Church Admin User Group

My friend Todd recently blogged about a yahoo user group for church administrators. Todd said, "you need to check it out". Todd is wise. So, I'm going to check it out.

Professional Issues Update

Yesterday, I attended a Professional Issues Update class put on by the Indiana CPA Society. This class is interesting because it covers some of the issues facing accounts today. Here are some highlights:

• The rate of change in science and technology over the next decade is likely to be 4-7 times fater than the last decade! That's like planning for 2006 in 1890 (4x) or 1670(7x)!
• Finding and retaining good people is the top issue for businesses.
• Part of finding and retaining good people involves relating to Generation Y or Mellinials.
• Saw this video from brazen careerist.com which helps you understand what college kids are going through today.
• Saw this 60 Minutes video on the Mellinial work force.
• There's a nationwide increase in accounting students and a decrease in accounting professors
• More students studying accounting and using it to lauch their career.
• Actually heard the facilitator say "Accounting is sexy". Oh yeah.
• Convergence of GAAP and International Financial Reporting Standards not a question of if but when. Be prepared.
• IFRS has already impacted Not-For-Profits. There was a case of an Indiana Not-For-Profit that was asked to present IFRS financial statements to obtain a grant.
• Extensible Business Reporting Language (XBRL) is a reporting language that will be used/requested/required in the future.
• Top Technology Initiatives - Business Intelligence is new on the list this year.

More including power point and web links here.

Background Checks on Volunteers?

Because we want to create the safest, most secure environment possible for our church:

We do criminal background checks on all of our staff prior to hiring them. We add a sexual offender check if the staff member is going to be working with children or students.

We do criminal background checks on volunteers who work with children, students, security, or money. For those volunteers who work with children or students we do a sexual offender check as well.

All of our checks are run through SecureSearch from our Fellowship One church management software.

Our staff member responsible for Human Resources does all of the checks on staff.

For volunteers, there is one person per department who is responsible for running background checks on that department’s volunteers.

PROCESS
Before a volunteer begins to serve in an area where background checks are required, he/she is notified that a background check will be done and asked to complete a background check consent form.

The staff member uses the information from the background check consent form to request the background check in Fellowship One.

Fellowship One transmits the data to SecureSearch who runs the check.

The staff member who requested the check scans and emails an electronic copy of the consent form to the person responsible for Human Resources who attaches the file to the volunteer’s record in our database.

When the check is complete, SecureSearch sends it back to Fellowship One electronically and the electronic report is attached to the volunteer’s record in our database

The staff member who requested the background check is responsible for reviewing the check to assess the results.

If the check comes back clean, then the staff member marks the check “Approved” in the data base and moves on in the process.

If the check comes back with results, then the staff member is responsible for following up with the volunteer candidate. If the results disqualify the volunteer candidate, then the staff member updates the status to “Not Approved” in the database and helps the volunteer find another place to serve. If after further investigation the results don’t disqualify the volunteer candidate, then the staff member updates the status as “approved” in the database and moves on in the volunteer process.

Computer Dependent Accountant

I admit it. I'm highly dependent on my computer. You tend to forget how much you rely on all of you computer equipment, software, and data until they crash.

That's just what happened to us a couple of days ago. At one of the worst possible times of the year, we lost a server and a backup system ( I think that's right. I'm an accountant not a computer guy).

Fortunately, we have the best IT team ever. Jason, Ed, and Justin worked like mad men to get things back up and running by the end of the day they discovered the problem. Way to go guys!

This little incident reminded me of the importance of a good backup system. It's a critical part of an IT and Accounting structure. What would happen if a tornado, flood, hurricane, etc. hit? What would happen to data?

We use several types of backup here at GCC. We use tape drives that backup every night. We also use a web based program called Mozy that provides an easy and inexpensive way to backup data offsite. I'm sure there are other backup procedures that I'm not aware of. But, I'm comfortable knowing that we have some procedures in place.

Backup good...lost data bad.

How We Budget

It's that time of year when most of us begin to think about and begin to prepare our budget for the upcoming year. So, how do we do our budget here at GCC? It changes a little bit every year, but the basic steps are:

1. We determine our budgeted revenue. We do this based on years of history as well as current conditions and a healthy amount of faith. This number drives the rest of the budget.


2. We also determine what the cost of our current staff and debt service will be for the upcoming year. These are centralized and fixed costs that have to be subtracted from revenue to determine how much is left to allocate to other ministry and operating expenses.


3. After the revenue number is determined, Tim and Mark discuss mission, vision, and values to determine goals for the upcoming year.


4. Based on their discussion, Tim sets some budget thresholds for each ministry and operating department.


5. Each department leader is given a threshold and asked to prepare a budget that is within that threshold. The threshold usually includes both capital and non-capital expenditures. They're also asked to include some goals and dreams for the upcoming year in their budget.


