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November 21, 2017
Managing Your Church Blog, October, 2014
4 Ingredients for an Effective Accounting System
Don't let sloppy or poor accounting practices compromise your church's finances.
4 Ingredients for an Effective Accounting System

Churches that don’t have effective accounting systems may compromise their church’s finances. Don’t let that happen at your church. Here are four essential ingredients that make up any solid system:

1. Accuracy. Decisions are only as effective as the information used to make them. Oftentimes, I hear leaders say they don’t have the time to review and double-check information. That’s not a good excuse. In order to avoid mistakes, and sometimes costly mistakes, you need build in time to reconcile accounts, create reports, and double-check reports.

2. Timeliness. Late information is the same as no information. Without information in hand, how can leaders in your church make good decisions? Plus: The more time that passes, the easier it is for someone to make an error or lose an important piece of information. Even worse, auditors of your church’s finances would consider consistently late reports a red flag. Why? It signals potential efforts to cover up financial malfeasance.

3. Efficiency. Because church staffs often are stretched, their time needs to be used well. This means the accounting system needs to be understandable and accessible. Create easy-to-understand department labels (or “classes” or “funds,” depending on the software), and a simple format for the chart of account numbers.

4. Support. The more your administrative role is seen as a support to the ministry roles, the better information and cooperation you will receive. Build rapport by offering your help whenever members of your finance team have questions or concerns about how to use the church’s accounting system. One church CFO I know does this regularly, and it opens up communication that later leads to questions ahead of potential problems, rather than after something has occurred.

Vonna Laue is a partner and West Region Director with Capin Crouse LLP, a certified public accounting firm specializing in nonprofit organizations. She is also an Editorial Advisor for Church Finance Today. This post is adapted from a presentation Laue gave to the Mile High Chapter of The Church Network (NACBA) in September.

For more help with managing your church’s finances, see the downloadable resources Internal Controls for Church Finances, Handling Church Money Safely, and Finance Committee Professional Pack I: Managing Money.