Know What You Owe

Both, a statement and a question!

Knowing what the organization owes as well as having confidence you have a complete and accurate picture really takes little to no effort. Start with a review of the debt amortization schedule.  This schedule should require all note obligations and commitments including mortgage, loans, and leases.

Review the schedule on a routine basis, maybe monthly, and verify all obligations are reflected accurately on the balance sheet. For added assurance, periodically request written confirmation of the balance owed, directly from the lender. This should correspond to the amortization schedule. One added measure is a review of the general ledger for regular payments for the items listed on, or excluded from, the debt schedule.

As busy as your organization is, it is easy to miss something when trying to put it all together at the end of the year; but it is also easy to ensure all debt and obligations are accounted for with these basic internal audit steps.

Please share your insight. How involved or simple is your debt schedule? What do you feel needs to be included to be complete?

-- Lisa Chapman is an auditor specializing in church accounting at PSK LLP.