Financial Management for Episcopal Parishes

James B. Jordan

Description

Designed to help parishes of all sizes establish good financial management processes and policies.

Experience shows that open and transparent churches engender a greater feeling of trust and willingness on the part of the donor. The policies and processes in Financial Management for Episcopal Parishes, which can be implemented by any size church, allow clergy, vestry, and parishioners to establish and document procedures that enable a financially transparent organization. The book defines the roles of the clergy, staff, vestry, and congregation and outlines what needs to be done by them to design and implement a system of checks and balances for financial oversight and stewardship, in order to protect donations and assets. Throughout the book, real-life examples of processes and procedures that did not work (and why) make for enjoyable reading of an otherwise business-like subject. Every reader will recognize some of them in their own church life.

Sujets

• Religion
• Christianisme
• Philosophie et théologie
• Christian Church
• Administration

Informations

• Publié par: Church Publishing Incorporated
• Date de parution: 01 juillet 2017
• Nombre de lectures: 0
• EAN13: 9780898690897
• Langue: English

Extrait

Financial Management for Episcopal Parishes
James B. Jordan
Copyright © 2012, 2017 by James B. Jordan
All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or otherwise, without the written permission of the publisher.
Unless otherwise noted, the Scripture quotations contained herein are from the New Revised Standard Version Bible, copyright © 1989 by the Division of Christian Education of the National Council of Churches of Christ in the U.S.A. Used by permission. All rights reserved.
Material quoted on pages 157–161 copyright © the Association of Certified Fraud Examiners, Report to the Nations on Occupational Fraud and Abuse 2012 . Used by permission.
Church Publishing 19 East 34th Street New York, NY 10016 www.churchpublishing.org
Cover design by Laurie Klein Westhafer Typeset by Beth Oberholtzer
Library of Congress Cataloging-in-Publication Data
A record of this book is available from the Library of Congress.
ISBN-13: 978-0-89869-088-0 (pbk.) ISBN-13: 978-0-89869-089-7 (ebook)
Disclaimer
No part of this book should be relied upon as legal or tax advice. Laws change frequently at the national, state, and local level, and widely differ. As a result, the reader should not rely on the information in this book as it relates to his or her particular situation. The reader must consult competent legal counsel and/or a Certified Public Accountant in his or her locale. In considering searching for advisors, obtain at least two opinions, ask only those specializing in the area of concern, and document the advice received. Information in this book is general in nature and not intended to address the intricacies of a particular situation, regardless of how similar it may appear.
Notice Pursuant to Treasury Circular 230 Regarding Use of Written Tax Advice: Please note that no tax advice is intended or given to the reader in this book. This book cannot be used to avoid penalties that the Internal Revenue Service might impose, as it does not include all of the information required by Circular 230, nor does it offer services that rise to this level of assurance.
Contents
Preface to the Second Edition
Introduction
CHAPTER 1
The Gospels and Money
CHAPTER 2
Church Canons and Financial Matters
CHAPTER 3
Roles and Responsibilities
CHAPTER 4
Parish Monies
CHAPTER 5
How to Read Church Financial Statements
CHAPTER 6
Audits
CHAPTER 7
Fraud
CHAPTER 8
Introduction to Internal Control
CHAPTER 9
Support Internal Control
CHAPTER 10
Disbursements Internal Control
CHAPTER 11
Taxes
CHAPTER 12
Budgets
CHAPTER 13
Other Items
Preface to the Second Edition
T his second edition was necessitated by significant accounting changes promulgated by the Financial Accounting Standards Board (FASB), which is the organization that determines generally accepted accounting principles (GAAP) in the United States. These new accounting standards were significant and changed the way the financial statements are presented in conformity with GAAP to the extent that parts of the book, and in particular chapter 5 , was rendered inaccurate in their information and form in the first edition.
FASB’s new standard, (ASU) 2016-14, Presentation of Financial Statements of Not-for-Profit Entities , is effective for annual financial statements issued for fiscal years beginning after December 15, 2017. It should be noted that these changes are only for those not-for-profit organizations that report their statements using GAAP. This would include all Provinces and Dioceses of the Church, but may include some of the larger Parishes and/or Cathedrals as well.
All three of the financial statements—Statement of Financial Position, Statement of Activities, and Cash Flow Statement—are altered to the extent that reading them requires a different understanding of the underlying accounting than previously held. To that extent, I have continued to keep the information presented in non-accountant terms. CPAs and other accountants should refer to the professional literature of FASB and the AICPA for details.
Chapter 4 has not been modified to reflect the accounting changes for GAAP because the vast majority of parishes do not use GAAP. The changes were made in chapter 5 for the new GAAP pronouncements mentioned above.
Introduction
