Church Groups and accounting practices

by Brett

I just need some straightforward advice. I am a member of a small church. For decades each group (ladies auxiliary,mens club, youth group,stitchers, etc) have had their own bank accounts and handled their own finances, all while using the churches id number on these accounts.

It has come to my attention that while these groups take in contributions and do fundraisers, that the accounting for these funds is never reconciled with the church and never included on church financial statements or reported to the irs.

It seems to me that if individuals who donate to these different missions were to claim a deduction on their personal taxes, but the churches reporting is different that this could lead to serious complications.

I guess my question is this-is the church responsible for reporting this money? It seems to me that regardless of how we operate internally that all financial operation of the church needs to be reconciled at the end of the year.

Thanks and God Bless.

Know the answer? Face the same situation? Please post your answer or comment by using the "comment" link below. Thank you!

Comments for Church Groups and accounting practices

Click here to add your own comments

Aug 20, 2010
Internal Controls
by: Vickey

Your right, Brett, everything should flow the church records. I would also be concerned with internal controls not being in place with each group having their own bank accounts and handling their own finances.

Sep 29, 2010
Nothing Separate
by: KJ

There should be no separate ministry bank accounts. Various ministries and events can be given credit for raising money, but the money itself should be recorded on the churches books. Some ministries get territorial and pile up huge amounts of money from dues and other things. They often end up spending that money on things have nothing to do with ministry. If the CHURCH, wants to keep the money available for the individual ministry to use throughout the year, thats fine, but the ministry should go through the church to get that money.

Church member DONATIONS should be recorded so that each members gets credit on their yearend statement. But money that member SPEND on various items and events, should NOT be credited to the individuals members. When they purchase something, that IS NOT a donation, they are getting something for their money, and should get no tax benefit.

Church do not have to report to the IRS.

Oct 13, 2012
No account, ministry only accepts cash
by: Anonymous

Old small church (less than 100 members) Seperate Ministry treasurer, who does not keep a bank account and only accepts cash. Church only knows of funds given during Sunday offering/tithes, no record of any other money received by this ministry. Ministry members are part of original group that started the church over 40 yrs ago. Change is not easy, and ideas suggestions form new members not welcomed. How can the church protect itself in this situation?

Oct 19, 2012
Internal Controls
by: Mary Ann

Could someone tell me where in the IRS code this is addressed so I can share with my church?
Thank you.

Oct 19, 2012
To anonymous and Mary Ann
by: KJ

It's really not good that in 2012 the treasurer is only accepting cash, for two reasons. Many don't carry cash anymore. I rarely use cash, even for church offerings. I pay by check o r pay online on my church's site with my debit card. I feel it limits the amount you can receive because it limits how a giver can give. It may be that the Treasurer is not good with bookkeeping or understanding how to maintained a bank account. How does the church pay for its bills? Cash
Only, money orders or checks? If the church has a bank Account there is no reason why noncash contributions cant be accepted. The other bad reason for only using cash is, it's easier pilfer yea steal. Sorry. There's no paper trail. Every dime given by a member should be recorded in there account, as well as every expense of the church weekly and monthly

Mary Ann, a lot of the procedures with money handling in the IRS is under nonprofits which the church is. There are a few church specific instructions also. What specifically are u look to see in the IR rules.

Oct 20, 2012
Internal Controls
by: Mary Ann

What I am looking for is the IRS Code that states any funds/expenses under the church's non-profit ID needs to good through the church ledger.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Internal Controls.

If you want to DIY your payroll, I highly recommend you look at using Gusto! It is very user friendly and their support is awesome! Plus they know how to set up and maintain payrolls for churches and nonprofit organizations.

Note: I am a "partner" of Gusto, but as I have told you before ... I never recommend anything that we or our clients have not tried and love =)

Share this page:
Enjoy this page? Please pay it forward. Here's how...

Would you prefer to share this page with others by linking to it?

  1. Click on the HTML link code below.
  2. Copy and paste it, adding a note of your own, into your blog, a Web page, forums, a blog comment, your Facebook account, or anywhere that someone would find this page valuable.