January is a busy time for those serving in the church’s financial arena. There are several deadlines to hit before the end of the month: donation statements, W-2’s, 1099’s, 941’s, etc. The loan covenant with my church also requires us to submit the annual budget, a list of the officers, and a financial review of our books from a Certified Public Accountant. At times, it all feels overwhelming. There is comfort in the wisdom of Ecclesiastes 4:9-12 and how it extols the virtue of working with a team. To help you get through those stressful times, here are the top three valued associates to help you; and in the process, build a better church budget:
CPA – Financial Review vs. Audit
Every church should have a working relationship with a Certified Public Accountant (CPA). A CPA is a person that earned a professional designation through education, experience, and licensing. Churches need to show transparency, humility, vulnerability by providing a third-party CPA an account of their books annually for an audit or a review.
- Audit – According to GRF CPAs and Advisors, an audit highest level of financial statement service a CPA can provide. In an audit, the auditor’s job is to obtain reasonable assurance that the books are free from misstatements and if the misstatements are due to error or fraud. If the auditor provides a clean (unqualified) opinion of the church’s financial statements, it means the church is following the generally accepted accounting principles (GAAP). In an audit, the auditor provides advice on weaknesses in the church’s internal controls or processes. Considering that most small to mid-size churches do not have CPAs on staff, this type of advice is helpful to strengthen the church’s financial systems and processes.
- Financial Review – A financial review is significantly less expensive than an audit. The reduced cost is directly related to the amount of work by the auditor to investigate the church’s conformity to GAAP. My experience is that a good CPA will explore the financial statements to a satisfactory level and provide advice to strengthen internal controls and processes.
The information provided at the end of the audit or financial review delivers confidence that the church is following generally accepted accounting principles. But, confidence and accountability are not the only benefits to the CPAs report. Often, the CPA will provide insights into the church’s finances that will improve budgeting practices, for example, determining an operating expense vs. a capital expense.
Peers – Find Others Who Do What You Do
I am embarrassed to admit that, until recently, I have not met with others in my position. I can fool myself and say that I am too busy or no one else has a job like me, but those were excuses. During the COVID-19 pandemic, I felt very alone in my position. I had a ton of questions about the PPP (Paycheck Protection Plan), adjusting the budget based on the current climate, how much to invest in live-streaming tools, and so much more. That all changed when Kevin Bugingo invited me to an Executive Pastor conference, it opened up my world. I was not alone after all. There are others out there just like me. That conference connected me with a pastor in my area whose position is similar to mine. It is such an encouragement to spend time with someone who understands your position, who can help and can encourage you on this journey. Having someone like this helps every aspect of your ministry, including building the budget.
Best Practices – Learn From Experts
I want to be life long learner. I don’t want to consume mass amounts of information to build arguments that support what I already think. That’s the easy way out. I want to be changed, to be better. The good news is that there is more information available than ever before. According to Forbes, in the last two years, 90% of the data in the world was created. The bad news is that is a lot of information to sift through. Whether you are looking for best practices on church budgets, diets, exercise, or used cars, seek experts. Experts are easy to spot because of their experience, credentials, and desire to teach. When looking for advice on church budgets, make sure it’s someone who has those qualities.
You don’t need to be the wisest person on the planet to know that we need others. We are not experts on everything. Being honest and vulnerable enough to admit it, and seeking expert advice and input, will produce accountability and confidence in your church’s finances. Who knows, it may even create a better church budget.short url: