6 Examples Where Bookkeepers Need Supervision

Is Your Church Exhibiting Any of these Symptoms?

Bookkeepers represent the backbone of every business enterprise. And yes,churches are a business enterprise, as money is received and money is spent. God bless all the church bookkeepers, who are often overlooked and under appreciated.

Bookkeepers tend to be the doers in your organization, right? They are the ones you tend to go to when you need help, even if it’s not an accounting issue, right?

The predicament we often see is that the bookkeeper rarely possesses the requisite C.P.A. level business experience that is essential for thriving organizations.

As such, we are going to list 6 examples where churches need an experienced financial manager overlooking the bookkeeping operations:

 1. Keep it Simple!

We see this all the time. Case #1: the bookkeeper doesn’t know where to record unrecognized transactions and so he / she repeatedly creates new expense accounts. The result is a lengthy P&L Statement that becomes impracticable to read and understand. Case #2: a new bookkeeper comes into the church to replace an outgoing bookkeeper. The outgoing bookkeeper had a certain way of recording the transactions. The new bookkeeper has his / her new way of recording transactions. The end result is a long, convoluted P&L Statement.

2. Complex Transactions

Complex transactions arise in your church, not necessarily every day, or every month, but they certainly occur. At Local Church Finance, we deal with complex transactions all the time. Examples include 2) the classification of fixed assets(like a building) and the recording of the resulting depreciation and, b) the proper recording of a stock gift. In these type instances, the bookkeeper doesn’t know exactly how or where to record the transaction. Sooner than later, your records are going to be not only confusing but also misleading.

3. Budgeting

Budgeting is both an art and a science. To budget correctly, one needs to have an in depth understanding of both accounting principles and the particular business industry. How would like you budget your church with an expert on the industry financial norms? For example, someone who knows the industry range for salaries as a % of donation revenue? Unfortunately, bookkeepers are not exposed to such information, nor do they tend to have the requisite accounting experience when it comes to budgeting.

4. Lesser-Known Reconciliations

Bookkeepers are usually diligent about reconciling bank statements. However, and in our experience, bookkeepers tend to be less diligent about reconciling other balance sheet items such as: a) loan balances (with the bank loan ledger), b) depreciation (with depreciation schedules), c) deferred revenue (with the deferred revenue worksheet) and, d) revenue per the accounting software system to revenue per the church management software system.

5. Reporting

Bookkeepers are busy working in the micro world of transactions as they spend their time and energy on recording each and every deposit, and each and every disbursement. Thus, their affinity is away from macro reporting. As such, bookkeepers usually don’t know how to pull the most optimal financial reports for the leaders of the church.  For a start-up or early staged church, the C.P.A. review of your financial statements should be conducted quarterly and performed in less than an hour.

For larger churches, the review should be conducted monthly and performed within several hours.

6. GAAP

GAAP stands for generally accepted accounting principles. It is so important for your church to have a C.P.A. periodically review your financial statements.  t possess the requisite skill set to properly record all of the transactions of your church. In our experience, bookkeepers oftentimes invent their own way of recording transactions and these inventions oftentimes result in a departure from GAAP.

Your church needs a CFO on a part-time basis. Let the Local Church Finance team oversee and equip your bookkeeper so that your financial statements are generated on an accurate, timely and understandable basis.

5 Poor Business Practices We Keep Running Into

At Local Church Finance, we look at these poor business practices as opportunities. Our mission is to help churches. There really is no denying that we regularly see these less than desirable business practices, which we often remedy at the start of the engagement with our clients:

 1.    Too Many Checking Accounts

You don’t have to have a separate checking account for each one of your designated fund accounts. As a matter of fact, with the right accounting architecture, you should be capable of retaining the cash in all of your designated fund accounts in one checking account.

Incidentally, fewer checking accounts will save on bookkeeping time.

 2.    Too Many Designated Fund Accounts

In our opinion, a church should have no more than two designated fund accounts. Each additional designated fund account creates exponential complexity. At Local Church Finance, we are experts in helping you get your designated fund accounts consolidated and thus manageable.

Again, fewer Designated Funds saves on bookkeeping time.

3.   Too Many Expense Accounts

The more bookkeepers a church has had in the past, the more expense accounts we tend to see. That’s because when the next bookkeeper doesn’t know where to record a transaction, he or she will create a new account. As a result, we often inherit expense reports that run many, many pages long.

Again, fewer expense accounts saves on bookkeeping time.

 4.   Unrecorded Fixed Assets

Fixed assets include land, buildings, renovations, automobiles, and office equipment. The recording of these transactions is often complex and beyond the understanding and scope of a bookkeeper. As such, bookkeepers tend to record these transactions in the Profit & Loss Statement, when, in fact, most of these transactions belong in the Balance Sheet.

5.   Profit & Loss Statements Lacking Departmental Breakdown

Remember #3 above, where the expense reports run for pages on end? In addition, we often find Profit & Loss Statements lacking proper departmental breakdowns. As such, we strongly recommend that our clients establish Departments within their Profit & Loss Statement. This way, each staff leader within the church becomes instantly accountable for his or her monthly spending.