Faith-Based Accounting

ox⋅y⋅mo⋅ron - a figure of speech, by which a locution produces an incongruous, seemingly self-contradictory effect…

This past week I received an interesting email.  A Christian bookseller was offering The Left Behind series; Collector’s Edition.  That got me to thinking. (Which at times can be a very dangerous concept!)  As a young boy I was thrown out of many Sunday School classes for asking questions like this:

Isn’t this an oxymoron?  I mean, if it is true (as the Left Behind Series teaches) that soon we will all be “raptured” out of this present world, why would we want to be collecting much of anything?  Oh well, just wondering…

Speaking of collecting, one thing I have noticed is that most churches are habitual collectors. At least when it comes to documents.  Often we are asked by our church clients how long they should keep documents.  When we press the question, we often learn that the church keeps virtually everything.  In fact, it is not uncommon to find a church with offering envelopes dating back more than ten years!  On the other hand, we often discover that the corporate minute books of the same church cannot be located or have not been updated in years! What this tells us is that many churches are confused about what documents are important and what are not.   

Document management is crucial.  Keeping items too long can provide information that can only do one thing; hurt the church.  Conversely, not keeping or failing to update permanent records can have the same effect.

Every church must make document retention a priority.  A starting point is the development of a comprehensive document retention and destruction policy.  If your church does not have one, may I recommend you start the process soon?

If you have any questions, please do not hesitate to contact me at verne@pskcpa.com.  Also, if your questions concern corporate documents (minutes, by-laws, etc.) you might want to contact our friends at the Church Law Group (www.churchlawgroup.com)

The Ultimate Cost of Church Embezzlement

The severity of a fraud incident is usually measured in one way – How much money was lost?  When presenting fraud case studies to church groups I have noticed a common reaction: the larger the dollar loss, the louder the gasps from the audience.  While it cannot be denied that in some cases the economic impact of embezzlement can cripple, or in some cases, result in the death of a congregation, the dollar loss is often the least of the church’s problems.

In the church environment, the real cost of economic fraud has little to do with lost funds.  In fact, most churches can replace stolen money with insurance claims. (Or perhaps a great sermon series!)  The real cost of an incident comes in the aftermath, when the church body learns they have been betrayed.  Loss of trust can, and often does, outweigh the dollars lost to an embezzler.

One of my most unpleasant tasks has been to report embezzlement findings to a congregation.  It is not a great deal of fun to stand on a sanctuary platform, accompanied by attorneys and law enforcement officials, and explain what has happened.  The pain in the room is so thick you can cut it with a knife.  Emotions rage out of control: anger, grief, betrayal, despair and discouragement.  In the worst of cases some congregations cannot adequately address the situation and church members leave in droves.  Some churches don’t survive. 

But, even this may not be the ultimate cost of fraud.  Some people, letting discouragement get the better of them, not only leave the victimized church, but leave the faith altogether.  And seekers, those contemplating following Christ, may abandon their search because of the ugly scene.  This is a cost that cannot be calculated. 

 P.S. – Fraud prevention is a team sport and churches wishing to defend themselves against fraud should develop a fraud prevention team.  Competent accounting and legal counsel should be included on the team roster. If you would like PSK to be a member of your team, or if you simply have a question about any of this, feel free to contact me at verne@pskcpa.com.  As for legal counsel you might want to contact the Church Law Group. (www.churchlawgroup.com)

sanc-tu-ar-y; noun – a sacred or holy place; a place of refuge

Last week, at the end of a long day in New York City doing all of the things tourists do, I plopped down on a bench at the last of our touristy destinations – The Top of the Rock.  The view, I hear, is just as good as that from the Empire State Building, without the two hour wait.

While perusing a map of the NYC skyline a woman sitting next to me at the other end of the bench asked, “Do you speak English?”  My response? “Being from Texas, not very well, but I’ll do my best to help you.”  This came after three days of receiving amusing looks from waiters and hotel clerks after opening my mouth.  The common refrain was “You’re not from New York are you?”  In the City I looked like everyone else but sounded totally different.

My pronounced Southwestern drawl was not the only difference I noticed between New York and North Texas, where I live.  You have to look very closely because they are hidden by the immense skyscrapers and the multitudes rushing past them, but churches are numerous in NYC.  Having acquired an interest in touring churches this past summer in Europe, I cannot resist venturing into older churches.  My wife and I did this several times in New York and I was struck by something about these churches that was far different from home.  Every church we visited, without exception, was open to the public.  Inside, among the beauty of these sacred places, individuals sat silently praying.

In contrast, many of the churches where I live are locked tight, accessible only after pushing an intercom button and obtaining clearance that you have “business” there.  And even after gaining admittance, the visitor is given access solely to the business office.  The place of sanctuary, a place to pray, a place of refuge has been closed off.

Oh, I know the reasons and they do make sense from a risk management perspective.  And I do believe that proper risk management is an important element of good stewardship.  But, perhaps we forget down here in the Bible Belt that the Church is (or should be) in the risk taking business.

My question: Is there not a way we can do both, manage risk while at the same time providing refuge to a world that is hurting?

