Churches Step Up to the Next Level:

A Guide for Local Churches to Improve
Their Accounting Operations and Internal Control


 Written specifically for local churches, this primer will help you step up to the basic internal controls and procedures every church should have. Why another book on internal control? There are many wonderful resources available, but they are usually 150 or 200 pages long. Who has time to read that much? This book is intentionally short in order to address just the foundational issues. The conclusion is on page 43, with an 8 page appendix.

Key topics:

  • Why bother putting good procedures in place?
  • Foundational financial procedures.
  • How internal controls protect your staff.
  • Basic internal controls that can be easily developed.
  • Tax issues frequently encountered in a local church.

Bonus in the appendix:

  • Questionnaire to identify specific areas to improve your church’s operations.

Whatever level your church is on, this guide will help you step up to the next level of accountability.


Summary of the chapters and sections.

Chapter 1 – Why Should Churches Step Up to the Next Level?

  • Where is this book going?
  • Why is there a need to step up to the next level?
  • The rules have changed and will change more
  • It’s the right thing to do
  • Where does this book start, and where does it end?
  • Definitions

Chapter 2 – Get Up to Speed

  • Bookkeeping
  • Internal controls
  • Processing of payroll
  • Personnel policies
  • Board of elders
  • Everyone knows the expectations
  • Communicate widely
  • Statement of faith
  • Conflict-of-interest policy
  • Standards of conduct
  • Code of ethics

Chapter 3 – What’s All This Internal Control Stuff About?

  • Internal control protects your staff
  • Trust is not an internal control
  • Fraud triangle
  • Segregation of duties
  • Dual control over offering
  • Donor system maintained by separate person

Chapter 4 – Basic Internal Control Procedures

  • Bookkeeper does not sign checks
  • Bookkeeper does not make electronic payments
  • Dual control over the offering count
  • Accounting software
  • Pastor never signs checks
  • Approval of disbursements
  • Supporting documentation
  • Separate the offering counters from other work
  • Bank reconciliations
  • Review of unopened bank statement
  • Send year-end receipt for contributions
  • Review of reports
  • Budgets

Chapter 5 – A Few Tax and Legal Issues

  • Why incorporate?
  • Employment issues
  • Tax-deductible contributions
  • Reporting income to the IRS
  • Other reporting requirements

Conclusion – Step Up to the Next Level!

Appendix A – Web resources

Appendix B – Diagnostic Checkup – Short Version