Maintain Good Control Practices is Essential for Churches and Non-Profits

July 7, 2012 · Posted in Accounting · Comment 

Each non-profit organization has an obligation to manage integrity for its supporters through appropriate money-handling processes, filing, and auditing. External procedures include the way a non-profit organization represents itself, its mission, as well as its use connected with contributed funds.

An institution should have the ability to promote itself aggressively, without having to use hyperbole or misrepresentations. Internal procedures include everything from handling inbound mail, instruction of phone receptionists, capital and data flow, and controls.

Incoming mail procedures are very important, mainly because the man or woman who retrieves the mail, often is not the one that takes action on bills, donations, or important material. Phone receptions need to be trained to be courteous, as well as be aware of mission of the organization and it is possible to turn for help for any kind of request which may be unusual.

Phone receptionists are significant since they often are the “face” of the particular organization. They are commonly the earliest contact that the outsider has with the organization, and the impression which can be made is valuable. Therefore, training the receptionist should be regarded as a worthwhile investment.

Internal controls on money-handling are many times overlooked. The assumption is that people are honest. While this assumption is oftentimes correct, the desire for money-handling procedures goes beyond characterizing the money-handlers. Keeping an “honest man honest” is one step-above having no procedures. Being able to successfully advertise to the outside world that money-handling procedures are in place, that can be audited, is even closer to the suitable.

In other words, money-handling procedures add to the integrity of the organization. Duties should really be separated. Two non-related people should be involved with every practical part of money handling. Signing privileges should be separated from reporting and data entry. No signers should be allowed to edit the accounting books, for example.

Reporting and audits have three stages of escalating integrity. An internal review shows that reports are viewed by the board of an organization and made available to its constituency. A compilation is the general review by an impartial, outside reviewer, who verifies some level of accounting integrity has taken place. An audit by an third party agency is the very best procedure.

Sometimes it is cost-prohibitive, but it could very well add value to the organization. Record keeping is a needed function for a non-profit organization. There are a number of non-profit software programs that are available on the marketplace to enhance the record-keeping functions. They have good integration with membership communicating and book keeping capabilities. An organization should have a functional software, and robust internal procedures.

Take the next step.? This PowerChurch document containing church management software provides continuing information. You will be well equipped with important knowledge for establishing proper strategies and controls.