Financial statements should have these characteristics and here’s why:
o Any accountant can make financial statements hard to read and interpret but that undermines their goal of being a tool which is used to help the church make better decisions (not just better financial decisions).
o Keep things as simple as possible because most people can’t read financial statements. If the statements are too hard to read, many people will conclude that things are being hidden from them and the trust level degrades.
o All financial statements should have all church financial figures. Hiding or consolidating numbers is not good for the church. It decreases the confidence level members have in the church’s financial leaders. Besides, all the money was given by church members so they should be able to see where all the money is.
o All financial statements should be published every month. If corporate America can put out monthly statements, then every church should be able to do that, too. I think complete financial statements should be made available to everyone who wants them every month, not just to the Finance Committee.
o By this I mean the church should have high expectations of how its money is handled.
o It should have highly qualified, fiscally impeccable, and well-trained staff in the Finance Office.
o Its lay leaders should give their time to know the figures and help the church understand the figures.
o The pastor and other ministers should understand their role in teaching generosity and personal financial priorities.
o There is accountability to the church: if the leadership expectations are not being met, then the church should ask them to fulfill their responsibilities or seek others for these roles. There is also legal accountability: if anyone involved in the church’s finances has any hint of fiscal irresponsibility, then the church is obligated to remove him/her from that role.
o All churches should have a financial audit at least every four years and in the off years, the church should have an “agreed upon procedures” audit. The AUP ensures the finance office is following best practices for a church.
These are non-negotiable items for me in a church finance office, its financial statements, and the people who work there (paid and volunteer). What are your standards?