GUIDE TO ANGLICAN CHURCH ACCOUNTING AND BOOK KEEPING PROCEDURES DURING THE CLERGY, WARDENS, STANDING COMMITTEE & PCC RETREAT
The paper is based largely on the book on the above topic authored by Gbolahan Olukayode Folayan published in 2016. We acknowledged his experience and involvement in ecclesiastical accounting for over 30 years.
The church in the Old Testament is the ecclesia, the called out Israel of God, also referred to as the called out people of God. The church in the New Testament is the Body of Christ, which he purchased with His blood.
The Anglican Church started in 1534 in England during the protestant reformation. As a protestant church, it has similarities with others as well as its peculiarities. Anglican Church has a well grounded structure and administration. The Anglican Church is Episcopally led and Synodically governed. Its threefold order of ministry is profound; Deacon, Priest and Bishop.
The requirements of effective accounting procedures in the Anglican Church setting is based on the conceptual expectation of charities to report clearly and fully the money received and spent. It could be said that there is presently no uniform accounting practice in the Anglican Churches as a result of lack of universal accounting procedures in the financial reporting of parishes. However, the Dioceses have their set standard and what we want to achieve by the vision of the Diocesan Bishop, is to have a standard format of financial reporting in the Diocese of Awori.
2. Financial Statements & Reports
Financial statements are often prepared at the end of financial year by parishes. Monthly financial returns are also expected during the statutory monthly PCC/Standing Committee meetings. Such reports are to ensure accountability which is a continued interest of parishioners to church funding. The cash inflow that occur in a church are receipts from contributions. It is important to provide adequate information to those contributors on how these contributions are spent. Otherwise, leadership resentment may be fuelled and subsequent calls for contributions may be rebuffed.
These statements are also important to make the scientific approach for assessment and other levies in the determination of the Diocesan budget less cumbersome. Information in this paper will help us to interact with the standard of accounting and financial reporting in compliance with General Accepted Accounting Principle (GAAP). This is aimed at assisting the church account personnel, vicars and wardens in a standard Anglican Church to operate, prepare accurate and uniform financial reports and facilitate a common platform for a scientific annual assessment and auditing system.
3. Receipts and Payment Accounting Basis
A receipt and payment accounting procedure summarizes cash book (cash at hand and cash at bank) for a given period and as well seeks to summarize the cash transactions as in the cash book analyzed and classified under suitable headings, including the opening and closing balances.
Parish Councils must encourage the preparation of a receipt and payment account at the end of the year. With the help of this account and some additional information, an income and expenditure account is prepared to disclose the true results of the church. Various cash receipts and cash payments during the whole year find place in this account in a classified manner with the closing balance reflecting cash in hand and cash at bank at the year end.
All cash receipts during the whole year are recorded on its left hand (i.e, debit) side. While all the cash payments during the year written on its right hand (i.e, credit) side, arranged in classified form.
4. Annual Report
An annual report is a comprehensive summary report on all activities throughout the preceding year or year that just ended. Annual reports are intended to give stakeholders and other interested people information about the Church’s activities and financial performance
5. Contents of Annual Report.
Annual report contains:
a. Minutes of Previous Year Vestry meeting Report
b. Vicar’s Address
c. PCC Report
d. Committee Reports
e. Report of Auditors
f. Report of joint treasurer
a. Statement of Comprehensive Income
b. Statement of Financial Position/ Balance Sheet
c. Statement of Cash Flow
d. Statement of Income & Expenditure
e. Notes to the Account
f. Church Dues
g. Accounting Policies adopted
6. Benefits and Biblical Injunction for Financial Prudence;
Apostle Paul said in 1Cor 14:40 “Let all things be done decently and in order” Funds collected in the church belong to God, not the church leaders and not the handlers. It ought to be used judiciously for the propagation of the ministry and the common good of all worshippers. There is no gainsaying that financial prudence is a huge challenge facing church leaders today, especially in Nigeria. If funds are prudently managed, the following will happen;
a. Facilitate the achievement of the church objectives.
b. Promote effective cash flow management.
c. Entrench accountability and fiscal responsibility.
d. Ensure credible, accurate and timely financial reporting.
e. Protect church official from unwarranted criticism and undue exposure.
f. Timely detection of errors and fraud.
g. Ensure compliance with anti-money laundering regulations.
h. Ensure financial transparency, accountability and professional standards among accounting and financial members.
i. Provide adequate and accurate record of individual donations and/or contributions.
