Q: We have never had a CPA or firm come in to do an audit because of the expense. However, we believe it is in the best interest of the church to do quarterly audits. What are some guidelines we should use?
Here is a list of items for a full audit that may be helpful. Your board may want to select a few and do them on a rotating quarterly basis:
- Review internal controls to make certain they are adequate.
- Review expense reports of executive employees.
- Review bank reconciliations.
- Determine if investment statements agree to the general ledger.
- Make sure there is support for the amounts recorded with accounts and notes receivable.
- Review property, plant, and equipment (PPE) to verify additions and disposals have been recorded and depreciation is accurate. Even if you don’t operate on an accrual basis, you should still maintain an inventory of fixed assets for insurance and security purposes.
- Review Accounts Payable and Accrued Expenses to determine all amounts incurred but not paid have been accrued.
- Review revenue to make sure the donor system is reconciled to the general ledger.
- Verify the church’s debt statement agrees with the general ledger.
- Reconcile the church’s 941 reports with payroll expenses.
- Analyze current year to prior year amounts of revenue and expense to see if there are any large or unexplained differences.
