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Operations 103 Finances: Class 1. Level 1: Certificate in Operations . Operations 101—Staffing Operations 102—Communications Operations 103—Finances Operations 104—Finances Operations 105—Facilities . Operations 103—Finances. Cash & Fungible Assets Income Expenses Budgets Reporting.

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level 1 certificate in operations
Level 1:Certificate in Operations
  • Operations 101—Staffing
  • Operations 102—Communications
  • Operations 103—Finances
  • Operations 104—Finances
  • Operations 105—Facilities
operations 103 finances
Operations 103—Finances
  • Cash & Fungible Assets
  • Income
  • Expenses
  • Budgets
  • Reporting
  • Audits & Financial Reviews
  • Financial Health
  • Tax & Legal
  • Insurance for Employees
  • Insurance for the church
tech issues
Tech Issues
  • Do not “un-mute” yourself by clicking the red microphone
  • If you are called on to speak, David will un-mute your mic.
  • The recording will be posted shortly after class.
today s topic
Today’s Topic

This topic sounds simple until you begin to define it.  Churches need great cash flow management.  They often handle a significant amount of cash on Sundays and during the week.  There must be adequate procedures in counting the offering, as well as security of offerings and offering boxes.  Churches must handle cash advances and cash for youth trips. 

today s topic cont
Today’s Topic, cont.

There are often cash surpluses and cash reserves.  If stock is given, the church must decide to sell or hold it.  This class will define cash and fungible assets, giving policy and practices on cash management.  Along the way, we will examine the cash practices of a large church.

chris gunnare
Chris Gunnare

Chris is the Chief Operations Officer at the Lutheran Church of Hope in West Des Moines, Iowa. The church has 9,500 in worship and Chris has come out of the business community to his present position. Through this leadership role in the church, he provides guidance to the following ministries: worship, production, fellowship, administration, finance, hospitality, facilities, communications and Café Hope.

cash fungible assets

Cash & Fungible Assets

Chris Gunnare

Chief Operating Officer

Lutheran Church of Hope

West Des Moines, Iowa

internal controls
Internal Controls
  • What are they?

The American Institute of Certified Public Accountants defines it as all the coordinate methods and measures adopted within an organization to safeguard its assets…

Internal controls are a set of policies and procedures to prevent deliberate or misguided use of funds for unauthorized purposes.

why do we need them
Why Do We Need Them?Internal Controls

"abstain from all appearance of evil“

(I Thessalonians 5:22).

"he must have a good report of them which are without, lest he fall into reproach and the snare of the devil“

(I Timothy 3:7)

"Let all things be done decently and in order.“ (I Corinthians 14:40)

internal controls1
Internal Controls
  • Why Do We Need Them?
  • Internal controls help to provide reliable data by ensuring that information is recorded in a consistent way that will allow for useful financial reports
  • They also help prevent fraud and loss by safeguarding assets and essential records.
  • Internal controls promote operational efficiency by reducing unnecessary duplication of effort and guarding against misallocation of resources.
  • They encourage adherence to management policies and funding source requirements.
internal control audit
Internal Control Audit
  • Best way to get independent, outside appraisal of your internal controls
  • Fall of 2011, we had our first Internal Control Audit.
  • We plan to schedule another control audit in 2014-2015
  • We received 26 recommendations.
internal control audit cont
Internal Control Audit (cont)
  • Don’t have to agree with all; Recommendation N
    • Post revenue and expenses separate versus net
    • We (CFO & council) choose to keep it as is
slide14

A pastor of a Lakeland church is accused of stealing more than $5,000 from the church, according to an investigation by the State Attorney's Office in Bartow.

Priest stole $1.3 million in church money

The former St. Matthew Parish secretary who embezzled more than $200,000 from the church has been sentenced to prison

Aug. 24, 2012 - PHILADELPHIA — A former executive of the Philadelphia archdiocese is due in court Friday to be sentenced for stealing more than $900,000 from the church.

CLEVELAND, Ohio -- A longtime priest at St. Helena Church on Cleveland's West Side has pleaded guilty to stealing $176,000 from the Romanian Catholic institution, a prosecutor said.

