LGCS Financial Policies
Lutheran Church of the Good Shepherd
Financial Policies
Approved by Council on July 15, 2014
In order to exercise good stewardship and care of the resources entrusted to it, the Council has established internal control and accounting policies for Lutheran Church of the Good Shepherd (LCGS). This document describes the major financial activities and related best practices. It is the responsibility of the Stewardship & Finance Ministry Team to review and propose updates on an annual basis.
Our financial policies govern the following activities:
· Financial reporting
· Budgeting process
· Benevolence allocation
· Bank account reconciliation process
· Authorized bank signers
· Investments [Replaces Continuing Resolution C12.05.A08]
· Receipts/offerings
· Asset classification [Replaces Continuing Resolution C12.05.B10]
· Scrip
· Disbursements and purchasing
· Credit card usage
· Capital expenditures
· Pastor’s discretionary fund
· Accountable reimbursements and travel expenses
· Payroll and taxes
· Data security
· Financial data privacy
· Records retention
· Code of ethics
· Memorial funds
· Annual congregational audit
Financial Reporting – LCGS reports financial activity using the cash basis of accounting. Revenues are recognized when cash is received and expenses are recognized when paid.
Budgeting Process – An annual budgeting process shall be in place and managed by the Stewardship/Finance Ministry Team. The budgeting process shall include:
• After closing the month of August, the Treasurer shall supply each ministry team with a copy of its current year budget detail, its year-to-date expenses, and any other data requested by the ministry team.
• At their September meetings, each ministry team is responsible for reviewing its budget and expenses to date, considering plans for the coming year, and proposing a detailed budget for the coming year. A written draft ministry budget shall be supplied to the Treasurer within a week of the meeting.
• By the end of September, the Personnel Committee shall make recommendations to the Treasurer regarding any adjustments to employee hours, salaries, wages, or benefits for the following calendar year.
• By the end of September, the Mutual Ministry Committee shall make recommendations to the Treasurer regarding any adjustments to the Pastor's compensation and benefits for the following calendar year.
• The Treasurer shall compile budget information received from ministry teams, the Personnel Committee, and the Mutual Ministry Committee, along with historical data, and prepare a draft budget for review by the Stewardship/Finance Ministry Team.
• At its October meeting, the Stewardship/Finance Ministry Team shall:
o review the congregation’s revenue sources and a projection of revenue by category for the coming year;
o review all draft ministry team budgets and suggest any changes to each ministry team;
o review expenditure proposals and commitments for the coming year;
o prepare a proposed allocation of benevolences;
o discuss possible ways to balance planned expenditures with projected income.
• A revised draft budget shall then be prepared by the Treasurer and submitted to Council.
• At its October meeting, the Council shall review the draft budget and make any adjustments deemed necessary or prudent.
• Prior to the congregational budget meeting, it is desirable to hold a budget forum.
• At its November meeting, the congregation shall consider a resolution to adopt the budget recommended by the Council for the coming year. Amendments to the proposed budget may be considered prior to its adoption.
• Once approved, each ministry team may manage and spend their budget up to the approved amount as the ministry team determines is best for living out the mission and ministry of that team’s ministry area. In other words, Council approval for changes within a ministry team’s budget detail is not necessary.
• Actual revenues and expenses shall be monitored by the Stewardship/Finance Ministry Team against the approved budget on a monthly basis and explanations of variances presented to the Council.
• Approval of the budget by the congregation does not guarantee feasibility. As the year progresses, spending may have to be reduced to stay within actual cash levels.
• Ministry teams are encouraged to coordinate with the Treasurer prior to any purchase over $500 to ensure availability of funds.
Benevolence Allocation – The congregation demonstrates its commitment to “first fruits” giving and the biblical tithe by dedicating ten percent of its total general fund income to ministry and charitable organizations beyond its own doors. At least half of this congregational tithe is customarily allocated as Mission Support for the Sierra Pacific Synod and, through the synod, to the ELCA churchwide organization. The remainder is allocated to other local and global ministry partners. The percentage allocated for ELCA Mission Support and for each of the other ministry partners shall be fixed annually within the general fund budget approved by the congregation. Such benevolence funds shall be distributed monthly according to actual income received and each recipient’s proportional share, except that small monthly allocations may be accrued and paid at a later date.
Bank Reconciliation Process – All bank reconciliations shall be performed by a person who is not an authorized signer on the account and is independent of the invoice approval process. These reconciliations shall be reviewed and approved by a member of the Stewardship/Finance Ministry Team. These reconciliations shall be performed on a monthly basis and be signed and dated by both the person performing the reconciliation and by the person reviewing it.
Authorized Bank Signers
· The following persons shall be signatories on the LCGS accounts: President of the congregation, Vice President of the congregation, and at least one other Council member or Stewardship/Finance Ministry Team member approved by the Council.
· Authorized bank signers shall not include the Pastor, Treasurer, or anyone involved in the bank reconciliation or general ledger processes.
· All checks shall be signed by two signers.
· A signer may not sign a check payable to him/herself or to a person to whom s/he is related.
· A person signing the check may not also be the person who approved the expense.
Investments – Congregational monies, both restricted and unrestricted funds, which are not anticipated to be spent within the immediate future shall be deposited in one or more interest bearing accounts or certificates. Our congregation has chosen to invest such reserve funds in the Mission Investment Fund, a churchwide unit of the ELCA that offers flexible investment options with competitive rates of interest. The Mission Investment Fund makes loans to help congregations and ELCA-related ministries purchase land, begin new building projects, or expand their current facilities. Thus, we cooperate with and support the wider church to strive for the fulfillment of God’s mission in the world.
Receipts/Offerings
• All mail containing money shall be immediately placed in the safe for counting on the following Sunday.
