Faith-Based Accounting

Budgeting Defined (Part 2)

I ended the last post by asking, “Are these definitions sufficient?”  Obviously the answer is no because that would be the end of this blog series!  Keep in mind that the three definitions posted were all written by accountants…  As a result, the main flaw with these definitions is that they appear to be about only CONTROLS & CONSTRAINT.  There is much more to a church budget than these two aspects, contrary to what many finance committee members might think… 

These definitions are missing three key words.  See if you can spot them in these additional definitions:

• A strategic budget guides the church in allotting and spending its money in congruence with its deep, defining core values to accomplish a specific, biblical mission and a clear, compelling vision.  It focuses on where God is taking the Church.”  (Malphurs & Stroope; Money Matters in Church)

• “A church budget is simply the vision of the church for the next twelve months expressed in dollars, rather than words.” (Me)

I hope you spotted the same ones I did: mission and vision.  A budget concerned only with controlling things and not including the vision and mission of the church, is not adequate. 

I owe you what??

In any business, having a high level of confidence in the amounts that are owed to various vendors is crucial. This fact is no different within our churches. The key to having this confidence is making sure adequate recordkeeping is maintained. Best practice guides stress that you should always have a consistent method for entering all invoices into your accounting system with the correct information provided on the invoice. This includes invoice number, invoice date, due date, amount, and a description of the products/services indicated on the invoice.

With all accounting software, you should be able to pull a report from your system that will show you a list of all unpaid invoices including the vendor name, invoice date, due date and amount. Having this report can help you examine various things; for instance, are there any accounts payable items that are significantly past due? If so, these should be researched further. Perhaps they have been paid, but due to an incorrect posting, were not removed from the accounts payable list, or maybe a certain invoice was mistakenly overlooked and is truly past due and, therefore, would need to be paid. Also, if there are ever any disputes with vendors over amounts owed, the accurate recordkeeping will give you the assurance you need in order to know whether or not the amounts have been paid in full.

From a fraud perspective, having the Church Governing Council review the unpaid invoice details regularly can hopefully uncover a possible fraud in the early stages.

What methods does your Church use to ensure accurate recordkeeping? Who reviews the unpaid invoice listing and how often?

 --Tia Fisher is a Senior Auditor specializing in church accounting with PSK LLP.

Things I Learned from King Joash

(About Church Business)

 

It is extremely difficult but I try not to bring my work home with me. However, my thoughts often drift to finding ways to help churches while not in the workplace.  For example, occasionally during my personal Bible study time I will see examples of good, as well as bad, financial behavior exhibited in the pages of Scripture.  The story of King Joash in 2 Kings 12:1-16 and 2 Chronicles 24:1-24 is one example.  On one occasion, while reading these passages I saw ten principles or maybe I should call them “best practices” of church financial integrity. 

           

First, however, I wish to beg forgiveness before I begin.  I must inform you that I am an accountant, not a Bible scholar.  In what follows I am not attempting to interpret the Scriptures. I will leave that to much more qualified people. I am simply sharing some basic principles of church and pastoral financial accountability that came to mind as I read from God’s Word.

 

These thoughts were included in Practical Aspects of Pastoral Theology published by Tyndale Seminary Press.  You can find the book at http://www.tyndale.edu/tsp.html or at http://www.amazon.com/Practical-Aspects-Pastoral-Theology-Christopher/dp/0981479154/ref=sr_1_10?ie=UTF8&qid=1286287914&sr=8-10

 

 

Verne Hargrave is the Church and Ministry partner at PSK LLP and author of the book, Weeds in the Garden.