Church Accounting

Posted on Wednesday, February 11, 2015

Churches often struggle with accounting; however, as with any nonprofit, it is important for churches to have proper accounting procedures in place.  Proper accounting procedures should focus on segregating duties of those individuals that have custody of church funds from those that authorize and approve transactions, and those that record transactions. 

A church’s main source of revenue are offerings, which comes from various contributors in varying dollar amounts and in different forms.  In order to ensure that funds collected in the offering are safe and properly accounted for, it is important to have an effective internal control structure for counting and depositing the offering.

  1. Cash and checks should be counted immediately after the offering is taken in a secure location without any interruptions.  The offering should be counted by at least two unrelated individuals.  Both the ushers collecting the offering and the individuals counting the offering should be rotated periodically.  

  2. Most churches utilize offering envelopes with a place for the donor’s name, date of contribution, dollar amount and designation of funds.  The amount inside the envelope should be matched with the amount written on the envelope.  Any difference should be noted on the envelope.  The counters should also note on the envelope whether the contribution was “cash” or “check.”  If the contribution was a check, the envelope should include the donor’s name.  The counters may not be able to determine the donor for cash offerings.

  3. All checks should be immediately stamped “For Deposit Only.”  

  4. The counters should complete a count summary for each service’s offering, listing the amount of checks received and the amount of cash received.  The count summary should be signed and dated (in ink) by all counters.

  5. The offering should be deposited in the bank as soon as possible.  It should be kept locked in a safe until the deposit is made.  The individual making the deposit (the pastor) should not be one of the counters.

  6. A copy of the deposit slip and the count summary should be given to the individual recording the deposit in the accounting system (bookkeeper).  It is important that the offering be recorded in the appropriate fund designated by the donor.  Annual contribution statements should also be issued to donors listing the amount given, date, and any designated purpose.

  7. Monthly bank reconciliations should be prepared by the bookkeeper and reviewed by the board treasurer each month to ensure that all offerings received were properly deposited.  As part of the review, the reviewer should look at the cancelled checks for any unusual payees or signatures. 

The other significant control system within churches is cash disbursements. 

  1. Blank check stock should be kept locked with limited access.

  2. All disbursements should have an invoice or supporting documentation listing the payee, amount, date and purpose of payment.  Disbursements should be approved prior to payment by the board treasurer and noted as such on the face of the invoice. 

  3. A check request form should be used for all reimbursements and also approved prior to paying.  The check request form should include the name and address of the person to whom the check is being issued to, the date the check is needed, a reason for the check, name of person requesting the check and all receipts should be attached.

  4. Checks over a specified dollar amount should require dual signatures.  Individuals signing checks (board officers) should be provided with the respective invoices/supporting documentation for each check.  

  5. Once the invoice is paid, it should be marked as such on the invoice to avoid duplicate payment.

  6. Blank checks should not be signed in advance nor should checks be written to “Cash.”

Even a small church should be able to properly segregate accounting duties by utilizing the Board Treasurer to divide responsibilities between the Pastor, Bookkeeper (Secretary) and Board Treasurer.

Posted by: Carrie Minnich, CPA

Posted in Mission Minded Nonprofits

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.

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