DIOCESE OF JOHANNESBURG
INDEPENDENT VERIFIERS MANUAL
(Version 3)
1. OUR GOAL:
To achieve an excellent standard of accounting, reporting and administration throughout the Diocese.
2. OBJECTIVES:
To provide each parish and diocesan organisation with an Independent Verifier who:
· can verify the accuracy of the financial statements,
· will assist with their preparation where necessary,
· is trained/experienced in the special needs of the church and
· can meet the deadline of holding the annual Vestry meeting before the end of February.
In this document any reference to a “parish” includes a Diocesan Organisation.
3. DIFFERENCES IN PARISH NEEDS
It is accepted that the parishes in the Diocese are not uniform in their levels of administration or accounting capability, resulting in different needs. They can for simplicity be divided very broadly into three categories, although in fact there is a continuum of capabilities from the most competent to the least competent.
Category A. These Parishes will be able to produce their own Annual Financial Statements completely. They will probably have a part-time bookkeeper keeping the records up-to-date and would be capable of preparing a year-end accounting pack in the normal way. These Parishes may wish to have their accounts audited and there is no reason why they should not continue to do this. However as aspects of church accounting are different from the normal company/CC accounting, as there is a need to meet the specific requirements of SARS as regards PBOs, it is important that the auditors are given copies of this Manual so that they understand the different requirements they must meet.
Category B. These Parishes will be able to produce regular monthly accounts, with bank reconciliations properly done. They will not however be able to convert these monthly accounts into Annual Financial Statements and will need the assistance and advice from someone who is aware of church accounting standards and the requirements of year-end accounts. This could be an auditor or independent verifier who is prepared to put in the extra work.
Category C. These Parishes will have a Finance Portfolio that is able to handle the weekly takings. Their reporting capability will be limited to producing a monthly cash flow analysis from the bank statement showing opening cash, receipts, payments, closing cash. For these Parishes the Independent Verifiers will need to prepare a spreadsheet summarising the monthly, and in some cases even the weekly transactions, doing bank reconciliations on the way. They will also be required to draw up the Annual Financial Statements and incorporate savings accounts, loan accounts and other amounts owing. A key aspect of the verification process is to encourage, empower and teach members of the Finance Portfolio to acquire financial and administration skills.
The purpose of this analysis of parishes is to help Independent Verifiers to understand the needs of various parishes. Our aim is to improve skills at parish level until all parishes fall into Category A.
4. RESPONSIBILITIES OF CHURCHWARDENS, RECTORS AND COUNCIL
It has always been clear, and is prescribed in the Canons and Diocesan rules, that the Churchwardens and Rectors have primary responsibility to the congregation for the administration and financial management of the Parish, even though these responsibilities may be delegated to a Finance Portfolio. The whole Parish Council also shares responsibility for these activities.
The now well-accepted guidelines on Corporate Governance, provided by the King Report, confirm that the leaders of an organization are primarily responsible for the good governance of their operations and must take responsibility for any delegated authority.
The new PBO position also makes it clear that as a component of the Diocese they also owe a duty of care to the Diocese for the reliability of financial reporting.
Accordingly, it is appropriate that the Churchwardens and Rector of each parish report and confirm that they accept such responsibilities and have carried them out. This should be done as part of the annual reporting process and as a precondition to the report of the independent verifier.
5. CHURCHWARDENS’ AND RECTOR’S STEWARDSHIP REPORT
The report should be addressed to both the members of the Parish and the Diocese, and confirm the specific responsibilities of their mandate. A proposed report is attached as schedule A.
Attached as Schedule B is a checklist prepared to assist them in ensuring that they have done all that is required of them. The duties of churchwardens are contained in Canon 29 and Rule G-1.9.
