Management overriding controls
by Phil Cllins
I work part time as the bookkeeper for a church reporting to the senior pastor. I am a retired accountant having spent 38 years in aerospace accounting, the last 25 years with Lockheed Corporation at the corporate level. Please bear with me while I provide the needed background / contextual information for my question.
The church uses QuickBooks and fund accounting with approximately 35 funds on the balance sheet. The church has two bank accounts, operating and designated. Undesignated contributions are deposited in the operating bank account, designated contributions to the designated bank account.
ALL monies received are counted by volunteer 'teller counters' on Sundays and recorded on either the operating count sheet or the designated count sheet. The tellers deposit all cash on Sunday at the bank night depository box. The endorsement stamp is placed by the tellers on all checks, a stamp for operating and a stamp for designated. The checks remain in the church and are copied on Monday morning and deposited. I enter the data from the teller's count worksheets into a similar Excel worksheet to verify the math / totals of the teller worksheets and to facilitate the grouping/identification/posting to the appropriate QB accounts.
From time to time a donor will write a check indicating on the check but sometimes with a sticky note attached to the check that $ are for operating and $ are for designated. This creates an immediate problem for the teller counters in not knowing on which count sheet to record the check, operating or designated. Either choice will not be correct.
Once I get the checks, I can't split up, i.e. between operating and designated accounts, the check including funds for both operating and designated. So the check is deposited in either the operating or the designated and a transfer is made online between the bank accounts in order to have the check amount in the correct account. The transactions (all recorded in the AJE folder) needed to complete the correction are 3: (1) transfer between online bank accounts; (2)QB: record transfer between bank accounts; (3) AJE to record the distribution of the transfer and this can only be done if I am given reliable information to do so.
Closer to my question. The senior pastor has clearly indicated that if she is approached by a member who is wanting to write a check and then decides to add an amount for a memorial, the pastor will not ask the member to write separate checks but will tell the donor that "we her staff or 'me'
will fix it." I openly disagreed with the pastor by her remarks, by throwing the fix back to me and increasing my workload by unnecessary 'fix it' steps.
Furthermore, I told the senior pastor making regular transfers between cash accounts will also raise red flags during an audit. My words did not impact her position at all. In my opinion she is deliberately managing overriding controls.Answer
Wow Phil. I am not sure what to say. 35 funds??? You do have your hands full!
Okay, I can see both sides of this dilemma. I have constantly stated that churches and pastors need to make their accounting as simple as possible for their volunteers and staff. It is very hard to find anyone willing to take on the responsibility of taking care of the church’s finances, so if you find a good one you should do everything in your power to keep them.
However, I can see your pastor’s side too. It is very difficult to ask your donors to write out two or three different checks.
We have people do that all the time, but we only have one bank account and the distinction is all done in the recording. So I have no easy solution for you.
I do believe that if your donors realized how difficult they were making it on the church staff...most would gladly write out the separate checks. Maybe your pastor could make an announcement to that effect...you know...not make it a requirement but a request and then if some still wanted to put it on one check they could...but most would probably do as requested.
Does anyone have a suggestion for Phil?
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