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Who Really Uses Church Accounting Software

Often times, churches are not thought of as a business but on some levels, they are indeed taking on duties of a business. Arnold, a fairly new church member, wanted to contribute to the church and decided to volunteer for the church finance office. Prior to volunteering, Arnold, like most church members, didn't realize how much work would be required, in order to maintain a sense of financial balance within the church.

Church Accounting Software

When it comes to a church, most people may not think about the behind the scene duties that take place, to keep the church running like a well-oiled machine.

The Three Part Machine

  1. Collection - Each church member is given an envelope, in which he or she can determine, where they would like their funds to be allocated. Options on most envelopes are as follows: Tithes, Offering, Church Building Fund and other, to name a few. The envelopes are then placed in an offering plate during church service. Once the offering plate is collected, it is immediately taken to the finance room, and locked up until the end of service. Once church service is complete, the individuals that work in the finance office, then proceed to their church duties.
  2. Sorting - One duty that can be tedious at times, once the money is collected from the church members, is sorting through donations. Arnold goes through each envelope, one by one, and must determine whether the envelope contains a check or cash. Once this is determined, Arnold must verify that the cash taken out of the envelope, matches the amount that was written on the outer portion of the envelope. If a check is in the envelope, the amount is recorded, then copies of the checks are made before they are deposited in the bank, later in the week. The cash is also recorded then deposited in the bank, within the same week that donations were given. 
  3. Recording - Church accounting software plays a major role in efficiently completing day to day tasks, while minimizing human error. The software, often reveals errors, that otherwise, would be missed. The software is versatile and allows the business owner, or in this case, members of the church finance team, an opportunity to maintain balanced books and to access their accounting information from anywhere. In order to prevent discrepancies from taking place, it is important for the church finance office to be well organized and the first step is often, having efficient software. At this time, Arnold's church uses a package called "Revelation" through QuickBooks accounting software, to track the individual donations that are made to the church. The Revelation package allows each and every dollar donated throughout the year, to be well accounted for, based on each individual that has made a donation. At the end of each year, the church members that made donations, receive a statement, to use for tax purposes. This task would be a difficult one, if the church accounting software was not used to streamline the accounting process for the church and help maintain organization of the church finance records.

Preventing Fraud

For quite some time, Arnold wondered how his church maintained financial order, moved forward each week in a smooth manner and didn’t have misappropriation of funds. Throughout each year, so many people gave donations and so many bills needed to be paid within the church. The accountancy standard that the church used, to avoid misappropriation of funds was a simple one, separation of duties & a check and balance system. At no time was any one person left alone with the checks or cash in the finance office. Each person working in the finance office was given his or her own task to complete but in the form of teams, to prevent any possible false reporting from taking place.

 

According to the Yale University Finance Department, in regards to the "Separation of Duties" there should not be any one individual to "Initiate transaction, approve transaction, record transaction, reconcile balances, handle assets or review reports".

 

Another safeguard taken by Arnold's church, is an initialing verification system. Before the cash and checks are taken to the bank, the treasurer and church secretary, are required to place their initials on record, to confirm that the amount verified in cash and checks is correct and has in no way been tampered with. If any discrepancies are found, the money must be counted again and any red flags to appear in the church accounting software, must be reviewed. Before the volunteers of the finance office can leave for end of day, all funds must be balanced. The overall accounting process each Sunday, usually takes a minimum of two hours. However, without the assistance of the church accounting software, this process would exceed the time frame of two hours. Overall, cloud accounting software increases efficiency and saves time.

Preparing Church Taxes Returns

Towards the end of the year, the church begins to prepare for tax season. The financial secretary or the treasurer, are responsible for any correspondence that may arrive throughout the year, from the IRS or any party that may cause changes in the financial budget. In Arnold's church, the taxes are prepared through Dubrown & Associates. In addition, efficient cloud accounting software is key, especially when tax season takes place, as the church must be certain that church members receive an accurate record of their annual contributions. Tax season is not particularly a busy time of year for Arnold’s church, as the church is not very large and religious organizations are exempt by the IRS from paying taxes. However, the financial end still needs to be done properly. Those that volunteer to work in the finance office, not only work on Sunday, but often are required to work during the week. As events take place at the church, money is paid to guest speakers and the church must also pay utility bills in a timely manner.

Compensation vs Volunteerism

Though many positions in the church receive compensation, those working in the finance office, can be volunteer only, and are not able to receive any pay for their duties.

In addition, reports regarding the financial activity of the church, is often provided to the church members weekly and at times on a monthly basis. This is done to provide church members with knowledge of the manner in which church funds are being allocated. Though the report includes specific amounts paid to those ministering within the church, it is not discussed with church members, as this information is privy only to those working within the finance office. The financial reports do include all funds raised, expenditures paid out to contractors, what bills are currently due, obligations in the future, any unforeseeable obligations that came up that month that cannot be prevented, such as a water leak and having to pay the plumber and the obligation payment to the individual in charge of church district. This report is another example of the importance of church accounting software. The structure and financial organization that the software provides is priceless and without it, the sudden monthly fluctuations that take place, would certainly cause a church to develop financial strain and may lead a church to dire straits. As the finances of the church are made public, any discrepancies can cause controversy. If accuracy is the goal, then accounting software is indeed a necessity that one should simply not go without.

While accounting practices vary from church to church, one thing that is certain, software is necessary to get the job done. Give ZarMoney a try today and start managing your congregation's finances better.

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