6. DIOCESAN EXPECTATIONS OF AUDITORS
The Diocese is now registered as a PBO and every parish and many other Diocesan units are a component of this legal entity. Those units that are separate legal entities are still part of the Diocese. Diocesan Rules require that the books of each unit are audited (or reported on by an Independent Verifier) who owes a duty of care to the members of the parish and to the Diocese. In addition, if the Diocese is to produce consolidated accounts for presentation to the South African Revenue Services there must be a common standard of presentation.
Without wishing to dictate to any auditor how to conduct the audit, it is important that they have read this manual and their reports conform to this manual where appropriate. If there is any suspicion that the parish finances or administration are being improperly conducted, the auditor should contact the Bursar or the Diocesan Secretary.
7. DIOCESAN EXPECTATIONS OF INDEPENDENT VERIFIERS
· Each parish is required to appoint either an Auditor or an Independent Verifier at the Annual Vestry Meeting. If a Parish fails to appoint an Auditor or an Independent Verifier, the Diocesan Finance Board will appoint someone suitable.
· Verifiers should be Anglicans and members of a parish.
· Verifiers must not be a member of the parish they are verifying, nor related to or associated with the priests, wardens & council of that parish – present and recent past.
· An Independent Verifier is expected to :
a) Be capable of preparing Annual Financial Statements. This would normally require a recognised accounting qualification or sufficient practical experience in accounting. They would also be expected either to own or to have access to a computer and knowledge of spreadsheets and/or some accounting packages.
b) Have a reasonable understanding of the operation and practices of an Anglican parish.
c) Have received the prescribed training in the Parish and Diocesan requirements. The curriculum for the Training Workshop is attached as Schedule H.
· Because the function of Independent Verifiers is new, it is important that we spell out the Diocese’s expectation of the work they will perform in each category of Parish described above. Independent Verifiers will be expected to develop a plan appropriate to the particular circumstances of the Parish based on the broad guidelines attached as Schedule D.
· Some Parishes do not have people with sufficient accounting experience to maintain an adequate standard in administering the finances and preparing monthly accounts. The Independent Verifier will be expected to help identify people in the congregation who may have the necessary skills or to train those who are willing to learn.
· The Independent Verifiers must understand that the Diocesan auditor may review their work on a sample basis to enable them to complete and audit the Diocesan consolidation.
· A distinction is drawn between the role of the Independent Verifier and the role of the archdeaconry representative on the Diocesan Finance Board. The archdeaconry representative’s role is to help explain and implement the Diocesan Finance Board’s policy in the archdeaconry, to explain the archdeaconry’s needs to the Diocesan Finance Board and to assist in preventing financial difficulties from becoming serious.
8. WORKSHOPS FOR INDEPENDENT VERIFIERS
Training for Independent Verifiers is an integral component of the Diocesan Finance Board’s plan to achieve its goal of excellence. It is envisaged that the initial training process will consist of a workshop. Since on-going sharing, discussion and learning is vital to developing the process and improving standards, annual workshops will be organised by the Diocese. This training does not do away with the need to train churchwardens, councillors and members of finance portfolios as these people hold the primary responsibility for all financial matters. As churchwardens change regularly, the Independent Verifiers will be the primary contact when things go wrong.
9. PROCESS SUPPORT FROM THE DIOCESE
The Diocese is able to provide direct support to Independent Verifiers in the form of important information needed in the verification process. On or about 10 January each year the Diocesan Office will have ready for collection or posting to each Independent Verifier in respect of each Parish they are responsible for:
· A printout from Standard Bank of the bank account movements from 20 December to 10January. This will act as a confirmation of the bank balance and help to identify late bankings and cheque clearances. Unfortunately this service can only be given in respect of Parishes that bank with Standard Bank.
· A copy of the latest insurance schedules giving the insured values of the premises, contents and vehicles which have been insured through the Joint Insurance Fund
· Details of properties of the Parish in respect of which the Diocese is holding title Deeds
· A copy statement showing movements for the last year of any loan or savings account with the Diocesan Deposit Fund and the Development Fund.
