| Internal controls are measures utilized by your | | | | |
| church to safeguard assets from waste, fraud, | | | | 1. Separation of duties: There are three basic |
| and inefficient use. Internal control can be a | | | | types of financial activities that are performed in |
| sensitive issue in churches, especially those that | | | | a church. These are (1) authorization of |
| relies on volunteers. | | | | transactions, (2) recording of transactions, and (3) |
| The church is built on the concepts of honesty, | | | | custody of assets. A lot of small churches have |
| truthfulness, and mutual trust. However, speaking | | | | one person handling all three activities. However, if |
| as a church volunteer myself, most of us realize | | | | at all possible...for that person's sake as well as the |
| that internal controls not only protect the church's | | | | church...you should try to use enough individuals to |
| interests, but can also protect the staff members | | | | achieve proper segregation of these activities. |
| from false allegations. | | | | 2. Establish clear guidelines for the handling of |
| Most volunteers and church staff members are | | | | church funds: A written financial procedures |
| good honest people and do not mind controls put | | | | manual will help establish these guidelines. |
| into place that protects the church's assets from | | | | 3. Conducting an annual financial audit: The audit |
| theft or loss. | | | | may be external (performed by an outside |
| Because each church is unique and operates with | | | | Certified Public Accountant) or internal (reviewed |
| its own set of unique circumstances, the financial | | | | by business people in the church who understand |
| leaders of each church must design their own | | | | financial management). |
| system of internal controls to meet their specific | | | | 4. Require two signatures on all church checks: |
| needs. | | | | Those writing and signing the checks have the |
| Hopefully...you have an accountant in your | | | | responsibility of checking all invoices for accuracy |
| congregation. If not, you might want to consider | | | | before payment is made. |
| hiring one, who is familiar with nonprofits, to help | | | | The handling of church funds is an act of |
| you set up a policy. | | | | stewardship. So we should always do what we |
| 4 Internal Control Procedures that you should | | | | can to see that God's resources are properly |
| include in your church policy are: | | | | managed and cared for. |