How to Establish Financial Review Practices for Your Church

Written by Kim Phegley

Many churches have no safeguards for the money given for God's work. This leaves our churches open to fraud or embezzlement that may go undetected for months or years. Here are 10 practices to protect your church family.

Free Download: Church Financial Review Practices 
(2-page PDF with explanation of each point)  

1. Have your financial records reviewed by a knowledgeable independent party.
   
    
2. All staff responsible for financial and accounting matters should be required to take periodic vacations.
   
    
3. Someone other than the primary accountant or bookkeeper should prepare bank reconciliations and review bank statements for large, old, or unusual reconciling items and suspicious transactions.
   
    
4. Have checks signed by someone other than the one who prepares the checks and who is not related to the preparer.
   
    
5. Segregate duties including not assigning incompatible responsibilities to related parties.
   
    
6. Church offerings should be counted and agreed upon by two or more parties and money should not be left unattended or in the control of only one person.
   
    
7. Ask detailed questions and review the budget by comparing it to actual results.
   
    
8. Checks and money should be received, logged, then posted by a separate individual.
   Generally the person who first touches the mail should open and log the incoming checks.
   
    
9. Perform an external audit.
   
    
10. Document policies and procedures related to financial transactions and reporting.

Management Essentials for Christian Ministries

This document is intended to provide churches, pastors and staff with current and accurate information about the subjects covered.  However, such information is not intended to be sufficient for dealing with a particular legal problem, and the authors and distributors do not warrant or represent its suitability for such purpose.  The reader should not rely upon this document as a substitute for independent legal consultation.

Kimberly Phegley, CPA, CIA is the Internal Audit Manager of LifeWay Christian Resources.  As a certified public accountant and certified internal auditor, Kimberly has performed financial, operational, and compliance audits.  Past experiences include being a manager in public accounting and an internal auditor with a large insurance company.