· A copy of the Diocesan Debtors statement showing movement through the year of the Diocesan Debtors Account for insurance premiums, unpaid debit orders for the payroll and the like.
· A schedule of salaries and benefits paid to clergy and laity through the Diocese.
10. DIOCESAN ACCOUNTING PRACTICES
Because the practices for church accounting in some cases differ from the practices for company or business accounting (Generally Accepted Accounting Practice or GAAP), it is appropriate that anyone doing the audit or verification of a component of the Diocese is aware of the accounting practices we wish to follow so that they can be consistently applied. Schedule F attached gives details of the practices which the Diocese considers Generally Acceptable at this time.
In the past it has been considered adequate to exclude some of the activities from the annual financial statements of the parish. The new definitions of “good governance” and the requirements of the PBO legislation now make it clear that all activities conducted by the parish and its various components must be included in the annual financial statements. Where a component of the parish prepares for itself audited accounts of its activities, it may be appropriate not to incorporate those activities in the balance sheet and income statement of the parish but merely to make reference to these activities in the notes giving a brief summary of the activities that are omitted in this way.
11. SUPPORT FROM PARISH FINANCE PORTFOLIO
If an Independent Verifier does not receive an adequate set of books or records from the Treasurer or Finance Portfolio the task will be much more difficult. Schedule F is presented as a guide to help Finance Portfolio ensure that they can meet minimum standards of accounting and deliver complete and adequate records to assist the task of the Independent Verifier. It is important not to wait until after the year end. It is recommended that a meeting is arranged as soon as possible after the Vestry to ensure that the new leadership team understands what is required and is performing its duties well.
12. INDEPENDENT VERIFIER’S REPORT
It is recommended that standard wording is used for the Independent Verifiers’ Report. A suggested form of standard unqualified report for each category of parish is attached as Schedule C.
The standard report may need to be modified to meet the particular circumstances where some form of “qualification” is appropriate. Some suggestions are given in Schedule D as a guide.
This Manual has been prepared at a time when independent verification is in its infancy in our Diocese. As we learn more of the benefits and problems of the process this Manual may need to be changed, perhaps on a yearly basis. Improvements can only be achieved with regular feed back from and discussion between those who are involved in the process.
Mark Franklin
May 9, 2005
Schedule A. CHURCHWARDENS’ AND RECTOR’S REPORT:
Stewardship Report by the Rector and Churchwardens to the Members of the Parish and the Diocesan Finance Board for the year ended 31 December 2005.
We accept responsibility for the stewardship of the Parish and confirm that the administration and finances of the Parish have been properly managed during the past year in accordance with the Canons of the Church of the Province of Southern Africa and the Rules of our Diocese and in particular that:
1. All income received has been properly controlled and accounted for.
2. All expenditure has been approved by the Parish Council and all major differences from budget have been explained and approved.
3. A proper record of all Parish moveable assets is maintained and kept in the ……. All these assets exist and are in good order, except for…………
4. Proper Registers of all Parishioners, Services, Baptisms and Marriages and adequate staff and financial records have been maintained, except for………………….
5. Buildings have been properly maintained, except for……………..
6. No emoluments of any kind have been paid to clergy, lay staff or volunteers in any way which does not conform with the laws of the country.
7. The attached annual financial statements (prepared and) reported on by the Independent Verifier correctly disclose all income and expenditure, assets and liabilities of our Parish.
Schedule B: CHECKLIST FOR CHURCHWARDENS AND COUNCIL
This checklist is intended as a guide to good governance and stewardship over the assets and activities of the Parish. It provides for appropriate accountability and transparency both to Parishioners and the Diocese.
1. Organisation
· Have responsibilities for the various activities of the Parish been allocated to a portfolios of Council and committed to in writing so that the scope of responsibility and authority is clear?
· Where necessary are there policies and/or procedures in place to guide the actions of the portfolios?
· Are those portfolios required to report regularly (preferably monthly) to Council on progress, including performance against their budget?
