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Religious-Organizations-in-Focus
1. Religious organization governance brings one-of-a-kind
challenges, e.g., required oversight of a denominational body
over affiliated but uncontrolled affiliates. Affiliates can include
organizations as diverse as churches, schools, mission boards,
pension agencies, loan fund entities and publishing houses.
Denominational bodies are responsible for proper governance,
oversight and support of the affiliates they steward. The
challenge is to effectively demonstrate appropriate
governance while maintaining healthy respect for the affiliates’
independence.
To provide guidance and support, many denominational
bodies publish literature and host conferences on effective
internal controls and insights on best practices. Is there more
they can do to further demonstrate stewardship and provide
focused training and assistance in areas where their affiliates
struggle?
Denominational bodies may consider a risk assessment
process. First, they work to understand the control structures
and follow with a risk rating assignment. An effective way
to approach this is to develop a questionnaire to gather
documentation on the internal control environment. Such
a questionnaire would capture information related to these
components:
Governance
1. Does the affiliate have a finance committee? If so, does
the committee have a member with finance and/or
accounting subject matter expertise?
2. Does the affiliate produce monthly financial statements,
including budget-to-actual comparisons?
3. Does the affiliate have documented internal control
procedures?
4. Does the affiliate undergo an annual review or audit from
an independent CPA firm?
Budget
1. Does the affiliate have a budget, and how is it approved
and monitored?
2. Is the affiliate allowed to modify the budget after initial
approval?
3. How often are budget-to-actual financial statements
generated?
Cash Receipts
1. Describe the cash receipt process
A. Churches: How many individuals are present when
the offering is counted?
B. Other organizations: How many individuals are
present when the mail is opened and deposit listing
is generated?
C. Do these individuals document the total contributions
received and sign off as verifying the total?
D. Who’s responsible for taking the deposit to the bank?
E. Is the deposit receipt agreed to the bank statement
and the total created when the offering was counted
(total generated in Step C)? Who does this, and how
is it documented?
2. Who prepares the monthly bank reconciliation?
3. Who reviews the monthly bank reconciliation and how?
Cash Disbursements
1. Who are the authorized check signers?
2. Who prepares checks?
3. What approval and documentation are necessary to
process a payment?
4. Does the affiliate have credit cards in its name?
RELIGIOUS ORGANIZATIONS IN FOCUS: RESPONSIBLE
GOVERNANCE OF AFFILIATED ENTITIES
bkd.com
BKD THOUGHTWARE®
By Dan Waninger