RECOMMENDATIONS FOR INTERNAL SYSTEMS – ADMINISTRATION

Written by Peter Mukwena. Posted in FOG Procedures

WORLDWIDE FAMILY OF GOD CHURCHES (UK) – INTERNAL SYSTEMS

RECOMMENDATIONS FOR INTERNAL SYSTEMS – ADMINISTRATION

The following recommendations for the above have been drafted at the advice of Apostle Andrew Wutawunashe after the meeting he held with Pastor Robert Majonga in his capacity as a trustee and Pastor Barnabas Kashora in his capacity as administrator. All the contents do comply with the Charity Commission guidance and also our policies. The purpose of these recommendations is to put systems in place in compliance with the Charity Commission’s legal requirements.

Financial Policy

Having looked at our financial policy which includes most of the guidance from the Charity Commission we recommend an update to include the following;

The trustee’s responsibilities regarding the accounting requirements 

Trustees have a number of legal duties that must be met in relation to accounting and financial reporting. These include: 

  • Keeping sufficient records to explain all accounting records and show the church’s financial position.
  • Preparing an annual report and statutory accounts meeting legal requirements.
  • Formally approving the trustee’s annual report and accounts, ensuring that the trustee’s annual reports, accounts and annual returns are filed on time with the Charity Commission and Companies House where filing is required by law. 
  • Safeguarding the assets of the charity and ensuring proper application of resources, and
  • Taking steps for the prevention and detection of fraud, financial abuse and other irregularities. 

To enable the trustees to carry out the above legal duties the following should be included in our internal financial systems.

  1. REPORTING SYSTEMS

Current Systems

Currently we have in place a weekly report form for use by all our pastors and elders or leaders of our churches to submit to the central office. The form can be submitted manually by post or electronically by email or web filing. The contents of the form would normally include a brief report on home groups, mid-week meetings, summary report on the Sunday Service and the amount of income received from offerings, tithes etc. 

Compliance

The following churches have been complying on the above-:

  1. Leeds
  2. Manchester
  3. Southampton
  4. Luton
  5. Slough
  6. Birmingham NB last complied several months ago
  7. London KT NB not consistent and have not been complying for some time
  8. London Kilburn last complied almost a year ago.

The following churches have not complied at all

  1. New Castle
  2. Bristol
  3. Wales
  4. Coventry
  5. Oxford
  6. High Wycombe
  7. Harlow
  8. Leicester
  9. Northampton

Advantages of reporting systems

 

Recommendations

The bishop should communicate regularly with those who are not complying and also find out whether there are any problems as to why they are not complying. However some of her churches are not complying as well. We further recommend that Pastor Majonga should also engage all our churches regarding compliance in his capacity as a trustee. Weekly reports should be submitted by Tuesday of every week.

  1. ACCOUNTING

Current Systems 

  1. Record Keeping & Reporting

We do not seem to have a proper uniform accounting system in place for all our churches. We are also currently not receiving monthly income and expenditure records from all our churches. All our churches have a legal obligation to submit their income and expenditure records for the financial year and this has been happening with late submissions.

Advantages of having proper financial systems and disadvantages of not having them;

 

Advantages

  • Enjoy high levels of public trust and confidence.
  • Meet legal duties to safeguard the charity’s assets.
  • Administer the charity’s finances and assets in a way that identifies and manages risk.
  • Ensures the quality of financial reporting.
  • Reduces the risk of loss through theft or fraud.
  • Reduces the breaches of controls.

Disadvantages

  • Misuse of charity funds due to lack of transparency.
  • Misuse of the charity’s bank accounts.
  • Fraudulent credit or debit card transactions.
  • Intercepting postal donations and cheques.
  • Failing to pass on money from charitable collections.
  • Using the charity’s database for personal profits or unauthorised private commercial use.
  • Fake fundraising events or requests for donations.

 

Recommendations

The importance of proper internal financial controls 

It is the duty of the trustees to ensure that the charity’s resources are protected in order that the charity can fulfil its aims. It is important that all those working in the charity whether trustees, staff or volunteers, take the issue of internal financial controls seriously. Making controls work should not be seen as just the responsibility of one or two trustees or senior staff members or as applying to some but not others. The “tone at the top” executive management and the charity staff and volunteers are responsible for ensuring the controls put in place by the trustees are implemented. There should be a culture of control embedded in the operations of the organisation. This culture is created by the trustees and senior management who should lead by example in adhering to the charity’s internal financial controls and good practice.