· Does Council meet monthly and conduct business in accordance with a carefully prepared agenda?
· Are minutes kept of all Council and Executive meetings which record all decisions taken?
· Does Council receive copies of all Executive committee minutes?
2. Budgetary control
· Has an annual budget been prepared and approved by Council and Vestry?
· Are monthly accounts prepared which measure performance against budget?
· Are variances from budget explained to Council and approved by it?
3. Controls over income
· Are there clear procedures in place to record all income, particularly Sunday collections, as soon as possible after receipt and for regular banking?
· Is any expenditure made from cash income before banking properly recorded and approved?
· Are these procedures working effectively?
4. Controls over expenditure
· Are there clear procedures for requesting expenditure eg a requisition form which must be supported by vouchers and approved by the responsible portfolio?
· Are cheques signed by two signatories only after the approved vouchers have been presented?
· Is a list of cheque and cash payments made and to be made presented to Council for approval at each meeting?
· Are all vouchers properly filed by month for easy reference and safe-keeping?
· Where electronic banking is done, do both releasers have access to the vouchers when releasing?
5. Accounting records
· Are suitable books or other forms of accounting record kept which enable monthly accounts to be prepared and will meet the needs of the auditors or Independent Verifier?
· Do you have an auditor or Independent Verifier?
· If not, have you discussed the matter with the Diocesan Office?
6. Human resource matters
· Do you maintain a file for each clergy person, lay staff member and volunteer which contains all the information required by law, including a contract of service or employment letter?
· If you do not use the services of the Diocesan office for your monthly payroll process, are you registered for PAYE, Skills Levy and UIF, and do you pay the taxes or levies every month?
· Are you satisfied that no emoluments of any kind have been paid to clergy, lay staff or volunteers without the deduction of taxes in accordance with our tax laws?
7. Controls over assets, registers and records
- Is a proper record of all Parish moveable assets maintained and kept on the Parish premises?
- Do all these assets exist, are they maintained in good order and are they adequately insured?
- Are Parish buildings being properly maintained?
- Are the parish buildings and contents adequately covered by insurance, bearing in mind the replacement costs of these assets. (Advice may be sought from the Independent Verifier or from a local builder or estate agent.)
- Are proper registers of all Parishioners, Services, Baptisms Funerals and Marriages being maintained?
- Are back-up copies of computer files made regularly and kept off the premises?
- Are the parish records kept in fire-proof storage?
8. Reporting to the Parish
- Is there regular reporting to the Parishioners on the financial and other performance of the Parish?
- Is this guided by the Parish Vision and related strategies?
- How frequently does it happen?
- Are both oral and written reports provided?
- Are written reports sent to all Parishioners or are they only seen by those attending services?
- Are there suitable forums for Parishioners to discuss progress with members of Council?
Schedule C. INDEPENDENT VERIFIER’S “STANDARD” REPORT
Category A Parish
Report of the Independent Verifier to the Members of the Parish of ____________
I have reviewed the attached annual financial statements for the year ended 31 December 2005, which were prepared on behalf of the Council by the Treasurer/Finance Portfolio. From my review I can confirm that these statements are in agreement with the accounting records of the parish and that in my opinion adequate records have been maintained. It is not possible to verify income before it is recorded in the records as cash received.
Subject to the above comments, in my opinion, the attached Balance Sheet at 31 December 2005 fairly presents the financial position of the Parish at that date, and the Income & Expenditure account fairly presents the results of its activities for the year ended on that date.
Signed
Independent Verifier
Date
Category B Parish
Report of the Independent Verifier to the Members of the Parish of ____________
I have prepared the attached annual financial statements for the year ended 31 December 2005, from the monthly statements and other records supplied to me by the Council/Treasurer/Finance Portfolio. From my investigations and tests I confirm that these statements are in agreement with the accounting records of the parish and that in my opinion adequate records have been maintained. It is not possible to verify income before it is recorded in the records as cash received.
