Financial Compliance Review Committee:
Guidelines for Congregations of the
Evangelical Lutheran Church in America

The task of the Financial Compliance Review Committee is to ensure that the finances of the congregation are in good order and to protect the members of the congregation . . .

Committee Members
A Financial Compliance Review Committee is appointed by the Congregation Council. This committee should be comprised of at least two members of the congregation, excluding the treasurer and the financial secretary. It is preferable that committee members have expertise in accounting procedures.

The committee, with approval of the finance committee, may secure outside help on a fee basis from an independent accountant, registered in the state.

Purpose
The Financial Compliance Review Committee:

Examines and reviews all accounts and records;

Exercises supervision and oversees the work of this review if it is  conducted by an outside accounting firm;

Examines all insurance policies and prepares a schedule of the insurance coverage;

Inspects and examines securities and investments;

Prepares a schedule of the securities and investments for review by the  finance committee; and

Reports its findings in writing to the Congregation Council with supporting schedules and recommendations for change and improvement.

Procedures
Review the recording of cash receipts:

Trace deposits from the counters' reports in the records of the financial  secretary and treasurer and compare these to the entries recording such  deposits so they agree with the deposits recorded by the bank;

Check on the timeliness of deposits; and

On a sample basis, check the account distribution in the cash receipts journal, being particularly alert for funds designated for specific purposes.

Verify check accounting:

Inspect the cash expenditures record in the cash disbursement journal, which should show the date, check number, name of payee, amount of check, and account distribution for each check written;

Check mathematical accuracy of entries;

Examine the authority for writing a check such as approval on invoices;  pastor's call, including current salary and housing arrangements; contract  agreements; actions of Congregation Council reported in minutes;

Examine checks to verify that disbursements were actually paid to the  proper parties;

Account for all checks, used and voided;

Prepare a statement of expenditures for comparison with the adopted budget for the year and analyze variances;

Prepare a tabulation of benevolence payments to the synod and compare with statements received from the synod, and compare this total with the expected response for the year; and

Analyze expenditures, noting proper capitalization of major improvements,  refurbishing, and new equipment.

Reconcile bank accounts:

Inspect, on a sample basis, endorsements on the canceled checks;

Request banks, savings and loan associations, and other investment agents  to confirm, in writing, the balances held in accounts;

Confirm authorized signatures for check writing with the financial institutions and compare signatures on the card with those currently used on  checks;

Prepare a statement of reconciliation between bank balances and balances shown on the books.

The reconciliation should begin with the bank's balance; add to that figure deposits shown on the books but not yet credited on the bank statement; subtract the outstanding checks (those which have not yet cleared the bank) to  prove the balance shown on the books.

Examine petty cash funds to determine that :

Disbursements vouchers have proper approval;

Reimbursements to the fund are properly made; and

Maximum figure for individual payments has been established and followed.

Examine individual member records:

Compare "pledge amount" with the signed pledge;

On a sample basis, check the financial secretary's posting of  contributions to the members' records;

Inspect insurance policies:

Inspect insurance policies and prepare a schedule of insurance to show:

Effective and expiration dates;

Kind and classification of coverage;

Maximum amounts of each coverage;

Premium amounts and terms; and

Comparison of insurance coverage with the insurance appraisal or other supporting cost data.

Upon completion of the audit report, it is suggested that the following certification be completed and made a part of the congregations records that a review of the financial records has been performed.

Sample Report Form
(Requires Adobe Reader to view or print the form)