The former bookkeeper of a South Jersey parish has been charged with stealing more than $245,000 from his employer.

handling cash
Handling Cash
  • Weekly Offering
    • Collection
    • Secure
    • Counters
    • Deposit
    • Post
  • Multi-Site
  • Mid-Week Offering
    • Class Fees
    • Fellowship/Coffee $
    • Bookstore
    • Coffee Shop
weekly offering collection
Weekly Offering - Collection
  • We use 24 ushers with 32 baskets for our worship center, 4 ushers with 8 baskets for our chapel
  • Volunteer Hospitality Captain oversees collection
  • All baskets brought to hospitality room
  • Uniformed police office outside/inside room
  • All cash/checks is sorted, bagged and brought to safe by 3 ushers and uniformed officer
weekly offering secure
Weekly Offering - Secure
  • Safe has a ‘rolling bin’ where the usher and office can drop offering in safe
  • Digital safe keeps log of whose access code opens the safe
  • Safe is professionally bolted to concrete floor in locked room, in a remote location (not visible)
weekly offering counters
Weekly Offering - Counters
  • We have twelve teams of four
  • Team is by invitation only
  • Volunteers have background & credit report checked on bi-annual basis.
  • No family members on same team.
  • Teams are rotated every two years
  • We have our finance assistant there for support
  • They enter all gifts on member contribution report
  • They count all cash, fill out deposit ticket and place in sealed cash bag from bag and sign seal.
counters
Counters
  • Bag is dropped in safe
  • Checks are placed in batches of 100 checks and totaled
  • Entire team signs of on report which reports totals for weekend
deposit
Deposit
  • Monday morning the finance coordinator records the cash bag number in her log book as well as the amount of deposit (cash & change)
  • Copy of deposit ticket stapled to the counter report (to be filed).
  • Note – the third copy remains in deposit book in teller safe (for CFO / Treasurer review)
  • Monday morning check are remote deposited by finance secretary, batch report attached to counter report
slide21

SHELBY TOWNSHIP, Mich. (WJBK) - St. Therese of Lisieux Catholic Church in Shelby Township was robbed of tens of thousands of dollars after Easter Sunday services. They drilled through the safe and got away with almost $50,000.

Safe, money stolen from church in Dixfield, Maine

JOHNSON CITY, Tenn. - According to police, the person or persons got into the church by kicking in an air vent in the back of the building and then went on a destructive spree, looking for valuables along the way.

Johnson City Police say all locked doors inside were kicked in and the rooms ransacked. A safe was ripped off the floor and the offering box was torn off the wall.

Authorities are searching for the person took a safe from a Concord church.

GULFPORT, MS (WLOX) - Burglars broke into a Gulfport church and went away with a safe and hundreds of dollars in cash.

slide22
Post
  • Our giving module is interfaced with our GL (Item K from internal audit)
  • Finance coordinator posts the balancing entry each week to the GL from ‘audited’ counter report.
  • Finance coordinator confirms deposit amount and post cash over/short to GL
multi site
Multi-Site
  • We have three locations (all schools)
  • Each have 4 teams of Ushers (similar to main site)
  • Ushers complete mini-teller sheet
  • Checks, teller sheet, cash place in numbered sealed bag (number on teller sheet).
  • All ushers sign over the seal
  • Bag is brought to main site and dropped in safe for processing by main site counter team
mid week deposit
Mid-Week Deposit
  • Processed by volunteers on Wednesday
  • Mid-Week report is filled out containing the total deposit (checks & cash) amount
  • Mid-Week report also provides the GL detail (account numbers and amount for each)
  • All Mid-Week sources have separate internal controls
    • Coffee offering
    • Fellowship offering
    • Café Hope deposit
cash over view
Cash Over-View
  • Safety in numbers (two good, four better)
  • Get amount counted & verified
  • Get to bank
  • AUDIT your controls
    • Volunteer Audit Team = 8 accounting folks
    • Groups of 2 will audit each unit several times per year
    • Report of findings to CFO, Treasurer
  • Review trends
slide26

May 13, 2013 – Stillwater Okla. - Dana Sue Eckhart 43 years of age,  has been arrested and charged with embezzling more than $141,000 from the UMC Stillwater, since 2009.  According to authorities, UMC Stillwater informed police that Eckhart had written unauthorized checks to herself, her husband and others from 2009 through 2012.  The church also questions hundreds of purchases by Eckhart utilizing church-issued credit card.  Dana Eckhart pleaded not guilty and is free on $50,000 bond and due in court for preliminary hearing sometime in June 2013.

