MODEL AUDIT PROGRAM PART II (For 2008 Audit)

MODEL AUDIT PROGRAM PART II (for 2008 audit)

GUIDELINES FOR AUDITORS: MANAGEMENT AUDIT

If Audit is for two years or for part of a second year, fill out two forms, one for each year. If questions have been answered in prior year audit, indicate by putting in date.

The following worksheets are provided for use by you and the parishioners, wardens and/or clergy who do the audit. This model program can be followed step by step and will be the basis of

the management audit. The church is to be given a management report following the audit, so it is important that all information obtained, materials given out, instruction provided and suggestions made be noted. Questions include canonically required information so are important for vestry knowledge of parish management systems.

The final management audit report will be combined with the fiscal audit and will be submitted to

the Vestry. The Vestry should, upon receiving both financial audit report and management report, note their receipt and findings in the minutes. One copy is to be filed with the Diocesan Finance Office in the parish file. The Management Audit should be submitted to the Diocese in years where there is a change in clergy leadership and no less than every three (3) years. (If done in

2007, it will be done in 2010). It is a helpful tool in all years. Completion of the financial and management audit will satisfy the canonical requirements for audit for the fiscal year(s) covered.

Before beginning the management audit, the CFO will send a letter to the Rector, Priest in

Charge or other person in charge of the parish indicating that the management scope will include the following items:

1. Property documents. Please have available copies of Deeds, surveys, title papers or any other ownership records on the church properties.

2. Loan and/or grant documents.

3. Records on policies and practices regarding employee payroll and benefits. Evidence of personnel files, benefit payments, etc.

4. Parish Rolls and register.

5. Example of service bulletins, policies on weddings, baptisms and funerals and other use of the church. Policy on discretionary funds.

6. Physical condition of the facilities needed repair work, ongoing work, etc. Any contracts for current work.

7. Insurance policies for property and liability (unless under the Diocesan policies, in which case this will be omitted)

8. Endowment policies and Investment policies

9. Communications systems: computer, electronic, newsletters, etc.

10. Summary of offerings by parish including Christian Education, Youth groups, Adult groups, etc.

The following management audit program is designed to be helpful to the congregation and to assess their compliance with various canons and policies of the church. Follow the instructions and answer the questions. If additional space is required, attach additional sheets. A place is provided on the right side of the model program for the initials or signature of the person performing each step in the audit.

Name of Congregation

Name of Auditor(s)

CALENDAR YEAR BEING AUDITED

I. PROPERTY DOCUMENTS

A. List the legal address for each property owned or leased by the church

B. For Properties owned by the church, the parish must have a deed, survey and title. A copy

of these must be on file with the Diocese. A parish may ask the diocese to keep the original in Diocesan archives.

The location of these for all properties in A. above is known by the parish

Exceptions: We don’t know where the following documents are (List)

Copies of the following documents are on file with the Diocese.

(Check with David Sisson, Archivist)

C. Has the church bought, sold or leased any property in the last 18 months. (Give Details about terms and conditions of acquisition, sale or lease.) Were these transactions approved by the Standing Committee?

II. PERSONNEL

A. Does the Vestry adopt a housing allowance for the priest, annually and did they report the housing allowance as a part of their clergy report? If not, Review the worksheet and model resolution with the parish for their benefit.

B. Is the parish aware that pension payments are canonically required by the National Church for the Clergy and recommended Laity (Review Canons and resolutions, attached)

C. Benefits (Clergy and Lay) The Diocese has benefit standards for congregations. Are the guidelines being followed? Review these with the parish leaders and give them a copy

of the summary sheet.

D. List the people who are paid by the church (now how much or how little). (Include teachers, choir members, babysitters, organists, etc.)

Name / Position / Amount of Time

E. Now give the names of the same people and indicate the benefits they receive and who pays for the benefits. (Church, Employee, Other)

(Check all that apply)

Check benefits paid by church (C), partially paid by parish(P), purchased by Employee (E) no benefit (N)
Health=H;Pension=p; Dental=d;Life insurance=L;Short-Term Disability=ST;
Long-Term Disability=LT; Unemployment Insurance=UI; Disability=DI; Workmen's Comp=WC
Name / Position / W-2 / 1099 / H / P / D / L / ST / LT / UI / DI / WC

F. List any employees or persons receiving money who are not receiving a W-2

statement and explain:

Name Form Given Reason

G. SALARY SCALE

Review the salary scale with the leadership, explaining size congregation and salaries that should be paid. Leave them with a copy of the salary scale.

Check the people’s compensation against the scale. (Include clergy and laity)

List all people who are not currently at the minimum rate for the size congregation and indicate when

the church plans to get the people to at least the minimum.

Does the congregation have personnel files for all persons paid by the church? (List employees or persons paid for whom a personnel file is not available and an indication when these files will be created. Give a copy of an I-9 form for all employees)

H. SAFE CHURCH POLICIES.

All Employees and certain parish leaders must have safe church training and evidence of this in their files?

List any employees and parish leaders who have not had safe church training?

When is their training scheduled?

List any employees whose certificate is not in their personnel files.

III. CANONS

Yes No Church has a copy of Audit Year Journal

B. Yes No Church has a copy of National Canons

Auditor, leave a copy if answer is no.