We therefore recommend the use of “Paxton” accounting software for all our financial records. Before preparing accounts, trustees must be quite clear as to the legal structure of the charity. A charity may operate through “branches” to raise funds and/or carry out its charitable purposes. In our case, branches will be accounted for as part of the charity.

All our pastors and elders who are responsible for our churches should ensure the quality of financial reporting from their local church by keeping adequate accounting records and preparing relevant financial information. In addition to submitting weekly reports they should also submit an income and expenditure record for the month on a monthly basis. This information is a critical element of our financial updates and input to the new accounting software. Local leaders should apprise the Bishop on a weekly basis preferably by telephone.

It is important that trustees make regular checks to ensure that the accounting records of income are being accurately maintained.

  1. Budgeting

We currently do not have proper budgeting systems for our churches except the budgeting we do for our conventions. This is also reflected by a lack of sound financial performance resulting in the use of restricted funds in the ways they are not specified. Budgets will help us identify resource needs and how to nip them as well as the charity’s aims and objectives and what is needed to achieve them. Budgets will also set out as far as possible how the activities will be resourced and what the costs will be.

Advantages

Disadvantages

  • Enables strategic planning
  • Provides a record of activities and sets out how activities will be resourced. 
  • Provides an overview of cost
  • Makes us aware of what income streams are available and when funds will be needed
  • Lack of strategic planning
  • Use of restricted funds where they are not specified
  • Financial underperformance
  • Restricted income streams 
  • Lack of incentive to stick to targets
  • Overspending

 

Recommendations

All our churches should submit an annual budget for the coming financial year. The budget should reflect their projected monthly expenditure and also projected income. The current situation reflects that most of our churches are using tithes to pay for their monthly expenses when they should be encouraging and teaching the people of God to be responsible for the work of God. The people of God are willing to be responsible whenever they are prompted to and this has been the case in some of our few churches. Both the leaders and the people of God should be motivated to work towards raising enough funds to cover the cost of their budget and more. 

One of the most important financial monitoring activities is budgetary control, i.e. monitoring the charity’s financial performance against budget. Proper and realistic estimates of income and expenditure need to be made for each area (church’s) activities for each financial year. From this information the overall budget will be set. Expenditure controls help ensure that only necessary and authorised purchases are made and that funds exist within approved budgets to meet the expenditure. Controls also ensure that payments are made only for goods and services actually received and at agreed prices. Controls could include:

  • Establishing authority levels for pressing orders and approving payments which are clear and preferably documented
  • Ensuring that orders placed are within an agreed spending plan or budget. Additional spending outside agreed budgets should be authorised, and 
  • Ensuring invoices received are checked against orders confirming pricing and the receipt of goods or services ordered.

Monitoring procedures should identify and seek explanations for significant over or under performance of both income and expenditure plans. Other monitoring activities could include a review of expected sources of income and the actual income received. Monitoring can also help to ensure that any restrictions placed on the use of funds are identified.

As with control over income, it is important to ensure the records of expenditure are being accurately controlled. Basic controls in this area can also serve as an early warning of poor accounting practice and help identify any unauthorised payments. 

  • Records of payments including direct debit, BACS, or standing orders are checked periodically to cheque stubs, credit card statements or bank statements- these checks may often be carried out as part of the bank reconciliation processes.
  • Periodic checks are made to ensure payments are supported by invoices which have been properly authorised,
  • Regular review of standing orders and direct debit payments are made to ensure payments remain in accordance with valid instructions given to the bank or building society.
  • Expenditure from restricted funds is in line with the restriction placed on how funds are to be used

These checks should be made by someone other than the person concerned with recording the original transactions.

  1. Fundraising

Our current main sources of income are offerings and tithes. In very few of our churches individual members do take responsibility of church hall rentals. Another method commonly employed by the Bishop involves phoning individuals and asking them for funds. This method, however, has caused some confusion where borrowed money had not been paid back as promised. There is a serious lack of transparency in this method reflected in a lack of accountability where different people have been asked to deposit money in different bank accounts when it is intended for the same purpose. Proposed appeals for funds should be well planned, in line with the church’s aims, values and take into account any financial or reputational risks connected with the appeal. A significant appeal may require a business plan, a budget and, possibly, professional advice. 