A Granger woman pleaded guilty Tuesday to using the postal service to help embezzle $119,000 from a South Bend church she worked at for eight years.

Loprest worked as a secretary at Hilltop Lutheran Church from 2001-2009.

When the church’s bank contacted leaders about an overdraft fee in 2009, they found out they were nearly bankrupt.

For several years, Loprest had been transferring money out of the bank’s investment account. She would have the checks delivered to the church, then deposit them into their spend account and use the money for personal expenses.

VIOLET, La. —A church secretary in St. Bernard Parish was arrested for what authorities said was systematic embezzlement of more than $100,000 from her church.

JANESVILLE — The former secretary of a Janesville church wrote nearly $90,000 in forged checks to herself over 10 months last year… An accountant uncovered 70 checks forged for herself from First Congregational United Church of Christ between January and October of 2012.

check writing
Check Writing
  • Segregation of duties (from internal audit B)
    • Authorization to execute transaction
    • Recording of the transaction
    • Custody of assets involved in transaction
  • Signing of check
  • Opening of bank statement
  • Reconcile Checking Account
credit cards
Credit Cards
  • Send employee the statement at end of month
  • Employee have receipts for ALL charges
  • Each expense must be budgeted / approved prior to purchase
  • Employee states details on receipt and proper GL code
  • Unauthorized expenses or mission receipts must be paid back within 10 days
other controls
Other Controls
  • Electronic Wire
    • Our process (Audit F)
  • ACH Payments
    • Always ensure following internal controls – similar to a writing a check
  • Stock Gifts
    • We use a broker who receives all stock
    • We sell all securities upon receipt
cash flow management
Cash Flow Management

Since cash flow describes how and when money comes into the church and is spent, cash-flow management involves projecting income and expenses with the goal of paying bills on time and creating a surplus for growth.

cash flow management1
Cash Flow Management
  • Project revenue each June for following fiscal year
  • Use historical data to project future giving
cash flow management2
Cash Flow Management
  • Project expenses each July for following fiscal year
    • Payroll should be 50% of general fund giving
    • 10% of general fund goes to external mission partners & projects
    • Operational budget is set using historical data (utilities, interest, phone, internet, etc)
    • Program budget set based on strategic objectives, allowing us to move resources based on what we are focusing on
cash reserves surpluses
Cash Reserves / Surpluses

Liquidity simply means available funds. The goal of liquidity management is to have enough funds available for current expenses and new ministry opportunities. Managing liquidity is tougher than it seems because income doesn’t always come in when expenses need to be paid. And we always have unexpected expenses.

Cash Flow Fluctuation + Unplanned Events + Potential Opportunities =

Operating Liquidity Balance Target

cash reserves surpluses1
Cash Reserves / Surpluses
  • How much cash do you have in reserve? Is it enough?
    • 60 to 90 days of expenses is ‘average’
    • Does your senior pastor know?
    • Does your council know?
  • Do you have/need a sweep account?
  • How much interest is your reserve earning?
  • What interest rate are you paying on loan(s)?
  • Work with experts in your area you trust
  • Work with ECCU (link on xpastor.org)
    • Excellent white papers on many subjects we covered today
slide35

Q & A

Send Questions via Chat to Tami

slide36

Malphurs, Aubrey & Steve Stroope. Money Matters in Church: A Practical Guide for Leaders. Grand Rapids: Baker Books, 2007. Read Chapters 1 & 2: “Developing and Communicating Your Theology of Financial Stewardship” & “Developing Donors.”

From Chapter 1: “The New Testament Greek word for steward is oikonomos… “manager.” Read the passages that deal with this word (page 23)

From Chapter 2: Where does your church teach about money? Sermons, adult classes, small groups, fund-raising drives? Some or all of these? (page 31)