• Offerings are counted by at least two tellers. Tellers shall be approved by the Stewardship/Finance Ministry Team and scheduled on a rotating basis and, to the extent practical, should not count with a person to whom they are related.
• All offerings shall be tallied on a preprinted form, signed and dated by the tellers. Detailed instructions related to the counting process can be found in the Teller Binder.
• The signed tally sheet for the receipts shall be given to the Treasurer and a copy given to the Financial Secretary.
• The tellers shall reconcile the deposit ticket to the tally sheet for all offerings.
• The receipts processed on a Sunday or Monday shall be deposited no later than the following Wednesday and shall be kept in the safe until deposited.
• The receipts shall be deposited by a person independent of the people performing the count and the bank reconciliation process.
• The bank statement shall be reconciled to the deposit tickets once a month by a person who is not an authorized bank account signer.
Asset Classification – All donations and receipts shall be properly classified in accordance with the donor’s intent. Unrestricted gifts and offerings to the congregation, as well as rental fees and investment income, are maintained by the Treasurer in a single general fund. Most expenses of the congregation flow from that general fund and are governed by the annual budget adopted by the congregation. Budget authorizations expire at the end of each calendar year, with unexpended monies remaining in the general fund.
Members of the congregation may also wish to make contributions for specific purposes. To the extent practical, the congregation will accept those restricted gifts and use them for the purpose given. Designated fund balances may carry over from one fiscal year to the next.
· For each designated fund established by the Council, a descriptive name and a clear statement of purpose must be provided in order to determine the type of charges that can be paid with the fund.
· For each designated fund, the Council shall determine which ministry team, or other group or individual, is responsible for authorizing expenditures and reimbursements from the fund.
· For each designated fund, the Treasurer shall track receipts and expenditures and report to the Council on a monthly basis. Designated funds need not be physically segregated from the general fund in separate accounts.
· If an expense or reimbursement could be legitimately paid from either a designated fund or from the general fund, the designated fund will customarily be used first.
· For each designated fund, the Council shall determine the expected duration of the fund and whether contributions shall be refundable.
· Unless otherwise stated when the fund is established, contributions shall be nonrefundable. Upon completion of the purpose for which a designated fund was established, the Council shall use any excess remaining monies for other projects or transfer it to the congregation’s general fund.
· If the project is abandoned and no proceeds expended, then the use of the contributions shall be determined by a vote of the Council or congregation.
· If a gift is given which cannot be credited to an existing designated fund, and no such fund is authorized, the donor shall be encouraged to contribute the gift to an existing fund. If an alternative designation is not made, the gift shall be returned to the donor.
· The Treasurer shall include the year-end balance of each designated fund in the annual report to the congregation.
Scrip – As one method to fund the ministries of LCGS, the congregation is invited to participate in Scrip. The following practices govern the management of the Scrip program:
· A separate checking account will be held for Scrip funds and purchases.
· The Scrip checking account will hold $1100 of general fund monies so that orders can be placed expeditiously. Once the Scrip account exceeds $1500 on hand (after all outstanding orders have been placed), the Treasurer will facilitate periodic transfers to the general checking account.
· Scrip transactions will be accounted for in a Scrip Holding Account Designated Fund, with net profits transferred to the General Fund on a periodic basis.
· The coordinator of the Scrip program will be responsible for collecting orders, placing orders with Great Lakes Scrip Center, preparing deposits, and distributing Scrip cards to those participating in the program. The coordinator will maintain an order spreadsheet report showing all financial details of the Scrip account. The coordinator will submit a copy of this spreadsheet to the Treasurer not less than monthly.
· The coordinator will ensure that the Scrip deposit is prepared at the church, verified by a second person, and placed in the safe for teller verification and deposit.
· The coordinator may choose to have the Scrip cards delivered to the coordinator’s home. By doing so, the coordinator agrees to be held responsible for all Scrip cards that have been ordered and purchased but not yet delivered to purchasers.
· When distributing Scrip cards, the coordinator shall obtain the signature or initials of the person who placed each order so that a record of receipt is on file.
Disbursements and Purchasing – All expenditures shall be handled as follows:
• Requests for reimbursement shall be approved and turned in to the church office;
• Any expenditure presented for payment shall not be processed unless properly approved and supported;
• All expenditures shall be supported by proper documentation and accompanied by a signed and approved processing form, with the exception of the following items. These items do not require approval for payment:
o utilities;
o signed lease agreements and other contracts
o mortgage payments;
o property taxes;
o benevolences per congregation approved budget;
o payroll taxes and processing fees;
o insurance installments;
o pension and medical benefits per congregation approved budget;
o standard recurring line item expenses per congregation approved budget;
o bank service fees;
o remittance of legally-required wage garnishments;
o pass-through of a special collection to the intended recipient.
• Payment for these items may occur via initiated or automatic electronic funds transfer;
• The person approving the invoice for payment shall not sign the check for that invoice, and shall be independent of the check signing and bank reconciliation process;
• Invoices for bulletins and other church administration items shall be approved by the Administrative Assistant or Pastor;
• Ministry team expenses shall be approved by a member of the ministry team or by the Pastor;
• Payment exceeding the IRS annual threshold amount shall not be made to any vendor who will require filing of a form 1099 until a completed form W-9 has been received from that vendor;
• Before issuance, invoices shall be matched to the checks presented for signing by someone other than the preparer of the checks;
• Payment of approved check requests may be made online or by phone if approval is obtained from two check signers;
• All expenditures shall be reviewed on a periodic basis by a person independent of the disbursement and purchasing processes. The Stewardship/Finance Ministry Team is responsible for ensuring this occurs, and it may be accomplished by the review of detail P&L reports at Stewardship/Finance meetings;