Subject to the above comments, in my opinion, the attached Balance Sheet at 31 December 2004 fairly presents the financial position of the Parish at that date, and the Income & Expenditure account fairly presents the results of its activities for the year ended on that date.
Signed
Independent Verifier
Date
Category C Parish
Report of the Independent Verifier to the Members of the Parish of ____________
I have prepared the attached annual financial statements for the year ended 31 December 2004, from the records and vouchers that were supplied to me by the Council/Treasurer/Finance Portfolio. From my investigations and tests I confirm that these statements are in agreement with the accounting records of the parish and that in my opinion adequate records have been maintained. It is not possible to verify income before it is recorded in the records as cash received.
Subject to the above comments, in my opinion, the attached Balance Sheet at 31 December 2004 fairly presents the financial position of the Parish at that date, and the Income & Expenditure account fairly presents the results of its activities for the year ended on that date.
Signed
Independent Verifier
Date
Schedule D: QUALIFIED REPORTS
It may be necessary to “qualify” the report on the Annual Financial Statements and the reasons for this will vary. While some are clearly important others are not so serious. Some typical examples follow:
- There are some expenditure vouchers missing.
This is not normally worth worrying about unless the amounts are particularly large or they appear to be inappropriate for a church. Confirmation by the Council that the expenditure was necessary and approved should be an acceptable verification. A letter to the Churchwardens explaining the need for vouchers would also be appropriate.
- Details are missing for some Sunday collections i.e. the income cannot be analysed.
Again this is not often a problem, provided that the amounts recorded are “order of magnitude” with other Sundays in the year. The amounts can be allocated pro rata.
- Amounts are owing in respect of municipal services. This is a frequent problem, particularly because the post in some areas of Soweto and the West is not reliable and statements do go missing. The amounts in question need to be established, usually from the appropriate call centre, and then either accrued or declared in the report.
- If the records supplied are completely inadequate for the Independent Verifiers to be able to do a proper job, then this is a problem and the report should make this clear. This can indicate a serious situation in a parish where there may well be conflict, taking sides etc and they will need some help to sort things out. The Annual Financial Statements will still need to be prepared as well as is possible under the circumstances. There may need to be categories such as “Unanalysed Income” and “Unanalysed Expenses”. The report will need to be modified along the following lines.
“I have prepared the Annual Financial Statements for…..from the (very) limited records and vouchers supplied to me by the Council/Treasurer/Finance Portfolio. It has not been possible to verify certain/many items of expenses/income”.
“While in my opinion, the attached Balance Sheet at 31 December 2004 fairly presents the financial position of the Parish at that date, I cannot report that the Income and Expenditure account fairly presents the results of its activities for the year ended on that date.”
Schedule E: CHECKLIST FOR INDEPENDENT VERIFIERS
Some verification procedures should be common to all parishes, including:
· Opening general ledger balances should be agreed with the previous year’s balance sheet figures.
· Review Minutes of Council Meetings to see if monthly accounts and expenditure schedules have been presented for approval and to note any other matters of financial importance.
· Inspect registration and licence papers for all vehicles to ensure in order
· Inspect lease agreements for all office equipment
· Inspect a register of all moveable assets and check that they all exist
· Review Financial Statements, and bank statements where appropriate, of all sub-groups in the parish (eg MU, AWF, Bernard Mizeki, Zones etc.)
· Ensure that the Annual Financial Statements comply with the Diocesan standard format This is sometimes a problem in parishes who want to keep some of their income out of the income & expenditure account eg special appeals or fundraising activities, which are placed in a separate bank account.
· Look at the emoluments paid to clergy and lay staff and ensure that all amounts paid have been declared and taxed correctly, either by the Diocese or the parish.
Other work will depend on the Category of Parish as follows:
Category A Parish.
The Independent Verifiers will only be expected to perform test checks, inspect expense vouchers and satisfy themselves that the procedures for accounting for all income have been correctly applied. They will need to perform other investigations to satisfy themselves that the records have been properly kept and the figures are correctly disclosed.
