03.2 - Financial Checklist
by Scott Selman
Listen to advice and accept instruction, that you may gain wisdom for the future.
Proverbs 19:20 (NRSV)
Suggestions that may help local churches improve their stewardship and management of financial resources include the following:
- Educate your congregation about money and the church – spiritual growth through giving, where the money goes, and how it is used.
- Require two persons to count the offering before it is given to the treasurer or financial secretary for deposit.
- Request the bank to mail the church’s monthly bank statements to the church or someone other than the church treasurer.
- Consider rotating persons who serve as the local church treasurer at the beginning of each quadrennium. Ideally, the treasurer should be independent of the pastor(s) and other paid employees.
- Require two signatures on all checking accounts, and don’t sign checks in advance. Check signers should be persons who do not normally count cash or make bookkeeping entries.
- Provide statements of giving to church members on a regular basis, and refrain from accepting “gifts” designated for purposes that are not approved ministries of the church.
- Prepare financial reports on a regular basis. Review these reports for reasonableness in comparison with prior reports and in consideration of special situations at the local church.
- Obtain an independent financial audit each year. The Book of Discipline of The United Methodist Church requires the local church finance committee to make provision for an annual audit of the records of the financial officers of the local church and all its organizations.
- Build financial reserves for emergencies and new ministries, and to ensure you are able to pay all current expenses on time.
- Review all local church insurance policies and make sure coverage is adequate for property, liability, and crime. Manage your risk!
- Provide workers compensation insurance for all local church employees if you have five or more full-time and/or part-time employees. It’s the law in Alabama!
- Consider incorporating the local church, its board of trustees, and/or its child care program.
- Develop and maintain a personnel manual. Personnel manuals help communicate expectations and reduce misunderstandings that may lead to financial difficulties.
- Maintain a basic understanding of church and clergy tax issues, including the reporting requirements of the Internal Revenue Service and the special provisions of the Internal Revenue Code applicable to clergy.
- Review your annual Local Church Report carefully before it is submitted to the Conference. The Local Church Report affects your Conference askings (apportionments) and is an important method of data collection for the denomination.
- Note that local churches are not sales tax exempt in Alabama.
- Help keep apportionments lower for all churches by remitting the full amount of your Conference budget asking.
This checklist should not be used as a comprehensive basis for evaluating the adequacy of a local church’s financial procedures or internal controls. Local churches should apply these suggestions after consideration of the specific facts and circumstances at their individual churches.