7. Overseers of Church Accounts
The Constitution of the Diocese of Awori is clear as to the joint responsibility of the vicar and the wardens in the parish…See Chapter XI, No 5 & 6. This is an in-built control system. The three of them are joint signatories. In the effective financial management of the parish, the wardens perform the following;
a. Receive all dues
b. Make all payments
c. Superintend all works approved by the parish church council.
d. Document and ensure sustainable usage of the church assets
e. Entrench procedures necessary and adequately sufficient for the ease of collections of offerings
f. Maintain order and decency in the church and church premises
g. Enter in the preacher’s book details of attendance and amount collected at each divine service. This provides adequate control document for auditing purposes.
h. The wardens shall be responsible for the prompt payment to the diocesan treasurer all monies which have been assessed by the Diocesan Board to be due to the Diocese from parish and all other monies as are due to the Diocese in respect of special Sunday withdrawals, collections, and all other special levies that may be authorised by the Diocesan Bishop from time to time. It is expected that priority must always be given to Diocesan matters.
i. The wardens shall present a report of income and expenditure for the preceding month at each meeting of the council, and shall make up and present to the council, at their last meeting, the account of the income and Expenditure as at the 31st day of December, every year.
j. It shall also be the Wardens to ensure copies of the audited account are approved at the annual Vestry Meeting, after which copies shall be sent to the Archdeaconry Board and Diocesan Headquarters. Subscribing members of the Parish are entitled to copies.
k. At every changes of Wardens or Vicars, inventory of the assets and such other valuable items of the Church at the Vicarage must be taken and jointly signed by all the Principal Officers ( Vicar, Wardens) and possibly Parish Secretary.
8. Financial and Accounting Control, Policies and Procedures for the Church
The Church and everyone charged with the responsibility of financial management must as a matter responsibility accept that every financial transaction must be transparent, with full disclosure to God (who sees in secret….) and the congregation (on whose appointment the office is being held). With this conviction, it is pertinent to state the general principles in adopting this guideline.
I. General Principles
1. This guidelines apply to all personnel of the Church, without exceptions;
2. An authorized person must approve every expense in line with the delegated limits of authority. It is not ethical for an individual to approve his/her own expenses;
3. Anyone who approves an expense in making the following assertions:
a. That this is a legitimate expense
b. It will be used for the purposes for which it is meant;
c. Proper approvals have been obtained;
d. The best choice of suppliers and/ or products will be made;
e. By the approval, there is a vouch and attestation that this expense conforms to policy;
4. All monies in every ministry belong to the Church except when collections are specially made on behalf of other agencies, ministries or headquarters e.g. Mothers Union, Disaster Fund, etc.
5. All ministry monies must be turned to the wardens and deposited in the Church designated accounts;
6. The policies constitute the basis for the audit of the Church financial records;
7. The parish Council shall comply with all applicable Church (Church of Nigeria)
II. Review of Risks
The guideline is designed to address and minimize the risks inherent in the Church fiscal operations. Some of these may include policies that will guide and equip Church workers with indispensable skills for the management of risks associated with Church fiscal operations and how to mitigate them. Some of the easily identifiable but still concealable risks inherent in |Church operations include but not limit;
Splitting of invoices
Improper/ non-recording of Church resources
Improper use of Church resources
Theft of Church assets
Over extension of Church resources
III. Fiscal Year
The financial year for the church financial operations generally coincides with national fiscal year of January 1 to December31. Within this period, all cash receipts and disbursements must be duly readiness to present it to appropriate Committees of the Church before final presentation to the Church Council and ultimately the congregation.
It must also be stated that annual dues by subscribing members must be paid on or before 31st December. The payment of annual dues determines eligibility to vote or be voted for at the annual vestry meeting.
IV. Book keeping:
Where the Parish Council has agreed to adopt accrual accounting basis, the statement of accounts shall give a true and fair view of the financial activities of the Council for the financial year and the state of affairs of the Church for a given period.
To make sound financial decisions, the Church must keep track of all its resources,, and in proper categorization. The four primary bookkeeping terminologies that form the basis of accounting are:
Asset: comprising everything of value tangible and intangible owned by the Church.
Liabilities: comprises what the church owes to third parties (Claim against assests).
Expenses: comprises monies spent legitimately by the church. It constitutes financial outflows/ disbursements/payments.
Income: all monies received by the church and generally classified as Receipts.
V. Accounting Records:
Effective data processing requires that the church as a matter of policy should maintain a minimum of five books of accounts for appropriate bookkeeping procedures and accountability. Some of the books may comprise the following:
a. Cash book to capture all receipts and payments
b. Revenue book for listing all donations and income-typed received by the church.
c. Asset Register to receive all fixed assets purchased by the church.
d. Charity/Donation registers to capture financial members and their payments.
e. Membership Register to capture financial members and their payments.
f. Fund Raising or Project Register
g. Special Sunday Collection Register.
h. Tithing and /or offering cards for members.
Fig 1: Monthly Financial Return Prototype from the Cathedral
ANALYSIS OF RECEIPTS AND PAYMENTS FOR THE MONTH OF DECEMBER, 2017.
RECEIPTS PREVIOUS CURRENT CUMMULATIVE
SUNDAY SCHOOL COLLECTION
NEW YEAR THANKSGIVING
SELF DENIAL etc
PAYMENTS PREVIOUS CURRENT CUMMULATIVE
BUS /VEHICLE EXPENSES
PRINTNGS & STATIONARIES
BANK CHARGES etc
OPENING AS AT 31ST OF OCTOBER, 2017
CLOSING AS AT 31ST N0VEMBER, 2017
CASH AT HAND
Fig 2: Annual Church Report & Audited Account Prototype from the Cathedral will be passed around.