Category B Parish
The Independent Verifiers will be expected to perform test checks, inspect expense vouchers and satisfy themselves that the procedures for accounting for all income have been correctly applied. They will need to perform other investigations to satisfy themselves that the records have been properly kept and the figures are correctly disclosed.
The Independent Verifiers will have to prepare the Annual Financial Statements from the monthly or annual reports produced by the finance portfolio/bookkeeper. This may require the preparation of a spreadsheet, re-allocation of amounts repaid on Loans, amounts received in repayment of loans and the accrual of debtors and creditors. The standard of filing is normally good and vouchers for expenditure are normally available.
Sometimes the Savings Accounts, Loan Accounts and Diocesan Debtors have not been handled correctly and will need to be re-allocated using the statements provided by the Diocese.
Category C Parish
The Independent Verifiers will be expected to check all expense vouchers and satisfy themselves that the procedures for accounting for all income have been correctly applied. They will need to perform other investigations to satisfy themselves that the records have been properly kept.
In this situation the Independent Verifiers may have to prepare monthly summaries from weekly takings sheets. An annual summary spreadsheet will then need to be prepared from the monthly analyses before drawing up Annual Financial Statements.
The weekly takings sheets usually analyse the income and such petty cash expenses (with supporting vouchers) as were taken from the cash takings. The total at the end, including overs/unders should then be checked against deposits on the bank statement
The availability of vouchers may be erratic, as may be the filing. These parishes tend to delay submitting their records for verification when they cannot find what they know is needed and this creates problems. Visits before the year end to meet with churchwardens, finance portfolios together with Rectors are often helpful to clear up matters. This is improving each year, but is by no means uniformly adequate. Help is needed, and there are often people who are very willing to be taught.
Schedule F: SUPPORT FROM FINANCE PORTFOLIOS
Basic standards laid down by the Diocese include:
i) The recognition of all monies received and expended in the accounting period from all sources.
ii) The accounting in the statements of all monies wherever these are held.
iii) The assurance that the statements represent fully the intentions of the parish council, committee or other body responsible for their compilation.
iv) The commitment of the Diocese to timeous and transparent reporting on financial matters. Our Rules require that Vestries are held before the 31st March.
v) The safeguarding of the financial and other assets of the parish or organisation.
Minimum documentation to be supplied by the Finance Portfolio:
1. Bank statements and paid cheques for the whole year.
This should be in respect of ALL bank accounts held by the parish at banking institutions and not just the chequeing account.
2. A file containing all expense vouchers cross referenced to cheque number or the Sunday taking sheet. All expenses should be authorised by two members of the finance portfolio or the churchwardens and they should sign a requisition of some sort.
It is important that the most recent statements for all expense accounts that are held by the parish, including municipal services and the Diocese are supplied.
3. A file containing all the weekly income analyses. These may include some petty cash expenses that were handed out on Sunday from the cash received. They should be signed by two people as a correct record of all transactions that took place on the day.
4. Deposit slips or deposit book and all the cheque books used during the year.
5. Signed certificates agreeing the balance due to the parish on any loan made to members of staff, the congregation or Groups. These should include the repayment details.
6. A short income & expense statement for ALL sub-groups in the parish together with their bank statements.
This need only be in a simple form
Opening Balance
Add: Deposits made
Less: Withdrawals
Closing balance
7. Minute Book containing minutes of all Council and Vestry meetings. If a Finance Portfolio is in operation, minutes of its meetings.
8. A inventory (schedule) of the movable assets of the parish as required by Schedule M clause 4 (b) of the Rules of the Diocese.
Some parishes prepare a spreadsheet for their accounts and it is helpful to supply a disc or to send it to the verifier as an electronic attachment.
In some parishes the Independent Verifiers will need to work patiently to improve the knowledge and standard of bookkeeping. Working towards establishing a sound system in a parish is a great help when the members of the finance portfolio and churchwardens step down. Otherwise in many cases it means starting all over again.
