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Church Finance, Accounting and Reporting - Part 6

Historically, churches have not been run much on professional grounds. Their records have mostly been kept on small papers and exercis...

Historically, churches have not been run much on professional grounds.

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Their records have mostly been kept on small papers and exercise books, which in most cases disappear without proper accountability.

The chaos associated with church accounting and finance has cast a shadow of doubt even on the motives behind the establishment of some of the ministries. Considerable membership has been lost along the way, splits have been witnessed; with people pointing fingers at each other for misuse of public funds!

11. Payroll Administration:
When churches are still small, they are usually run on voluntary basis. Trust and loyalty plays a big part at that inception stage; there is little regard for qualifications. However, as the ministry grows, full-time employees begin to be engaged to run the affairs of the ministry. From an accounting perspective, the following must be clearly defined and submitted to the administrator for ease of implementation:

(a) Salaries structure
  • Basic pay
  • Overtime
  • Bonus (13th cheque)
(b) Benefits structure
  • School fees
  • Medical aid cover
  • Funeral cover
  • Communication
  • Transport
(c) Schedules of allowances
  • Duty travel allowances
  • Board sitting allowances
(d) Income Tax Schedule
  • Tax free threshold
  • Tax bands
  • Taxation of expatriates
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12. Investments:
Gone are the days when churches used to live from hand to mouth! Church leaders must now begin to think of setting up an investments function under administration. Policies must be promulgated that ensure setting aside of certain percentages of incomes for investments. For instance, a policy can be developed which mandates assemblies and sub-ministries to set aside 5% of all their incomes, and submit the same to the head office for investments. And when the investments portfolio grows, the church can easily pay for all its conference expenses without even waiting for conferences fees or collections from services! It can pay for pre-conference expenses like air tickets for guest speakers, accommodation, conference hall, live broadcasting services, security and guest musicians even before the conference starts! Such luxuries can only be done when proper investments have been done to cushion the church.

Investments can also be made in acquiring land and buildings, even for speculative purposes. In future, the church can dispose the same and realise good value out of it.

13. Computerised Accounting:
The corporate world has now gone a step further by introducing accounting softwares to manage their books of accounts. Likewise, churches have also gone the same way by adopting the use of systems to manage their information, records and activities. This improves data integrity and completeness. In addition to that, it also helps the church to move away from “people centred administration” to “system centred administration”.

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Let's put order in the house of God.

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