T his book is intended to be read by clergy—bishops, priests, deacons; by staff—canons to the ordinary, diocesan finance committee members, parish administrators, senior wardens, parish finance directors or finance committee members, other diocesan and parish staff members; by laypeople—vestry members, ushers, bookkeepers, secretaries, committee chairs, volunteers, and parishioners.
This resource is as much about leadership and roles as it is about internal control and processes. Without the desire at the top to implement good internal controls, the rest of the organization will not easily follow through. This requires real leadership. The clergy must take the initiative to insist that the assets of the church are properly accounted for, properly identified, and properly maintained and protected. It is the leadership of the clergy that can set the tone of the parish—including the financial tone.
Most clergy enter the presbyterate from walks of life that do not prepare them for the financial and procedural tasks required to safeguard the assets of the church. Most do not have accounting or business degrees. If they do, they are ahead of the game. However, the not-for-profit organization has major differences in its management and accounting practices from other organizations, much the same as there are major differences among retail, manufacturing, and construction companies. So, too, is the not-for-profit different from all other businesses (yes, the church is a business). The church is a not-for-profit organization (usually a corporation), and has its own lexicon, mission, customer set, management objectives, accounting methods, and definitions of success—large and small.
Further, religious not-for-profit organizations are different from other not-for-profit organizations such as the Red Cross or United Way. And each denomination is different; each diocese is different; each parish is different. Herein lies the rub.
While there are many texts, treatises, canons, church publications, and personal opinions regarding what to do to protect the church’s assets, there are none that deal with how to design and implement the processes and procedures, accountability, checks and balances, and oversight to actually accomplish protecting the assets. This is a how -to book.
Even if all those in the church at all levels could agree on exactly what to do, the implementation of the how is left to those in each organization at each level of the church. This means that the interpretation of what , and the translation into how , are left to those in charge of the implementation—the local staff or volunteers. The plot thickens.
Consider now that each of these staff or volunteers all have varying backgrounds. Most are not trained in accounting procedures or safeguarding assets, and are left to make it up as they go along. Have you heard that before? Additionally, every time new members are elected to the vestry, one-third of the memory of the what and/or how is lost. In three years, the slate is clean and we start afresh recreating varying aberrations of a process to accomplish the same protection that may have been created and implemented better four years ago, but of which no one is aware. Or worse, maybe the what and how are simply no longer addressed.
Hence, the need for this book as a blueprint that any church organization can use to design processes and procedures that are lasting, documentable, hold people accountable, provide for the separation of duties, record and protect the assets, and provide oversight on a regular basis. This book addresses many things that must be clear in your mind before you can begin designing and implementing your own processes. You do not need a business or accounting background to use this book in your church organization. You do need common sense because much of this is common sense mixed with observations of churches from my CPA auditing practice, combined with sound tried-and-true methods from businesses and theories from academia.
The chapters in this book build upon each other, sometimes are parallel to each other, then come together at the end to provide an understanding of the elements necessary (and how to implement them) to build your own processes that work for your church organization. It is important to remember that the principles in this book work for organizations as small as three people and for ones that are as large as thousands. The difference is scale of effort. The scope of effort—the what and the how —does not change.
The principles in this book apply to a church of any denomination and faith. However, the references to canon and church publications are specific to the Episcopal Church.
We must first establish the authority on which the contents of this book are based, both in religious terms and in earthly terms. Chapter 1 deals with the religious authority. Being Christians, we give the most credence to the words and actions of our Lord Jesus Christ. The Bible is loaded with references to money, but in this book we focus on the gospels as the source of authority for the attention to and about money in the church.
Chapter 2 moves from the religious to the earthly authority. In the Episcopal Church, those are the canons. We examine the canons closely to understand what the church has already charged us to do—but, by design, without telling us how to do it. As we will see, the national canon is explicit, but the interpretations by dioceses range from strict to loose.
In chapter 3 we discuss r