Schedule G: DIOCESAN ACCOUNTING PRACTICES
The key principle is that the Annual Financial Statements are understood by parishioners. Simple, understandable terms should be used. The more sophisticated the congregation the more sophisticated the wording can be. However even in these congregations, a knowledge of accounting and its terminology are not always high.
1. Assets
a) Smaller assets such as office equipment, sound systems, computers etc are not capitalized but written off in the year of purchase.
b) Larger Assets such as Motor cars and Organs should be capitalized and depreciated.
c) Buildings. Do not provide depreciation. New Buildings and extensions should be capitalised.
2. Fixed Asset Valuation.
The Insured Value of all parish assets should be shown by way of a note
3. Accrued Income
No income should be accrued. Only income actually received (or received within a day or two after the year end) should be taken into account. Pledges not yet paid should not be accrued. (see Independent Verifiers Report) .
4. Accrued Expenses
Category A and B parishes should accrue material unpaid expenses at year end. However in Category C parishes this only serves to confuse the members who have a limited understanding of accounts and need not be done. In this event the material unpaid expenses at year end should be shown in a note.
5. Fund Accounting
In general this is to be discouraged. If it is done two principles MUST be adhered to:
a) All income must be shown in the income statement and then transferred to the Fund as expenditure. The purpose of the fund must be clearly described.
b) An amount of cash equal to the Fund must be kept separate in a separate bank account or Diocesan Deposit account.
In a very limited number of cases some money may be set aside for a specific purpose, such as the re-furbishing of a facility, and the income may have been received and the expenditure not incurred at the year-end. In this case it is acceptable, but should not be allowed to carry over for a second year. In all other cases, the income and expenditure should be brought to account in the current year.
6. Accounting for Groups within the Parish
It is acceptable to deal with the various Groups collectively on the Balance Sheet as
“ABC Group’s Funds” (the credit balance)
“ABC Group’s Investments.” (the debit balance)
It is recommended to show the movements on each group’s funds by way of a note.
7. Cash Flow Statement
No cash flow statement need be prepared as most parishioners will not understand it.
8. Requirements to meet Section 30 of the Income Tax Act.
The Diocese may be taxable if more than 15 % of its total receipts consists of trading items. Thus rentals received, sales of books, income from fundraising must be shown in full and not net of expenses.
9. Requirements to meet the Diocesan Rules. Monthly accounts must be prepared and presented to the council and displayed on the notice board to inform the parishioners of the financial state of the parish.
Schedule H: TRAINING WORKSHOP FOR INDEPENDENT VERIFIERS
Objectives:
To equip Independent Verifiers with an understanding of
1. What their role is and how to fulfil it
2. Basic church accounting and how it differs from companies/CCs
3. The ways in which they can assist parishes and organisations to improve their standards of administration and accounting.
2) The Role of the Independent Verifier
a) The Independent Verifier is first and foremost a servant to the parish being verified. It is known that a parish where the values of good governance are upheld – honesty, transparency, accountability and trustworthiness – is most likely to be a parish that is growing spiritually, numerically and financially. The report to the parish members should assure them that all is in order.
b) Parishes where there is conflict between the various factions (eg Rector/council; council/executive; any parish group/council/Rector) are invariably struggling financially. An attempt needs to be made to understand the “parish politics” and to help to bring healing and understanding. These conflicts are often centred around, or are exacerbated by money. Do not allow conflicts and problems to be “swept under the carpet” – rather bring them into the open with your council. The problems can then be faced and rectified.