6. Department leaders prepare their budgets for their departments and turn them in.


7. We gather all of the budget documents and compile them in an easy to review form.


8. Tim reviews the budgets that were turned in and requests additional information, corrections, adjustments, etc.


9. Once Tim is satisfied with the numbers, he presents the final budget to our Senior Management Team (SMT) who approves the budget.


10. After the SMT approves the budget, it's presented to our Board of Directors who approve the budget.

Finding Extra Cash

What do you see in this photo?

To some it's a basement full of junk. To some, it's a storage area. To me, it looks like extra cash for an emergency fund or to payoff a credit card or charitable donation. With a little work, this basement could be cleaned up and turned into extra cash.

Most of us have stuff in our basements and storage areas that we haven't seen, touched, or used for years. We tend to accumulate this stuff over time because it's easier to stick it in the basement than to figure out how to get rid of it. Some of us think about that one day in the distant future when we may actually need it.

What if instead of accumulating stuff in our basement, we took time to deaccumulate the stuff in our basement? What if we sold everything we haven't seen, touched, or used in a year or more? What if I could convince my wife to let me clean our basement? Hmmm...the possibilities.

What is IFRS?

International Financial Reporting Standards (IFRS) is one of the hot topics of discussion at the Financial Accounting Standards Board (FASB). It's an attempt to get U.S. companies accounting and reporting on the same standards as other companies around the world. It's not clear when/if they will be required to be implemented. They may not apply to local churches. But, if adopted, this could require significant investment in staff, IT, and other support. I read this article and noted this:



"If we set a date for adopting [IFRS], we need a minimum of a year, if not two years, of no new accounting systems," said FASB member George Batavick. "Companies need a break." Batavick, who said he is a "strong believer in moratoriums before and after" a future switch to IFRS, discussed the concept in response to a question from the audience at a mid-year update webcast. He also said there should be "at least a one-year quiet period" during which no interpretive guidance would be issued.



"In addition to needing time to manage such a massive changeover, said Batavick, companies "also need a period to have their [IT] systems run two [accounting] systems." That's a reference to the fact that any changeover to IFRS will probably require U.S. companies to manage two sets of books for at least two years."

"Trust Is Not an Internal Control"

We have a local CPA firm come in and audit our books every spring. Every year, Bob reminds me that "Trust is not an Internal Control". He also reminds me that he sees as much fraud in churches as he does in other businesses. Mostly because churches often lack appropriate internal controls.


I recognize that sometimes it takes a lot of resources to implement good internal contorls. I realize that a lot of churches just don't have the financial or human resources to implement all of the controls they need. I understand that it's possible to implement so many controls that ministry gets stifled. I realize that internal controls are often perceived as a lack of trust in your staff.


However, I think we need to look at internal controls differently. A good internal control system not only protects the church but it also shows that staff is valued. They are valued enough to put a system of controls in place that protects them from accusation and temptation but doesn't hamper their ability to do ministry. That balance can be achieved.


Check out this report on Fraud. Is your church and staff properly protected with internal control?

Redesign and Changes to Form 990

Do you file form 990? If so, do you know about the redesign and changes to form 990 for 2008? If not, you may want to check it out.

Cash Flow, Projections, and Tools

This article has links to lots of articles about Cash Flow, Projections and Forecasting, and financial tools.

Church Credit Cards

Got a question about church credit cards today. Thought I'd post about them.

At GCC, we do our best to help facilitate ministry. We want every ministry to succeed. We try very hard to make sure that our staff doesn't have trouble purchasing the stuff they need to do ministry.

So, we offer all of our staff that are responsible for purchasing the ability to use a Granger Community Church credit card. We also allow them to use their own credit card for ministry purchases. In either case, the staff member is responsible for paying the statement and requesting reimbursement for ministry expenses.

Along with the priviledge of using a church credit card also comes some responsibility. So, for those who are issued a church credit card we require the following responsibilities:

• GCC Credit Cards are for budgeted GCC ministry expenses only
• GCC Credit Card balances should be paid on time and in full every month
• If for some reason the balance isn't paid on time and in full, the staff member is responsible for paying the late fees or finance charges
• Violations of these could lead to cancellation of the card

We have the ability to set the credit limit for each card based on the staff member and their purchasing needs. We also have the ability to monitor all of the cards to make sure they are being used appropriately and paid on time and in full.

Most Helpful Resource

Of all the resources that I use, the most helpful resource to me as a church finance director has been:

The Church & Clergy Tax Guide by Richard Hammer

I refer to this book several times a year to answer questions about how to treat various situations that arise. Richard Hammer is an Attorney and a CPA. His knowledge is vast and his information is thorough. I recommend this reference book to anyone responsible for church finance and accounting.

I also subscribe to Richard's monthly newsletter "Church Finance Today" which is a nice supplement to The Church and Clergy Tax Guide.

You can find these resources and more at churchlawtoday.com