PDF OF THE SLIDES? 2/5/19 THE CHURCH AUDIT: YOU CAN DO THIS! Blake Davis, Host Host& Tech Support

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1 THE CHURCH AUDIT: YOU CAN DO THIS! This Webinar is made possible by your church s generous support of the World Service Fund. Thank you for your faithfulness Discipleship Ministries. Permission is given for use in United Methodist congregations, districts, and annual conferences with this note included Discipleship Ministries. Permission is given for use in United Methodist congregations, districts, and annual conferences with this note included. 1 Blake Davis, Host Host& Tech Support Ken Sloane, Presenter Director of Generosity & Connectional Giving 2 PDF OF THE SLIDES? me: ksloane@umcdiscipleship.org 3 1

2 WHERE IS HOME? 4 WHERE IS HOME? 5 WHY IS THERE SO MUCH Anxiety? Anger? Fear? Resistance? 6 2

3 THE ANNUAL CHURCH AUDIT needs some better PR It is a poor, misunderstood part of the life of the church. 7 THANK YOU, IRS! 8 WHAT INCREASES THE STRESS When the audit is not conducted regularly, it moves from being an ordinary part of the lifecycle of the church to something extraordinary and therefore negative. 9 3

4 WHICH BEST FITS YOUR CHURCH? a) We religiously do our audit every year. b) We do an audit every couple of years. c) We ve done an audit in the past 3 years. d) We haven t done an audit in more than three years. e) What s an audit? Select your answer in poll window. 10 CHURCH AUDIT IS NOT Criminal Investigation Witch Hunt Inquisition Threat Power Play Vendetta Treasurer 11 CHURCH AUDIT IS NOT getting some numbers on the form, getting it signed and getting the DS to take it with her or him after charge conference. 12 4

5 WHAT IS THE CHURCH AUDIT? Audit, the term as used in the Discipline, is meant to be a process that provides reasonable assurance that good stewardship is being used in handling and accounting for the funds and other assets of the local church. - Local Church Audit Guide (2014) 13 WHAT IS THE CHURCH AUDIT? A local church audit an independent evaluation of the financial reports and records of the internal controls of the local church by a qualified person or persons for the purpose of reasonably verifying the reliability of financial reporting, determining whether assets are being safeguarded, and whether the law, the Discipline, and policies and procedures are being complied with. -- Local Church Audit Guide (2014)

6 16 ULTIMATE GOALS OF AUDIT 1. Protection for local church leaders 2. Trust and confidence of donors 3. Continuity in turnover 4. Accountability & transparency 5. Restrictions are respected 6. Checks & balances for funds received and expended. 17 MARY WAS THE TREASURER FOR 50 YEARS. 18 6

7 DOES MY CHURCH NEED AN AUDIT? Every local church. 19 DOES MY CHURCH NEED AN AUDIT? The local church Finance Committee shall make provisions for an annual audit of the financial statements of the local church and all its organizations and accounts. 20 DOES MY CHURCH NEED AN AUDIT? The local church Finance Committee shall make provisions for an annual audit of the financial statements of the local church and all its organizations and accounts. The committee shall make a full and complete report to the annual charge conference. ( 258.4d). 21 7

8 YOUR CHURCH S ANNUAL INCOME? Less than $50,000 $50,000 to $100,000 $100,000 to $250,000 $250,000 to $500,000 $500,000 to $750,000 $750,000 to $1 million More than $1 million 22 DO WE NEED A PAY FOR AN AUDIT? According to GCFA s Guide If receipts are less than $500K/year, a volunteer audit committee is fine. Receipts more than $500K, then the recommendation is for a CPA conducted audit (consult the Audit Guide). 23 Appendix A leads you, step by step, through the audit process. 24 8

9 1 25 Compare the reports of treasurer and financial secretary with bank statements, invoices, etc. Follow the money! How is it treated at different steps along the way (plate donations, electronic or mailed donations, deposits, etc.) Document that donor- designated money and income earned from designated funds are being used correctly. 27 9

10 Review accounting controls systems that reduce the possibility of loss, inappropriate use of funds, or errors Segregation of Duties assurance that more than one person is involved in critical steps in handling money so that there can be checks and balances. 29 Reasonableness of systems and procedures in light of all factors, including the size of the church and its budget

11 7 31 Records that show donor s intent for the use of gifts made to the local church. Confirm that tax reporting requirements are being met in a timely manner Review church property and insurance policies, noting values and when they were last updated

12 What s Involved in the Audit? Review maintenance of important church records (and access). Are electronic records backed up regularly? Paper documents kept safely? 1034 WHO YA GONNA CALL? A church member, accounting expert Someone in the banking field Someone who manages a business Great: someone not yet in leadership Two or more are great. NOT: treasurer, financial secretary, finance chair (relatives of any of these) 35 AUDIT TEAM EXCHANGE? 36 12

13 GET REQUIRED INFORMATION READY ü Treasurer, ü Financial Secretary, ü Finance Chairperson 37 FOLLOW THE ROADMAP! 38 QUESTIONS? THANK YOU! 39 13

14 Monday, February 11, 2019, 10:00AM CST Clergy Taxes: Keep All You Can! Clergy face some unique challenges when it comes to things like social security payments, estimated tax payments, housing allowances or exclusions, and reimbursed expenses. Your corner tax preparer may not understand the unique situation of clergy and finding one who does can save you substantially in money and aggravation. Join us as the Rev. Don Joiner, a certified financial navigate the preparation of taxes a Thursday, May 9, 2019, 6:30PM CDT Going Mobile to Fund Our Mission The statistics are astounding! 95% of Americans own a cellphone, with 77% owning smartphones.80% of social media time is spent on mobile devices, and users of online media spend on average 69% of their media time on a smart phone. How is your church communicating your funding? Postal mail? Text in an ? There is a whole, wide world at your fingertips! Join us as we scratch the surface of your smartphone for ways to move people to generous support of your church s mission!