An annual audit of each congregation is required by the canons of The Episcopal Church (Title I, Canon 7, Section 1(f)-(g)). Not only is an annual audit an important part of ensuring that the finances are being properly recorded and maintained, it is an important part of our stewardship of the assets that God has given to us.
By performing this essential annual review of the finances of a congregation, we take a look at how we are handling the pledges that are made to our congregations as well as how we handle other receipts and, in turn, how we use those funds. We often find, as a result of annual audits, better ways of handling funds to make them more secure and our practices more efficient and effective.
And when we report the results of the audits to our congregations, there is the opportunity to not only make others aware of the finances of the church but also to demonstrate that the leaders of the church are performing their duties to carefully oversee the assets entrusted to them.
Requirements for Annual Audits in the Diocese of Newark
Most congregations cannot afford to hire an independent CPA to perform an annual audit. The Canons allow for congregations to perform audits on their own by having several individuals follow specific steps. Over the years, however, there have been no specific, standard guidelines that outline the minimum steps to be performed.
The Diocesan Council recently approved the use of a standard Audit Checklist which is to be used by congregational audit committees. Effective immediately, this Audit Checklist is to be used by congregational audit committees for all audits that have not yet been started. This includes audits for the year 2012 and any prior year that has yet to be completed.
Available Resources
Guidelines for Financial Audits may be found on the diocesan website at www.dioceseofnewark.org/audits. These Guidelines provide background, information on who can perform the audits, a checklist to be followed and completed, and a listing of the documents that are to be submitted to the diocese at the conclusion of the audit. Included are Word documents that can be used to evidence the steps taken as well as forms to be used to report on the completion of the audit.
Congregations Audited by Independent CPAs
Some congregations are large or have more complicated finances, and have used independent CPAs to perform audits in the past. Such congregations are encouraged to continue to use the services of an independent CPA. It is important, however, that those CPAs perform an audit of the congregation’s records. CPAs also perform “reviews” and “compilations,” neither of which is intended to be an audit and, therefore, are not accepted as meeting the requirements of The Episcopal Church or the Diocese of Newark. If there are any questions about this, please contact me. Congregations that use CPAs to perform their audits should ensure that the CPA’s procedures include each of the steps on the Audit Checklist.
Please feel free to contact Paul Shackford, CFO if you have any questions regarding the Audit Checklist or the requirements.
