Can your lean faith-based organization still have sound internal controls?

Whether you are a new addition or seasoned contributor to the staff of a faith-based organization, you’ve probably already worn many hats to help your organization fulfill its mission. But in the finance department, there are certain hats that are best left unshared.

As a new or growing ministry or paraministry, can you relate to these issues?

  • You have a lean budget and are worried about the cost of hiring staff or additional staff to perform finance functions.
  • You feel you can’t trust just anybody to record tithes, pledges, and other donations in your

While these concerns are important, keep in mind that trust is not an internal control and unfortunately, even longstanding employees have betrayed the trust of faith-based organizations. In organizations of any size, it’s important to separate duties so that no one person can initiate, approve, and record a transaction. Simply put, these hats must be worn by separate individuals.

Here are a few guidelines to help your faith-based organization follow best practices for financial internal controls. Separate each of these functions among different individuals:

Cash Receipts

  • Collection of donations
  • Creation or maintenance of donor records in the donor software system
  • Entry of donations into donor software
  • Bank deposit slip preparation
  • Bank drop-off, and
  • Entry of donations into accounting software.

Cash Disbursements

  • Creation or maintenance of vendor records in the accounting system
  • Access to physical checks
  • Initiation of purchase requests
    • Payroll processing
  • Purchase requisition approvals, and
  • Check signing or electronic bill pay authority.

Bank Reconciliations

Someone independent of the cash receipts and cash disbursements processes should reconcile all bank accounts. This is an area where outsourced help could be utilized to provide an additional level of internal control.

It’s important to separate duties in the finance department to avoid the pain and cost of misappropriation of assets. At YPTC, we have helped many faith-based organizations just like yours implement financial internal controls. Contact us to learn more!

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