Last week, I posted the 4 Things to Include in a Master Finance document. [Read that post here]

Following are additional thoughts I hope you will find helpful to your leadership team when thinking and praying thru this process.

Presented in the order of the previous post:

The church’s approach must be based upon Scripture. (2 Corinthians 8:18-21)

I don’t have much to add to my previous post other than this is the foundation of all finance processes in your church. Read this scripture a lot and pray about it.

Here’s a companion one to consider. (1 Samuel 16:7)

These verses really boil down to this – Operate with Transparency and Accountability. Everything in the Master Finance Document and subsequent financial processes should revolve around this principle.

 

All financial processes must include the Segregation of Duties Principle.

The only thing I would add to my previous post would be to look at your organizational structure and put checks and balances in place so that no one person or persons have too much control over financial transactions. This is just as much for their protection as it is for anyone else. BTW, if you’re getting push back by anyone in the finance area in regards to building checks and balances, make sure they’re not seeing this as an “you don’t trust me” issue. Explain the why (go back to God’s word) and if they’re still pushing back, that’s a red flag for sure.

The smaller the church and staff, the harder to implement, but it can be done. I’ll devote a future post to how to implement SOD in your church.

The church needs to adopt the Transparency Principle.

If your fellowship knows there’s an Accountability order that involves Staff and Lay Leaders and, they know how to obtain financial information along with how to ask questions, I think you’ll find this promotes trust in the body towards church leadership.

There are 4 areas that facilitate transparency we looked at in my previous post. For now, the first 2:

1. Accountability.

Let’s face it. We’re all accountable at the end of the day, but as leaders, even more so – and it must be apparent to the body who’s accountable and to whom. Sure, ultimately, the buck stops with the Senior Leader. But there are other stops along the way. Finance staffers report to a Finance Director or CBA who in turn reports to the Senior Pastor (or an Executive Pastor). That’s all good but who holds the The Senior Leader accountable? The Senior Leader reports in to a Board of Elders and/or the Finance Team. The point here is – everyone including the Senior Leader is accountable to someone.

Now, just so I’m not misunderstood, the Senior Leader is leading the church, not the Board or Finance Team.

However, the wise Senior Leader truly listens and values their input and works to maintain trust and unity. The Pastor, Board and Teams work in tandem to make decisions that are best for the Kingdom.

The goal here should be complete unity. And to be clear again, these boards should not be just “yes-men”, but partners. Work to have an environment where all concerns and disagreements are discussed and fully worked through.

2. Oversight.

There’s overlap here between Accountability and Oversight for sure. Accountability can’t be achieved without providing Oversight Boards, Councils, Teams, Committees (whatever term you want to use). Oversight Boards also provide valuable feedback, wisdom and prayer support. They can often see what Pastor and Staff cannot.

I’d encourage you to work toward 3 types of Oversight from a Finance perspective:

1. Utilize a Finance Team. These are lay leaders whose sole function is to review and approve Budgets, Forecasts, Financial Statements, Financial Processes and be a sounding board for the Senior Leader. It’s important that these individuals be nominated by the church, tested scripturally and if approved, then selected to serve by the Senior Leader and the Chair of the Finance Team.
2. Put an Internal Audit Team together to audit the major Financial Processes on an ongoing basis. This team makes sure the Financial Processes are being followed and are functioning as expected. They report their findings and recommend improvements based upon their observations.
3. At a minimum, engage the services of an outside CPA Firm to perform an Annual Review of your Financial Statements. You can strengthen that by having the firm conduct an assessment of the Control Environment in your church on some periodic basis. The ultimate “protection and assurance” however, comes with an Audit. I’ll devote a future post to Reviews and Audits.

 

That’s all for now.What do you in your church?

In my next post I’ll finish up the Transparency Principle section along with Compliance, Compensation and one other bonus item.