The purpose of auditing church funds differs from the auditing of business funds. Whereas specially trained auditors are required by the world’s organizations to detect fraud and mismanagement of funds, brethren of our congregations can adequately perform the work if given a few guidelines and have a basic understanding of standard bookkeeping practices.
In this way, many more of our brethren can share in this work, rather than the same few being re-appointed each year. It is a good policy to appoint one brother each year to serve for 2 years, so the brother serving the second year is familiar with the procedures to be followed. If a yearly financial report is prepared, the audit should be made for that same period.
Treasurers and deacons should recognize the scope of the auditor’s work. This means having the checkbook in balance with the bank statement, and all the receipts and disbursements properly recorded in a manual ledger or on a computer. The difference between the receipts and expenditures as recorded in the ledger, should agree with the change in the checkbook balance since the beginning of the year. The auditor’s job is to audit the treasurer’s work, not to do the treasurer’s work.
Purpose of an Audit
1. Promotes confidence by the brotherhood in the treasurer, by each knowing there is a yearly review of the treasurer’s work.
2. Provides a means of revealing to the brotherhood a detail of where the church funds are spent. The practice of announcing that the books are open for inspection is good, but few if any members will do so for obvious reasons.
3. Requires at least an annual completing and proving out of the books for the treasurer. This prevents a laxness, which could eventually prove embarrassing to those in charge.
4. Encourages readily understood standard bookkeeping practices.
5. Encourages honesty and discretion in handling of church funds and the careful recording of those transactions.
1. The treasurer should provide the following to the auditors: checkbook register, ledger that reflects the deposits and disbursements and bank statements for the entire fiscal year. If a financial statement was prepared, it should also be given. If the records are recorded on a computer, a check register and detailed trial balance should be printed out and given to the auditors instead of the checkbook register and ledger.
2. Auditors should review the disbursements. This can be done by looking at the check register or ledger. Any items which the auditors feel are inconsistent with generally accepted group practice should be questioned. If the answer given by the treasurer is unsatisfactory in the auditor’s opinion, the minister, bishop or chairman should be notified.
3. Auditors should make sure all receipts and disbursements are properly recorded in the ledger. This can be proven by taking the checkbook balance on the 1st day of the year being audited, add to it the total receipts as shown in the ledger, minus the total checks issued as shown in the ledger, and that balance should agree with the actual ending checkbook balance. A computerized check register report that ends with a correct balance can be used to verify that all transactions are properly recorded.
4. Make sure the checkbook balance agrees with the bank statement. This is done by taking the most recent bank statement’s ending balance, add to it the deposits made since that date but not yet given credit by the bank, and deducting the checks the bank has not yet paid (outstanding checks), and the resulting balance should agree with the present checkbook balance. If the treasurer balances the bank statement by computer, he should print out the outstanding checks for the last month of the period for easy verification by the auditors.
5. When the auditors are satisfied with the records, they should sign off the audit by writing “Audited on (insert date) by (insert auditor’s names)” in the checkbook, check register and in the ledger near the last entry of the fiscal year being audited.
The audit can generally be completed in less than one hour.
Spiritual values will be realized when our auditors confirm that our treasurers and deacons “that are appointed over this business” are “men of honest report.”
— Myerstown PA