Recommendations

Much is written about people’s personal stewardship but little attention is paid to the attitudes and systems employed by those who oversee financial processes, both leaders and finance teams. Below are three areas where church practice is often culturally outdated, biblically suspect and a dangerous hindrance to Christian teaching. 

  1. Sunday Offering designed for a society based on cash transfers and giving a message of subscription more than of spiritual discipline.
  2. Financial communication by way of accounts. These should tell stories of faith that motivate everyone to action and prayer, but are more often seen as complex codes.
  3. The third part goes behind the scenes and questions the attitudes of leaders and administrators to ownership, to generosity and to faith. 

Each area relates to the other two. Churches would be much healthier if they took a fresh approach to all three. In this document we will concentrate on how people give to their church’s general fund.

Giving

What is the most appropriate way for Christians to give to their church? If this whole subject is seen as encouraging charitable donations to keep the show on the road, someone shaking a tin at the church door may be the answer. If, on the other hand, you have a clear model of Christian stewardship in mind and see that the giving of money is one aspect of Christians giving every part of themselves in the service of their Lord, the answer should be different. 

Giving should be related to the ways in which people receive their money in the first place. That implies a variety of approaches.

  • Monthly salary or pension. Many people receive a salary or pension direct to their bank account. If they are giving a generous proportion of that, the most suitable means of giving is therefore likely to be by monthly standing order or direct debit.
  • Weekly cash wages or benefits. The declining number who is paid every week in cash may find a weekly envelope system suits them best. This would also apply to students and teens paid weekly allowances, and to those without bank accounts of any kind.
  • Four weekly benefits. These people will need a system tied to the four weekly intervals (not the same as calendar months), whether they receive, and therefore give, directly through their bank or by cash. 
  • Irregular fees or other income. Those who are self-employed and others may receive their income in varying amounts at different times. This calls for a system that can match this in some appropriate way, or perhaps a quarterly system of standing order. For those using online banking, BACS transfers on instruction from their home computer each time they receive income may be the best method. 

For occasional one off gifts on top of regular giving, the means might be occasional cheque, cash, online transfer, or plastic. Envelope giving to the plate encourages a small cash sum to be given, when for many people this will not compare with a significant proportion of income received. It says in “subscription” not “sacrificial giving”. It is a dated concept, just as cash is becoming a dated currency for financial transactions.

Churches should wherever possible offer a menu of options, and that a member of the finance team should discuss this one to one with each person, especially with new members. The options might be 

  1. Standing order forms with a range of possible intervals, with some system for reconsidering the amount on an annual basis. This might be tied to a pledge system.
  2. Appropriate help for the growing number of people who use online banking. 
  3. Either weekly or monthly envelopes, but only for those for whom this method makes sense.
  4. Special envelopes for those who wish to give four weekly or irregularly. Also for those who would like to have the opportunity to give extra amounts from time to time on top of regular giving- perhaps this should be for everyone.
  5. Provision for card giving where this makes sense. 

To promote only one means of giving, or to work on the basis of what is convenient for the church without considering how someone’s giving needs to be related to their income sources, is unhelpful and counterproductive. It demonstrates a wrong view of how people should give within a context of Christian stewardship.

Teams of People

Another form of raising funds is building teams of people who have the same passion for the area of service e.g. appreciation team, decor team, catering team, protocol team, ushering team, transport team, convention task force team, media team and registration team. The leaders of the teams can then work with their teams to raise a portion of funds to meet the budget relating to their area of service. This will be most helpful during our conventions when we have big budgets to finance. Leaders could then work closely with the central office to agree targets of the budget to go and work to raise the funds.

Any funds raised by the various teams should be remitted to the central account or office and acknowledged by receipt. It is vital that all transactions, whenever possible, pass through the system if we aim to produce accurate accounting records. Cash collected should be banked as soon as possible.

The following controls could help ensure a basic level of protection for the Church’s funds:

  • Checks to ensure that amounts expected from committed donors have been received
  • Cheque and cash receipts should be promptly recorded in the accounting records
  • Cheques and cash should be banked regularly and promptly
  1. BANK ACCOUNTS/ BANKING

Current Systems

The following churches have their own bank accounts;

CONGREGATION

NAME OF BANK

SIGNATORIES

  1. Birmingham

Barclays Bank

  1. Elder Dewa
  2. Mr I Chitsa
  1. High Wycombe 

HSBC Bank

  1. Elder Machisa
  2. Mr Chinyuke
  3. Mr Nyakuwa
  1. Leeds

Barclays Bank

  1. Pastor R Majonga
  2. Dr Mawondo
  3. Mrs Ratisayi
  1. London Main

Barclays Bank

  1. Bishop C Matanhire
  2. Elder I Murimbarimba
  1. Southampton

Barclays Bank

  1. Pastor B Kashora
  2. Chanyuka Dhlakama

 

Bank accounts play an important role in the day to day financial transactions of the charity. The bank is the most suitable place where the charity’s funds, cheques and cash received are kept securely, banked promptly and recorded in the accounting records.