c) The objectives of the Independent Verifiers are broadly to establish that the financial statements comply with the standards laid down by the Diocese of Johannesburg. These are:
3) Basic Church Accounting & Administration
a) Understanding parish income:
i) Pledges/tickets/dues - tithing
ii) Collections – what is included and what is not
iii) Special collections
iv) Fund raising – approval required under certain circumstances
v) Books of first record, receipt books, tickets, pledge schedules, dishonoured pledges
vi) Expenses paid from cash receipts on Sundays
vii) Banking of monies collected
viii) Standard Collection/banking form
b) Understanding parish budgets
i) The preparation of a budget for large, medium and small parishes (see Rule xx)
ii) Monitoring income and its fluctuations against a budget
iii) Approval of expenditure against the parish budget
iv) Abnormal items outside the parish budget
c) Understanding parish expenses:
i) Normal parish expenses;
ii) Capital expenditure – Buildings and cars should be capitalised. Cars should be depreciated in the normal way;
iii) Purchase of equipment. All equipment purchased is written in the year of purchase. It should be entered in the fixed asset register. Parishes are not allowed to lease equipment. If this is done the contracts should be viewed and salient details recorded in the notes to the accounts;
iv) Outreach or helping others;
v) Arrear municipal accounts – arrangement balances;
vi) Fund raising – record keeping – separation from normal expenses?
d) Understanding the Diocesan Office
i) Parish debtors and where they arise – Synods, purchases, insurance premiums
ii) Deposit Fund and its use as a savings facility
iii) Parish loans
iv) Joint Insurance Fund – valuations, premiums etc.
v) Payroll and taxation of all employees – clergy, lay and volunteer
vi) The role of the Diocesan Trustees – property, title deeds etc.
vii) The role of the Diocesan Finance Board – management of Diocesan monies
e) Understanding electronic banking in the Diocesan office
i) How it works
ii) How it can help the parishes
iii) Electronic banking for parishes
iv) Facilities available to parishes – bank statements, payments from savings accounts, the use of the Deposit Fund as a “bank” for parish groups
f) Understanding the Diocesan contribution:
i) How is the amount arrived at for individual parishes?
ii) How is it paid to the Diocese?
iii) What is it used for?
g) Understanding the Diocesan standard format for parish accounts
i) Understanding PBO legislation
ii) What is included where – income
iii) What is included where – expense
iv) Balance sheet – what is required and how should it be shown?
v) The Diocesan consolidation for SARS purposes
h) Understanding the functions of a parish office
i) What is the basic minimum?
ii) What records are required to be kept
iii) The parish registers
iv) Communication – internal and external
v) Computers and fax machines
4. How can you help your parishes?
a) Understanding your parishes. Parish councils frequently change. It is helpful to arrange a meeting with the new council soon after their Vestry meeting to ensure the handover has been smooth.
b) Visit your parishes and look at aspects of their security – cupboards – do they lock? Who has the keys? It is also helpful to you to occasionally attend a service in the parish and it is greatly appreciated by the parish. Worshipping with the congregation shows them that you care.
c) Administration: This will depend largely on the current state of individual parishes and any advice must be offered on the context of the individual units. It may vary from offering to purchase a few files with monthly dividers to advice on the safe-keeping of records, to setting up a parish roll on a computer, to the training of a parish secretary etc. If you are not sure – you can always ask your own parish office to help! Assistance with security in the collection, recording and banking of monies is often needed.
d) Accounting: This may also vary widely from helping to prepare suitable books of first record to the use of an accounting programme such as Pastel accounting. Many parishes have parishioners who would be happy to learn simple spread-sheeting and much useful help can be given in this area.
e) Being available to offer advice: An independent person is often listened to while the Rector and wardens are not – they are perceived as having an “axe to grind”. Conflicts start when a perception grows among what is often just a small group of people that the Rector and/or the Council are “eating” their money.
f) There are also opportunities to help councils and/or congregations to understand SARS legislation vis-a-vis PBOs and the need to for disclosure of group monies. There is still conflict between the old ways of secrecy within the Groups and Zones. A few parishes have managed to overcome this and perhaps they can also help those who are struggling.
g) the Diocesan Office is working on some Standard layout and nomenclature which will be posted as soon as it ready.