Auditor, review key sections of Canons relating to Diocese. IV. PARISH ROLL AND REGISTER

A. Yes

No Parish uses new register form

B. Discuss which numbers from the parish register are used in the parochial report

C. Discuss which number in the parochial report determine size congregation

D. Review Apportionment Formula and how it is derived from the above number.

V. PARISH SERVICE MATERIALS

A. Parish has the following materials/Books/Hymnals available

Choir/Organ/Pews

1. Wonder, Love and Praise Yes No

2. 1982 Hymnal

3. Lift Every Voice II

4. Others (specify)

Yes No

B. Service Music available in addition to the sources listed above

(Please attach copies to the report, if possible)

VI. PARISH SPECIAL SERVICES

A. Baptisms are held (Check and Indicate all that apply)

1. When Requested

2. Special Sundays (list when)

3. During Church Services

4. Other (specify)

B. Wedding and Funeral Service policy (attach copies)

___1. Weddings and Funerals are a service of the church and clergy are not paid.

___2. Clergy are paid for Weddings and Funerals and all the checks are made out only to

the church.

___3. Clergy are paid to the clergy and/or musicians for Weddings and Funerals, directly

by persons or families.

___4. Non parishioner weddings can be held at the church. Explain the policy and who

does counseling, who performs ceremony, fees collected and payment policy

___5. Non-parishioner funerals can be held at the church. Explain the policy and what fees

are collected. Attach the payment policy.

Please list any other comments about the use of facilities.

VII. GENERAL APPEARANCE OF THE CHURCH AND RECTORY

A. What is the general appearance of the church/Rectory: walls, lighting, roof condition, gutters and downspouts, woodwork and siding, steeples, etc.

Has the Church/Rectory had any repair work done in the last year?

B. Describe the repairs and how they were paid for (investments, operating funds, loans?)

C. Are the properties in good repair? Look at landscaping, driveways, trees, shrubs and plantings.

D. Are steps and sidewalks in good condition or do they need repair?

E. What work needs to be done in the next five years (inside and outside of the church/Rectory) and how will this be paid for?

F. Is there a separate office for the clergy, with soundproof doors? With Windows?

VIII. LIFE OF THE CHURCH

A. Programs for young people and young adults. Indicate yes or no.

1. Do young people (under 16) participate in the liturgy

2. Is an adult other than the Rector responsible for training?

3. Is there a church school for youth 5-16? ages

4. Is there a nursery provided during church services?

5. Is there a youth group for teenagers?

6. How many kids are involved in total youth programs?

7. How many teachers are involved in the church school?

8. In which activities do youth participate in regular services?

Ushers at regular services

Acolytes, Crucifer

Choir

Readers during regular services

Bring forward collection

Bring forward elements

Other

Have all adults who are in charge of youth activities (paid or unpaid) participated in safe church training sponsored by the Diocese? If not, why not.

B. ADULT EDUCATION

1. Does the church have adult education?

2. Who leads it?

3. How many on average participate?

4. Comments

C. Does the church sponsor or have organized adult social activities? If yes, describe. (Include how many people participate)

D. Does the church have members or is the church involved in ministry with or for others in or outside of the church? If so describe (example, a food cupboard, tutoring program). Include only those activities where members are actively involved.

E. Does the church give money to organizations doing work in the community or in the world?

List organizations and amount received in 2008.

IX. ENDOWMENT AND OTHER INVESTED FUNDS

A. List the funds (amount) that the church has in addition to its operating funds. Include CD’s, savings accounts, investment accounts, stocks or bonds, treasury notes, others. Attach a copy of

the statement for each source of money for Dec. 31st of the year being audited. (The value of

these should be on the parish balance sheet)

B. Are any of these funds restricted? Are the restriction requirements in writing?

C. Is there an endowment/investment/spending policy? (attach)

X. COMMUNICATIONS

A. Do you have a newsletter? Attach a copy.

B. Do you have people who are receiving Living Water?

C. Do you have a web page?

D. Does the church have e-mail at the church office? Church

address

E. Does the parish have a computer(s) at the church?

F. Are the parish financial records kept on an on-site church computer?

G. Do you have a fax in the church office? #

H. Do you have “Rite Stuff” or other Rite Series on computer disk for your Sunday bulletins? (which)

I. Is the church on the “list serve” and do you post the messages?

XI. Parish Mission and Ministry (The purpose of this section is to help the Diocese provide better

resources and assistance to parishes)

Give three things that you are doing well as a congregation (ministry, outreach, etc.)

What three things could you do better and what resources do you need

Are you familiar with Diocesan Loans and Grants? Sibley / Clergy / Development

Have you received any loans or grants through the Diocesan Budget

Are you familiar with the Diocesan Budget and where funds go? (Review the budget)

XII. REPORT TO THE PARISH/MISSION AND TO THE DIOCESE

A. Prepare the report of the management Audit for the presentation to the Vestry Committee and submit it to Vestry with the financial audit. Discuss your list of observations, discrepancies, and comments, with the Vestry or Executive Committee.

B. Submit a copy of your report (attached to the annual financial audit) with the Certificate of

Audit to the diocese. To comply with the Canons of the Church , this should be received by the

Diocese by June 30.

C. All members of the Audit Team should sign these work papers in the place provided.

Additional Comments of Audit Team for the Vestry and/or the Diocese. (Use back if needed)

Signatures of Audit Team Members:

Date:

Created by The Episcopal Diocese of Rochester New York www.episcopalrochester.org

FORM FOR CONFIRMATION OF OUTSTANDING LOANS

(Church Letterhead)

To: (name of bank)

Please confirm directly to our auditor/Audit Committee

(name and address of auditor/Audit Committee)

the amount of our outstanding loan(s) with you as of December 31, 20 . According to our records, the amount of our loan(s) is (are) as follows:

Loan # Principal amount due $

Interest rate %

Terms of repayment

If the above information is correct, please sign the enclosed copy of this form and return it in the enclosed self-addressed

envelope. If this information is not correct, please note corrections and return the form to us.

Yours truly,

Name of church

by (authorized signature)

We certify that according to our records, the details of the outstanding loan(s) of the

Church as of December 31, 20 are as indicated above.

Name of Bank

Authorized signature

(send this form in duplicate: one copy to be retained by the lender, one copy to be returned to you).