The following controls could help ensure a basic level of protection for the charity’s funds where the bank plays a vital role;

  • Cheque and cash receipts should be promptly recorded in the accounting records;
  • Cheques and cash should be banked regularly and promptly;
  • Cheques and cash not banked on the day of receipt should be placed in a safe or locked cash box;
  • Funds should normally be banked gross without any deductions; and
  • Insurance cover for cash in hand and in transit should be considered.

Recommendations

It is important that trustees make regular checks to ensure that the accounting records of income are being accurately maintained. Certain basic controls, if performed regularly may serve as an early warning of anything going wrong. We recommend that regular checks are made to ensure that:

  • Records of cash and cheques received agree with bank paying in slips
  • Paying in slips agree with the bank statements, both in terms of amount banked and date of credit, and 
  • Transfers or other direct payments into the bank are identified and verified against supporting paper work. (Vouchers)

These checks should be made by someone other than the person concerned with the original recording of the transactions.

Increasingly, charities are making payments using corporate debit cards, credit cards and charge cards. Payment cards can provide convenience but it is important that controls are in place to ensure their correct use. Debit cards charge bank accounts directly and payments therefore have an immediate impact on bank balances; their misuse or loss can be extremely serious for the charity.

Used properly these methods of payment are generally considered to be safe but we recommend that certain controls are put in place, including:

  • Ensuring payment cards are cancelled and destroyed if the individual ceases to work for the charity or if the authorization of the cards use is withdrawn.
  • Ensuring that debit card expenditure is supported by a voucher and/or invoice and recorded and analysed in accounting records.
  • Copies of all credit or charge card statements being sent directly to the charity’s finance team to record and analyse in accounting records and collection with supporting vouchers and invoices provided to users of cards.
  • Periodic review of card use to ensure consistency of use with set policies.

In order to maintain the security over electronic bank accounts there are a number of basic precautions that can be put in place including:

  • After each electronic banking transaction, a printout should be taken showing details of the transaction and stored as part of the accounting record
  • Retaining printout of statements as part of the accounting records
  • Keeping all PCs with access to the online banking facilities secure
  • Ensuring all PCs are up to date with anti-virus spyware and firewall software
  • Keeping all the passwords and pins secret
  • Changing passwords periodically and following changed in authorized staff and trustees.
  • Adequate training for those using the charity’s computer systems and 
  • Treating emails received relating to bank accounts with caution in particular, trustees and staff should not respond to email and telephone calls asking for personal security details.

The use of cheques to make payments is diminishing with the use of electronic payment. However, cheques continue to be used and it remains important that payments are only made for expenditure, properly authorised and incurred by the charity.

  • Ensuring cheque books are kept in a secure place
  • Regular review of bank mandates and other limits
  • Prohibition on the signing of blank cheques
  • Prompt recording of payments in cash books including details of the cheque number, nature of the payment and the payee.
  • Obtaining documentation to support the validity of the payment including relevant invoices and confirmation that the goods or services have been received.

All our churches with full time pastors should ensure proper administration of their church bank accounts by managing their finances while keeping in line with our policies and systems. The following churches fall under this category;

  1. Bristol
  2. Leeds
  3. London (Harlow, Kilburn, Kingston, Luton, Slough and South East)
  4. Manchester
  5. Southampton

The following expenses may be paid for full-time pastors, “where resources permit”, from their local church funds unless otherwise stated;

  • Rent
  • Council Tax
  • Electricity & Gas
  • Telephone & Broadband
  • Mobile phone bill
  • Travelling & Subsistence
  • Hospitality
  • Minister’s Allowance

Presiding Bishop

We recommend that travelling expenses be covered by all the churches that fall under London when visits are within the local jurisdiction. Where visits are outside the local jurisdiction then expenses can be met with funds from the Bishop’s Fund Account.

