Effectively Unraveling Disorganized Financial Records

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What to do when records appear in disarray

Vonna Laue responds in our Ask the Experts discussion.

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Posted:

9/17/2008

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Question:
I recently took on the job of church treasurer, I'm not a CPA, but even I can tell our records are in disarray. How can I unravel the inconsistent accounting methods used in the past? Should I recommend a church audit to help straighten everything out?

Answer:
I am aware of one business administrator that required the church be audited as a condition of her accepting the employment agreement. While that gives everyone an idea of what problems existed before she arrived, an audit is not always a cost effective solution to the issues. If the church has not been audited before, the money is probably better spent to have an accountant experienced in church finances complete a consulting engagement to sort through potential problem areas and give suggestions on better accounting processes and policies.

Posted: February 04, 2009

Carolyn M. Smith

(Guest)

Having been through the experince of records in disarray, I took a "stake in the ground approach". For the checkbooks, I went one year back and stated balance was this from the bank and then reconciled forward. I used resouce like Church Treasures Alert (now Church Finance Today) and books they have on tax and law to develope guidelines. The hardest part was not determine what to do, but rather getting people to change. The "we have always done it this way" statements made it very hard. Forceing people to document what they spent, standarizing money handling, requring regular audit etc took major efforts. All of this took time. One last point make sure you find good financial software that is designed for churches. Not all software for accounting can handle the problems presented by need to track donations.

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