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New audit guidelines announced

By Melodie Woerman
Editor, The Harvest

The Council of Trustees will require parishes with income greater than $200,000 to have a yearly audit conducted by a certified or licensed public accountant rather than a parish audit committee, under guidelines adopted during its meeting May 15.

The body adopted that requirement and other policies on parish financial controls designed to lessen the chance of theft and help keep parish money safe.

Diocesan Comptroller Jay Currie said 12 parishes are large enough to require CPA audits, and another four or five are close to meeting the $200,000 threshold.

Linda Robertson, a member of St. Michael’s, Mission, headed a task force that prepared the guidelines. The group was formed to help parishes protect themselves from situations like that faced by St. Paul’s, Manhattan, which found itself the victim of misappropriation of more than $180,000 in church funds by a former treasurer.

The new audit guidelines and the internal control procedures are posted in PDF format on the diocesan web site.

Finance manual guides efforts
Robertson told Trustees the standards are based on the Manual of Business Methodsin Church Affairs, an Episcopal Church publication that offers guidance to parish treasurers, wardens and clergy on how to conduct parish finances. She said every parish needs to have a copy of this manual and read it carefully, noting that rectors and vestries can be found legally liable if a lack of proper procedures leads to financial loss.

Robertson said fraud occurs when three things are present — opportunity, desperation and a source. “You can’t control desperation. That’s personal,” she said. “But you can control opportunity.”

Both the audit standards guidelines and the accompanying internal controls recommendations are designed to do exactly that.

The new financial standards offer lots of common-sense advice, like making sure two people count the offering so no one can pocket some of the cash. It also describes the kinds of reports treasurers should make to clergy and vestries.

Currie said the internal controls document lists the degree of risk associated with various financial steps.

For instance, the risk of fraud is high when the Sunday collection is removed from the sanctuary to its counting place, while a moderate risk exists for writing checks to cover parish bills.

Currie said this list can help parishes target their safety efforts. “If you’re going to spend extra time, spend it on the high risk areas,” he said.

He also noted that while the new requirements and stated guidelines can help protect parishes, they are basic.

“Each parish has to look at their specific situation, which may require additional procedures,” he said. Currie is available to assist parishes in developing needed safeguards and policies.

The diocese provided each parish with a copy of the Manual of Business Methods in Church Affairs after it was printed in 2000. For those needing a copy, it can be purchased for $15 from Episcopal Books and Resources, 800-903-5544.

A copy also is available on-line in PDF format.

Currie said he can send any parish a printed copy of the on-line version, if requested, by calling him at the diocesan office, (800) 473-3563.