The finances for all other churches could fall under Worldwide Central Account and thus administered from the central office. The following churches could fall under this category;

  1. Birmingham
  2. Corby (Northampton)
  3. Coventry
  4. High Wycombe
  5. Leicester
  6. New Castle
  7. Oxford
  8. Sheffield
  9. Wales

All the above churches should be remitting their offerings including tithes to the Worldwide Central Account. We recommend that they arrange lease or rental agreements with the owners of the venues they use and where possible arrange to pay for hall rentals on a monthly basis. Pastors and leaders are encouraged to motivate the people of God to take responsibility of hall rentals collectively, always aiming to raise more money than their budget. All major payments like hall rentals will then be made from the central office. The new accounting system will enable us to keep track of each church’s available funds thus allowing us to make payments according to available funds. Payments from the central account should be facilitated by a manual or electronic requisition form. Other small expenses can be paid for at the local church from the petty cash money. Imprest system petty cash could be put in place.

Recommendations

Payments in cash should be kept to a minimum due to the greater risk that handling cash presents and difficulties that can arise in establishing clarity and control over significant cash transactions.

Controls could include:

  • Cash payments are for small amounts only
  • Cash should be paid out of a petty cash float specifically kept for such payments and not from incoming cash.
  • Details of payments should be entered in a petty cash book
  • Supporting documentation for the cash payment should be authorized by someone other than the person who maintains the petty cash or the person making the payment
  • The balance of petty cash in hand, and the record, should be kept securely, and 
  • Regular spot checks of the petty cash float should be made by an authorized person independent of the person who maintains the petty cash.

All churches including those with resident pastors should provide their annual budget at the beginning of each financial year. 

  1. CONVENTIONS

Current System

The three main conventions have been organised by the Bishop with the assistance of some people. Key local people have been playing significant roles in looking for venues. The main source of income has been convention fees but has never been enough to finance our conventions. Because of this every convention would end with a fairly large deficit except our February convention when we started using Sandown Park Racecourse. The Bishop would then start phoning people in order to raise money to pay for the convention debts. This method, however, has done some harm leaving some people hurt or disgruntled after promises to pay them back their money failed to materialize. On many occasions certain people have been asked to check in guests using their credit cards and some have not been reimbursed until this day. This area truly needs serious attention so that proper systems can be put in place.

The other conventions namely Mighty Men, Precious Stones and Youth conventions have been organised independently without much involvement of the Bishop’s or Central Office. Funds to finance these conventions have been raised from convention fees but there is no record of their accountability in the Bishop’s office. This probably means they have not been included in our end of financial year accounts. All these areas need to be incorporated into the system so that our end of year accounts can reflect true figures of funds that pass through the system.

Recommendations

We recommend that all our conventions be centralised for accountability purposes and also to allow the administrator to keep track of financial information that must be entered in our accounting systems. The following conventions fall under this category;

  1. Prophetic Word Convention
  2. Preaching of the Cross Convention
  3. World Harvest Convention
  4. Precious Stones Convention
  5. Mighty Men Convention and
  6. Youth Convention

We further recommend a VIBRANT CONVENTION TASK FORCE TEAM comprising of PASSIONATE and RESOURCEFUL people from each of the five convention groups. The three main conventions could have people from London, Birmingham and Manchester respectively. The Task Force would then work in full consultation with the Bishop’s Administration Office. Important decisions regarding convention venues and/or facilities will have to be agreed collectively. Full effort could be placed on acquiring suitable facilities at competitive rates. All fundraising could be done in consultation with the Bishop’s Administration Office. Fees could be determined by the actual budget of the particular convention. 

Disbursement of funds 

  • Disbursements of funds should be done by the administrator in line with the existing budgets.
  • Leaders of departments should make their requisitions prior to the convention.
  • All funds to be disbursed in consultation with the Bishop’s office.
  • All funds raised for conventions should be remitted to the administrator for banking or banked directly into the central account with clear relevant reference.
  • All fees collected at conventions should be submitted to the administrator for banking and or custody.

Bank Mandates

In view of the above it is necessary for the administrator to become a signatory to all the Worldwide Bank Accounts namely;

  1. Worldwide Central Account
  2. Worldwide Bishop’s Fund
  3. Worldwide HSBC Account

We await the Apostle’s advice regarding the management of the London account.

We look forward to hearing from you Apostle.

Compiled by Pastor Kashora - BMKashora

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