Internal Accounting Controls for a Church or Nonprofit

Internal Accounting Controls

Stewardship August 2011

Stealing from a Church/Nonprofit

How easy do you make it for someone to be tempted to “borrow” money from your church or nonprofit?

I know I harp on internal accounting controls quite a bit, but I am seeing more and more cases of embezzlement from a church in the news all the time and most of them could have been prevented by setting up a few simple internal accounting control measures.

One of those cases was a real eye opener for me. I have told you before that I do not know how anyone could steal from a church ... which in my opinion is essentially stealing from God ... but then I read this story about a couple from North Carolina.

They were accused of stealing $208,000 from their church and were convicted to serve 2-3 years in prison. Here is the sad part - they were good people who did a lot of good for their church for over 20 years before this happened according to other church members. They just had some rough financial times and decided to “borrow money from their church and then pay it back.

They would write themselves a check and later would put some money back in the church account as a way to balance the church’s accounting books. But over time it became more and more difficult to pay back. They soon became so disgusted with themselves they even considered taking their own lives.

See the rest of the story in this article in the Gaston Gazette titled: Couple sent to prison for stealing thousands from church.

This was a hurtful situation for the church, its members, and even the couple who stole the money and it could have all been avoided by simply setting up some basic internal accounting controls.

One internal accounting control that would have helped would have been to have another unrelated individual reconciling the bank statements. They would have never been tempted to write themselves all those checks if they knew someone else would have seen them come through the bank statements.

I know that is a person really wants to steal money from a church they can find a way to do it ... but don’t make it easy for them and especially don’t make it easy for good people to be tempted to borrow money from the church.

See this article on Guarding against Church Embezzlement.

Also see some additional internal accounting controls you can set up to protect your organization’s resources.

Free Mileage Log

For all of you that claim business mileage on your taxes or fill out mileage reimbursement reports to turn in to your church or nonprofit, there are specific information that must be included in your mileage logs - especially those of you that live in the United States.

Here is an article on My Basic Accounting Help site that was written for small business owners; however, the same regulations apply to ministers claiming business miles on their personal taxes or turning in for reimbursements: Mileage Log Sheet: What Must Be Included on It

There is a free mileage log included on that page for tracking business miles or for those of you turning in mileage for reimbursement here is a Mileage Reimbursement Report.

And just for Stewardship subscribers and those they choose to share this newsletter with (see bottom of page), I have built a spreadsheet that will automatically figure your miles and totals. Here is the links to the spreadsheets:

FreeChurchAccounting's Spreadsheet Tip

For those of you using the church accounting spreadsheets or any Excel spreadsheet, here is a tip for making your heading appear on every printed page:

Excel 97-2003 Instructions:

From the menu, select File then Page Setup.
In the Page Setup dialog, there are four tabs across the top. Select the Sheet tab. In the field for Rows to repeat at top:, enter 1:1
This will cause row 1 to appear at the top of each printed page.

Excel 2007 Instructions:

On the ribbon, click on the Page Layout tab, then on the Print Titles button in the Page Setup group.
In the Page Setup dialog box that pops up, click on that little box at the end of the Rows to repeat at top text box.
On your spreadsheet, highlight which rows you want to print on every page and then hit Enter.
The Page Setup dialog box will pop back up with desired rows in text box.
Click OK.

I have not used Excel 2010, but I did find instructions for doing this task on this page: http://office.microsoft.com/en-us/excel-help/print-row-and-column-headings-or-labels-on-every-page-HP005201811.aspx

Payroll Tip

For church’s and nonprofits here in the United States, please check with your state to see if you are required to provide Workers' Compensation for your ministers and employees. Most states require churches to provide Workers’ Compensation coverage.

Share this newsletter.

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To insert a link on your website or as a reference on a forum ... here's what to do. At the bottom of each page, you will find a Pay it forward link. Clicking on the link opens instructions and code. Just copy and paste the HTML link code onto your site or forum.

If you want to share it on one of the many social networking sites, just click on the appropriate icon and it will automatically create a post for you.

Till Next Time,

Vickey

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