage Are members encouraged to use offering envelopes o Envelopes serve to 1 protect members offerings until they can be counted and 2 provide the basis for recording the contribution in the church s accounting records 0 The envelopes should be retained by the treasurer or financial secretary until after a contribution report has been provided to members Are members encouraged to use checks in making their offerings Is the handling of offerings always controlled by at least two people Is the handling of other receipts of cash always controlled by at least two people Is cash counted in a secure area Do the money counters verify that the contents of the offering envelopes are identical to the amounts written on the envelopes by the members Page 2 of 5 D ID ID I OOO O N O N N N L N UI Are all checks received restrictively endorsed as soon as possible Is cash deposited as soon as possible after receipt Is all cash received deposited in the bank 0 Cash receipts should be deposited intact that is without being reduced by disbursements Is cash safeguarded in a safe lock box or similar protective container when at the church Are collection reports given to the nancial secretary or treasurer for entry into the accounting records and a copy sent to the internal audit committee for subsequent audit purposes Are incomingmail and ino ice contributions handled by people who are not responsible for the accounting records 0 If contributions acknowledgements andor statements are mailed on a regular basis this may mitigate the risk from not having these duties separated Has the bank been instructed in writing never to cash checks payable to the church 0 A letter to the bank may not prevent someone from cashing such a check but it would x quot quotquot for the 39 iatiou with the bank rrr Are contribution records maintained for members 0 This is required by the IRS Do members receive periodic perhaps quarterly notices of their contributions from the audit committee Are the periodic notices of contributions sent to each member photocopied o The idea here is to deter anyone from changing the amount on the notice to an amount that is not recorded in the books Are members instructed to report any irregularities or errors in their notices of contributions to the internal audit committee Cash Disbursement Controls 27 28 Are requisition slips prepared for anticipated disbursements that do not have standing authorization Are prenumbered purchase orders used for all disbursements that do not have standing authorization for payment 0 Purchase orders should be used even if requisition slips are not used Purchase orders provide structure and accountability for legitimate purchases Page 3 of 5 0 Their use protects the church from unscrupulous vendors who send unordered goods to churches 29 Are invoices for goods and services approved by a quali ed person before payment is made 30 Are invoices checked for accuracy before being paid 3 1 Is a check authorization slip prepared to support the disbursement of funds 32 Are all disbursements of cash except for minor items made by serially numbered checks 33 Is a check protector used 0 This is a mechanical device that embosses the amount on the check so that nobody can change the amount of the check before it is deposited at the bank 34 Do all check signers inspect all supporting documents before signing 35 Are at least two signatures required for all checks 0 This is strictly an internal control and often not enforced by the bank 0 Prevents one person from being in charge of cash 0 Blank checks should not be signed 36 Are supporting documents canceled when checks are issued Stamp Paid on the paperwork If a voucher check is used attached the paperwork to the voucher 37 Are all voided checks marked and retained 38 Is preparing a check to Cash prohibited 39 Are blank unused checks safeguarded at all times 40 Are expenses always recorded in the correct accounting period 41 Is a petty cash fund used for minor disbursements of cash 42 Are vouchers prepared for all disbursements from the petty cash fund 43 Are transfers among bank accounts properly authorized Reconciliation Practices 44 Are reconciliations of all bank accounts prepared monthly by a person not involved in writing checks 0 Bank statements should be mailed to a member of the internal audit committee or someone designated by the committee to reconcile the accounts 0 Monthly reconciliations should be retained for use during the yearly audit of the books 45 Is the petty cash fund reconciled on a surprise basis at least once a year 46 Are account balances in the books ever reconciled with the amounts presented in financial reports Page 4 of 5 Other Assets 47 Are valuables securities jewels valuable documents etc afforded protection in a bank safedeposit box 48 Are two signers required for access to the safedeposit box 49 Is an updated inventory of securities valuables equipment and other major noncash assets maintained 50 Are scheduled reviews made to determine if insurance coverage is adequate Page 5 of 5


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