Finance Matters
The basic rules of good financial administration are fundamental to all organisations. These include having appropriate financial knowledge and showing accountability and transparency to members. Although council or governing body members are not generally required to have particular qualifications to be appointed, legislation and tax requirements do impose standards of financial competence. There is a lot that can be learnt.
Below are some information and resources to assist you in this area.
It is important that you familiarise yourself with sections 7 and 9 of the Governance Handbook for Parishes and Congregations.
Promoting and encouraging members to give via REG can help to decrease money handling, as there is less cash to handle and bank each week. (See below for more information.)
Money handling
It is important to have proper practices and procedures in place for those who handle the finances of your congregation or parish. This protects both the church and the people who are handling your money.
Below are some important money handling policies and procedures.
- All money must be properly accounted for and transactions recorded.
- Always have two money counters, not from the same family.
- Separate the duties of money handling whenever possible; that is, one member should not be responsible for all aspects of money handling, recordkeeping, entering deposit data and depositing the money.
- Limit the number of people who have access to church funds. Two or three responsible members should have access to and authority to operate congregational bank accounts, including any cash on hand that may be stored in a safe.
- Check your insurance policy regarding money stored in the church or at someone's home.
- Deposit cash regularly and review bank statements alongside church deposit and income receipts.
- Facilitate the cross-training of members. Sufficient members should know how to receipt income properly when the designated member cannot. However, the training needed may vary depending on the size of the congregation and the types of activities conducted.
Budgeting effectively
Expenditure policy and procedures
Here are some suggestions to consider when developing your policy and procedures on spending church funds.
- The governing body needs to agree on who has delegated responsibility to authorise congregational spending and the levels of spending. This could include the pastor, designated council members, church staff or lay workers. Clear approval and authority levels need to be set, so those designated to authorise expenditure have agreed guidelines to follow. For example, expenses of more than $500 require approval. Expenses under $499, if it is a pre-approved budget item, may be incurred by an appropriate team member.
- Ensure that tax receipts are obtained when items are purchased and that they are kept and stored appropriately. Receipts can also be scanned and stored electronically.
- All bank transactions, withdrawals and payments require two signatures, including electronic payments.
- Develop a register of those with authority to spend church funds, including their respective spending levels. (See the downloadable template example on the left.)
- If you are using bank or Visa cards, ensure there is a spending limit and that tax receipts are obtained and kept. It is advisable to ask credit card users to fill out a monthly Visa claim form. (See the downloadable template example on the left.)
- Bank account signatories need to be elected by an approved motion of the council and then updated with the bank.
- Spending decisions are not just the job of the treasurer; they must line up with the pre-approved budget set by the entire congregation or parish, and in conjunction with the delegated spending levels.
- The congregation must accept the church budget at the AGM.
Reporting requirements
Timely and accurate financial reporting is a must because, in monetary terms, it's considered an organisational plan. To make important financial decisions, governance bodies must understand the financial state of their organisation.
It is reasonable to expect an income and expenditure statement with actual versus budget at every meeting and a balance sheet if a major financial decision is to be made when the discussion about the next budget is being held.
You may request detailed financial reports from the previous five years to ascertain trends in expenses and income.
For information on reporting requirements regarding Australian Charities and Not for Profit Commission (ACNC) or Charities Services (CS) New Zealand, see Legislation.
Employee requirements
When you employ someone, there are several legislative and financial requirements that you need to consider.
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