Pastor Coaching: A Remedy for Cloudy Vision

So you captured God's vision and executed your ministry plans, but now you feel like the chasing dog that caught the car! Lots of new believers, but now dealing with inadequate facilities...small group leaders a little crisp around the edges...budget constraints...

Is your vision getting cloudy?  We know a solution.

Through the leadership of Partners in Church Consulting, PSK (a proud member of the PCC Network) is excited to announce the unveiling of the PCC Coaching Network.  You can have access to Pastor Coaching from some of the nation's most innovative ministry leaders.

Check out the roster of coaches today:  pcccoachingnetwork.com

 

Security at Your Church/School

You need more than faith in God to keep you and your people safe from attacks in your facilities!!

Recently, several high-profile incidents have raised awareness of the threat posed by individuals against churches, schools, and similar organizations.  Dr. George Tiller, a controversial  physician in Kansas, was shot to death in the lobby of Reformation Lutheran Church in Wichita.  James von Brunn attacked the Holocaust Museum in Washington DC; he had a list of other potential targets in his vehicle, including the National Cathedral.  The man who attacked a military recruiting center in Little Rock also conducted ongoing surceillance on a Baptist church in Atlanta.  And although it's been ten years since the horrific catastrophe, our own client, Wedgwood Baptist Church in Fort Worth, lost seven members when a lone gunman opened fire in the church sanctuary.

For help in security issues, I immediately think of our friends at Gatekeepers Security Services, www.gatekeeperssecurity.com.  Chuck Chadwick and Matt Gilstrap stress that it's much more than alarms and locks.  Many churches utilize off-duty police officers or other hired security personnel.  Even more, though, there needs to be an overall awareness by the entire congregation that's proactive.  Effective security takes ongoing training, and so much more.

Contact Gatekeepers for help and insight in this area.  And contact PSK with questions about the business of running your church.

Good morning,

I hope everyone is finding a way to keep cool in this brutal summer heat.  Unfortunately, what I am about to tell you may cause your thermometer to pop up a few degrees!

Over the last year and a half or so, we have been advising our church clients and breakfast attendees that the IRS’s attitude towards churches and ministries appeared to be taking a less than desirable turn.  Our fear was that due to some high-profile cases of abuse, the IRS would begin taking a closer look at churches, ministries and individual ministers.  This week, our fears were confirmed by a brief comment in The Kiplinger Tax Letter.   The following is a quote from the July 10, 2009 issue.

“Ministers will get special attention from auditors as well:  A new audit guide tells examiners to be on the lookout for several potential trouble spots.  Among them: Incorrectly figuring the tax free housing allowance and failing to pay SECA tax on it.  Wrongfully claiming to be exempt from SECA tax, and deducting business expenses that are attributable to tax-exempt income. Go to the IRS's guide to check out the complete list of tax issues that examiners will be looking for.”

You might want to follow the link above to make sure you will come out ok should your church or any of its ministers receive one of those very inconvenient letters from our friends at the IRS.

If you need any help interpreting any of the IRS gibberish don’t hesitate to give us a call. 

Also, this might be a good time to consider having PSK perform an IRS compliance review.  In a compliance review we perform many of the tests that an IRS auditor would perform with one huge difference.  If we find areas of noncompliance we help you get it fixed.  If the IRS finds it… Well you know.

Stay cool…
Verne

Pastor Compensation

The Church Law Group (also known as Anthony & Middlebrook) and Church Executive Magazine are hosting a free webinar on "Compensation Issues for Church Pastors."  This is an important topic that we receive a lot of questions about so I thought I'd share this great resource. 

Click here to register for the webinar.

Do you want to comment on proposed IRS Cell Phone regulations?

Related to the last post on IRS & Cell Phones, I read the actual IRS Notice 2009-46.  The IRS is considering three possible approaches, and they will allow public comment through September 4, 2009.  Go here to see the details. What approach would you suggest?

IRS & Cell Phones

The IRS Commissioner released this statement last week regarding the taxability of employer provided cell phones.  There has been much confusion on this topic.  The current law requires that the employee keep records supporting business use and personal use of employer provided cell phones.  The employer is then required to include the value of personal use as wages. 

These requirements can easily become overwhelming and impractical in this culture.  It is good to see the IRS is agreeing that the rule is outdated and simplification is needed.  Now it is up to Congress to fix it. 

Keep it Simple Stupid!

I think it surprised everyone at the Advance09 Conference (@Advance09) to hear Mark Driscoll (@MarsHill) recommending that churches should cut down, if not eliminate, all of their programming and para-church involvement save for two.  The first is what he calls the “Air War” which is the Sunday worship service and the second is the “Ground War” or small groups.

Now, for most, this seems a bit drastic.  But it does beg the question when we have so many irons in the fire, are we making the impact that we intended?  As we consult with churches all over the nation, we find that many church administrators get caught in the crossfire of conflicting schedules and tight budgets.  Then, unwittingly, these faithful workers lose sight of the passion that originally attracted them to their roles.  And just as passion is contagious, so is apathy.  So perhaps before we take on another heaping portion of responsibility we should ask ourselves, have I been a good steward of what I already have…?