Transparency In Ministry

Best practices for ministries includes a conflict of interest policy. The IRS form 990 (required for some ministries) includes the question "Does the organization have a written conflict of interest policy?"

The IRS has helped organizations, by including a sample policy in Appendix A to the instructions to the form 1023, go to www.irs.gov. Alternatively, a ministry can find other sample conflict of interest policies that may be more in tune with their policies by doing an internet search using keywords sample conflict of interest policy.

If you need help in defining conflict and developing a conflict of interest policy, contact me via e-mail or call us.

As we celebrate Freedom on July 4, 2007, please enjoy the following words from Jesus and the Apostle Paul:

I tell you the truth, everyone who sins is a slave to sin. Now a slave has no permanent place in the family, but a son belongs to it forever. So if the Son sets you free, you will be free indeed. John 8:34 etal...(NIV)

Those who live according to the sinful nature have their minds set on what that nature desires; but those who live in accordance with the Spirit have their minds set on what the Spirit desires. The mind of sinful man is death, but the mind controlled by the Spirt is life and peace. Romans 8:5-6 (NIV)

It is for FREEDOM that Christ has set us free.Stand firm, then, and do not let yourselves be burdened again by a yoke of slavery. Galations 5:1 (NIV)

We are a blessed.

Many non-profit organizations are separating out certain program activities into different legal entities, or are getting involved with other non-profit organizations. When does a non-profit have to report on a consolidated basis? The accounting regulations have the intent for organizations that are under common control through ownership, board control, and (or) economic control be consolidated. The accounting standards (SOP 94-3) states that “A reporting not-for-profit organization should consolidate a for-profit entity in which it has a controlling financial interest through direct or indirect ownership of a majority voting interest.”

The following chart from SOP 94-3 is a helpful guide in making the consolidation determination. It addresses the major issues in control and ownership of a company. There are more detailed items that need to be considered, however it is a great starting point.

Relationship With Another Not-for-Profit Organization (From SOP 94-3)

View Chart

In my second post, we will address

Grapevine Texas is hosting the 51st conference for the National Association of Church Business Administration. Record attendance of over 1,000 individuals representing churches, ministries and industry providers are expected.

Sandy Siegfried and I are representing Stanfield & O'Dell, P.C., as exhibitors, and we are meeting church leaders from across the U.S.

Improving Your Serve is the theme for the conference and Thursday - Sunday includes a variety of guest speakers on topics affecting churches and ministries of all sizes.

Go to the NACBA website for more information.

Under Statement on Auditing Standard #112, the auditors are required to communite certain information to those charged with governance. Who are these individuals? What are the auditors required to communicate? These and other issues will be explored as we determine who is responsible for financial information and who are responsible for guiding the mission of the church or ministry.

Those charged with governance are members of the board of directors, board of trustees, elders, etc. They are the individuals that oversee the senior pastor and help define, evaluate and refine the mission of the organization.

Responsibilities - the chain of command... Management of the church or ministry is responsible for the financial statements. Executive members of management report to the senior or executive pastor or director. The executive director reports to the board, or those charged with governance.

After the audit has been completed, the auditors are required to communicate certain information to those charged with governance. What items are included in the required communication? See my next post describing the information that must be communicated.

This morning, I sat in on one of the Alpha/Omega sessions held at NACBA's 51st Conference in Grapevine, TX. Glenn Wood, Seacoast Church and Bill Gruenewald, FBC of Hendersonville facilitated this session. This session addressed issues that affect not only churches with membership > 3,000 but churches of all sizes. This is why I will share information from this session and I encourage "us all" to discuss the issues that significantly affect the operations of churches/ministries.

Large or "mega" churches can be defined as:
1. > 2,500 - 3,000 in worship attendance/weekend
2. > $4.0 million annual budget
3. > 40 paid staff members
4. > 150,000 square foot facility
5. Multiple services

We will begin this series of posts by identifying the following key issues facing churches:
1. Human Resources
a. Salary, including taxable and non-taxable benefits
b. Structure of staff (ministry and administrative support)
c. Recruiting, evaluating, training and transitioning employees
d. Volunteer support
e. Regulatory requirements
2. Management Systems
a. Donor/Membership Data Bases
b. General Ledger and Financial Reporting Systems
c. Web-site based Programs
3. Finance and Business Office Requirements
a. Record retention
b. Banking relationships
c. Multi-site issues
d. Facilities
e. Trends
4. Governance and Communication
a. Board Policies and Procedures
b. Plantinum or "Best Practices"
c. IRS Compliance
d. External Consultants and Independent Auditors
e. Communication with Executive Management; Staff; Congregation - what is required?
5. Capital Campaign & Stewardship Issues
a. Internally and Externally led - what is better and why?
6. Intellectual Property Issues
a. Products
b. Books
c. Other property

Stay "posted" as we work through these and other issues. If you have a specific question, please comment, as noted in the blog home page.

What is the true purpose in a Christian’s life?

Che Ahn defined the purpose: rather than works, duties or accomplishments, the true purpose is love God and loving others.*

* Excerpt from a book review by Chris Maxwell from Fire Evangelism, written by Che Ahn - published in MinistryToday March/April 2007 magazine.

Why is my external auditor asking me to sign a Management Representation Letter?

If you are a member of senior management and your financial statements are being audited, your external (independent) auditor will ask you to sign a management representation letter or “rep” letter before they release the audited reports to you.

So what is this “rep” letter? In format, it is a letter from management to the auditors but is typically written by the auditors.

Why is this necessary? In short, it is because it is required under Section 333 of U.S. Auditing Standards for audits of financial statements performed in accordance with generally accepted auditing standards.

During an audit, management makes many representations to the auditor, both oral and written, in response to specific inquiries from the auditors. As such, written representations from management should be obtained for all financial statements and periods covered by the auditor's report. Such representations from management are part of the audit evidence the independent auditor obtains, but they are not a substitute for the application of auditing procedures necessary to afford a reasonable basis for an opinion regarding the financial statements under audit.

In many cases, the auditor applies auditing procedures specifically designed to obtain audit evidence concerning matters that also are the subject of written representations. For example, after the auditor performs procedures to identify related party transactions, the auditor may require written representation that all the related party transactions have been identified and disclosed.

In future postings, we will discuss who should sign the letter and the typical content of the letter.

Please feel free to contact us if you have other questions.

If solitude were primarily an escape from a busy job, and silence primarily an escape from a noisy milieu, they could easily become very self-centered...solitude and silence are for prayer. The Desert Fathers did not think of solitude as being alone, but as being with God. They did not think of silence as not speaking, but as listening to God. Solitude and silence are the context within which prayer is practiced.
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> -Henri Nouwen, from The Way of the Heart, Desert Spirituality and
Contemporary Ministry.