The start of a new year is a time for making resolutions, or at least for taking a fresh look at different parts of our lives and our ministries. This month, we will look at some of the common mistakes made in church finance departments and how these mistakes can be remedied. We will then look at the remedies in more detail throughout the coming months.
Romans 12:4 notes that the body is made up of many parts, and they all have different functions. We use this analogy in many contexts, and it is appropriate when considering the workings of a church. Your church needs ministries such as preaching, discipleship, and worship, but you also need support ministries. These can include IT, accounting, facilities, and office operations.
Finance departments are some of the most significant of these support ministries, as well as being some of the most misunderstood and overlooked. Yet church leaders rely on the information their finance departments provide, and if that information is inaccurate, significant—or even catastrophic—results can occur. In the work performed for ministries at the certified public accountant firm, where I work, we’ve seen personnel layoffs, ministry reductions or discontinuations, and lack of debt compliance as results of improper financial management. Even if a church finds itself in a difficult economic position, options are available through access to accurate and timely information. But the longer the problem continues without proper attention, the worse the consequences will be.
Consider whether your church has allowed any of these mistakes to continue in your operations:
- Lack of proper internal controls
- Lack of competent staffing
- Lack of training
- Lack of adequate financial reporting
- Lack of documented processes and procedures
- Lack of succession planning
- Lack of current information on regulations, trends, and pronouncements
If you’ve lapsed in one or more of these areas, it’s important to recognize why such a lapse needs to be remedied for the good of your ministry. Here’s why each mistake can’t be ignored:
Proper Internal Controls
As a career auditor and consultant, I would be remiss if I didn’t note the most common mistake I see affecting ministries of all sizes. A lack of internal controls not only leaves the church vulnerable to financial losses, it also leaves individual staff and volunteers vulnerable to allegations that they may not be able to defend. To provide basic protection for the church’s financial assets, it’s critical to have segregation of duties over cash receipts. It’s also vital for disbursements to involve at least two people in the custody of the asset, record keeping, and authority of transactions.