Churches Need More Than a Bookkeeper: Six Examples
Is Your Church Exhibiting Any of These Symptoms?
Bookkeepers represent the backbone of every business enterprise. And yes, churches are a business enterprise, as money is received and money is spent. God bless all the church bookkeepers, who are often overlooked and under-appreciated.
Bookkeepers tend to be the “doers” in your organization, right? They are the ones you tend to turn to when you need help, even if it’s not an accounting issue!
The predicament we often see is that the bookkeeper rarely possesses the requisite CPA-level business experience that is essential for thriving organizations.
As such, here are six examples where churches need an experience financial manager overseeing the bookkeeping operations:
1. Keep it Simple!
We see this all the time. Case #1: The bookkeeper doesn’t know where to record unrecognized transactions and so he / she repeatedly creates new expense accounts. The result is a lengthy P&L Statement that becomes impracticable to read and understand. Case #2: A new bookkeeper comes into the church to replace an outgoing bookkeeper. The outgoing bookkeeper had a certain way of recording the transactions. The new bookkeeper has his / her new way of recording transactions. The end result is a long, convoluted P&L Statement.
2. Complex Transactions
Complex transactions arise in your church, not necessarily every day, or every month, but they certainly occur. At MinistryCFO, we deal with complex transactions all the time. Examples include the classification of fixed assets (like a building) and the recording of the resulting depreciation, and the proper recording of a stock gift. In these instances, the bookkeeper doesn’t know exactly how or where to record the transaction. Sooner than later, your records are going to be not only confusing but also misleading.
Budgeting is both an art and a science. To budget correctly, one needs to have an in-depth understanding of both accounting principles and the particular business industry. How would you like to budget your church with input from an expert on the industry financial norms? For example, someone who knows the industry range for salaries as a percentage of donation revenue? Unfortunately, bookkeepers are not exposed to such information, nor do they tend to have the requisite accounting experience when it comes to budgeting.
4. Lesser-Known Reconciliations
Bookkeepers are usually diligent about reconciling bank statements. However, in our experience, bookkeepers tend to be less diligent about reconciling other balance sheet items, such as: a) loan balances (with the bank loan ledger), b) depreciation (with depreciation schedules), c) deferred revenue (with the deferred revenue worksheet), and, d) revenue per the accounting software system (with revenue per the church management software system).
Bookkeepers are busy working in the micro world of transactions as they spend their time and energy on recording each and every deposit, and each and every disbursement. Thus, their affinity is away from macro reporting. As such, bookkeepers usually don’t know how to pull the most optimal financial reports for the leaders of the church.
For a start-up or early stage church, the CPA review of financial statements should be conducted quarterly and performed in less than an hour. For larger churches, the review should be conducted monthly and performed within several hours.
6. GAAP (Generally Accepted Accounting Principles)
It is so important for your church to have a CPA periodically review your financial statements. Bookkeepers simply don’t possess the requisite skill set to properly record all of the transactions of your church. In our experience, bookkeepers oftentimes invent their own way of recording transactions, and these inventions oftentimes result in a departure from GAAP.