Portion of Diagnostic Checkup from
Churches Step Up to the Next Level:
A Guide for Local Churches to Improve Their Accounting Operations and Internal Control
Diagnostic Checkup – A Short Version
A diagnostic checkup is a service looks at a number of areas in a church to identify what could be done to improve operations or compliance with laws, regulations, and move towards best practices. A checkup could take several days in your office. When it is complete, the CPA will issue a report containing a long list of suggestions for improvements.
The book Churches Step Up to the Next Level has 76 questions on 5 pages which are designed to identify opportunities to improve internal operations of your church.
Here is the section of the diagnostic checkup discussing internal controls. As you can tell, each question is phrased so that yes is the “right” answer. A no answer identifies something to think about improving.
Internal controls
- Is the bookkeeper prohibited from signing checks?
- Is the senior pastor prohibited from signing checks?
- If the church uses online bill paying, is each online payment electronically approved or released by someone other than the person preparing the payment (since this is essentially the same as signing a check)?
- If the church uses wire transfers to pay any bills, are wires approved by someone other than the person initiating the wire?
- If direct deposit is used to pay staff, is the payroll register reviewed by someone other than the bookkeeper prior to disbursing funds?
- Do two people maintain control over the offering at every point in the collection and counting process until the deposit is ready to be made?
- If the offering is stored in a safe until it is counted, are two people required to gain access to the uncounted funds?
- Are the people who count the offering segregated from as many other accounting procedures as possible?
- When the offering count is finished, does the count team sign a count sheet that summarizes the offering and then provide a copy of the count sheet to the bookkeeper and treasurer?
- Has the church considered using pre-numbered, tamper-evident plastic bags to improve internal control of counting the offering?
- Does the church use an armored courier to make bank deposits?
- Does an appropriate supervisor approve every disbursement in writing?
- Is appropriate documentation retained for every disbursement?
- Do check signers completely avoid ever signing a blank check?
- Are bank reconciliations prepared accurately and timely?
- Does someone other than the preparer review bank reconciliations to make sure they were completed and have reasonable explanations?
- Does a senior manager (possibly the pastor or board treasurer) receive the unopened bank statements and review them for unusual items?
- Are credit card statements reviewed and reconciled timely?
- Do all credit card users account for all purchases on their cards in a timely manner?
Extracted from Churches Step Up to the Next Level – A Guide for Local Churches to Improve Their Accounting Operations and Internal Controls. Copyright © 2009 James L. Ulvog. Local churches are granted permission to print this page for use in assessing areas to improve their own operations.