Your financial statements are a key to making decisions for your Church. Let me rephrase that…ACCURATE financial statements are a key to making GOOD decisions for your Church! 

I can’t stress enough just how true this statement is. Whether your Church is deciding to build a new campus, expand or remodel the existing campus, or even whether or not to purchase a new van for the youth trips, it is absolutely crucial that the Church is basing these decisions on accurate financial data.

A set of month end financial statements should be prepared on a timely (within 30 days) basis and submitted to the Church’s governing council. This “set” of financial statements should include at least a statement of financial position and statement of activities (more commonly known in the commercial industries as the balance sheet and income statement). The financial statements should include all funds: unrestricted, temporarily restricted, and permanently restricted.

Additionally, these financial statements should be reconciled with the amounts reflected in the accounting systems general ledger. For instance, if you pull an accounts payable aging report from your accounting system, does that total equal the amount you have recorded in accounts payable on your statement of financial position? It is very important that the Church’s sub-ledgers agree to the general ledger and financial statements. Two common fraud symptoms are a ledger that does not balance and that master account balances do no equal the sum of the individual customer or vendor balances.

How often is your Church preparing financial statements? What are some typical questions being asked by your Governing Council when reviewing these reports?

 -Tia Fisher is a Senior Auditor at PSK LLP, specializing in church accounting.