Guidelines for Local Church Stewardship

Questions are raised periodically concerning proper procedures for handling church finances. Local church finances are addressed in Paragraphs 6250 J and K and Paragraphs 6300 G through L in the Book of Discipline.  Listed below are some pointers to assist churches and treasurers.  These guidelines should be followed as closely as possible.

 

Disciplinary Requirements

1.         Paragraph 6300.G.

The treasurer of the society shall keep a record of all monies raised and of the manner in which they are expended. The treasurer shall provide a detailed monthly or quarterly financial statement in writing to the finance committee and the local board of administration, with a full report to the annual society meeting.

2.         Paragraph 6300.H.

 

To safeguard the treasurer, it is recommended that the board elect separate persons who shall count each offering and provide the necessary documentation of same for the financial review or audit. A policy that provides the procedures to adequately safeguard those receipts from church functions should be in writing and in force from receipt until deposited.

 

Additional Guidelines

 

1.         The work of the treasurer is important to the operation of the local church. Faithful and timely payment of obligations is essential. Accurate reports to the board of administration of the local church enable it to make wise business decisions.

 

2.         Keep adequate records. Copies of invoices or other documentation should be attached to the check stub and kept in a file cabinet by date or alphabetically by vendor. The payroll checks will not have an invoice, but most everything else will.  Even payments to the conference orWorldMinistriesCentershould have adequate documentation to support the payment.

 

3.         The local board of administration in cooperation with the pastor shall agree on an annual budget.  An approved budget should be in place prior to the effective year. The board should care for the approval of the pastor’s housing allowance for the next year as part of the budget.

 

4.         An accurate and detailed monthly or quarterly financial statement is to be given to the finance committee and the local board of administration. This detailed monthly financial statement should include both monthly and year-to-date actual vs. budgeted income and disbursements. The annual financial statement is to be made available to the society.

 

5.         Consider requiring two signatures on church checks. This is a standard audit recommendation that protects both the church and the treasurer.

 

6.         Each society must apply for its own Employer Identification Number (EIN) from the Internal Revenue Service by filing IRS Form SS-4. Application can be made online by going to www.irs.gov/smallbiz.

 

7.         Church accounts should be kept separate and not commingled with the funds of other organizations or persons.  A church is strongly encouraged to set up the account using the church’s Employer Identification Number (EIN) rather than an individual’s social security number. (Most banks will require this.)

 

8.         Bank statements should be filed in a secure place, preferably at the church on a timely basis. If the treasurer needs to use them for a period of time, a copy should be made for his/her use.

 

9.         All financial documents are the property of the church and not the treasurer.

 

10.       Some churches may not have an “accounts payable” in their financial records. In such cases the board of administration should be kept informed of all outstanding obligations because no one benefits if unpaid obligations are kept hidden from the board.

 

11.       Churches must prepare and distribute annual giving records to donors with these records retained for seven years, plus perform other responsibilities as defined by the local board of administration.

 

12.       A copy of the year-end financial statement from the local church should be forwarded to the conference office or treasurer, if a conference has established this protocol.

 

13.       An annual audit or a financial review conducted by a qualified person or firm (as determined by the local board of administration) should be completed no later than five months after the close of the fiscal year. A copy of the audit or financial review will be made available to the local board of administration and to any member of the society. The conference office or the Free Methodist Church of North America may request a copy.

 

14.       Church Articles of Incorporation and By-Laws should be maintained and periodically updated with the State of incorporation.

 

15.       The local board of administration shall have a written policy on the spending limit for non-budgeted expenditures that are permitted prior to receiving the local board of administration’s approval.

 

16.       The local board of administration is encouraged to take the necessary steps to secure electronic and/or web based financial transactions.

 

17.       Treasurers should seek out any training necessary to be able to fulfill the role.  This is often obtainable from the conference.