The Church Treasurer's Handbook. Robert Leach

Чтение книги онлайн.

СКАЧАТЬ href="#ulink_7a4b4399-a4c8-5da9-8dac-7a5026942c4b">Audit Trail).

      Accurate records

      It is obvious that records have no purpose unless accurate. However, that does not necessitate spurious accuracy, particularly with regard to rounding and estimating.

      For rounding, the general rule is:

       keep records to the nearest penny

       publish accounts to the nearest pound.

      Nothing is gained by reporting that the annual income was £147,692.14 rather than £147,692. This is an example of unnecessary detail crowding the true picture.

      Sometimes it may be necessary to estimate an amount. The church may have agreed some building work and not yet know the full cost, or be in dispute about the cost. In such cases, the treasurer must:

       estimate a reasonable figure, erring on the side of caution

       state in the accounts that it is an estimate.

      Timely records

      Financial records must be kept up to date, in that all income and expenditure should be entered in a cash book or computer equivalent within a reasonable time. For income, that is likely to be no more than a day or two. For expenditure, provided details are noted on a cheque stub, it is probably sufficient that expenditure is written up once a month.

      A treasurer usually needs to do some work at least once a week. Many treasurers find it convenient to set aside a regular time each week for this. A treasurer should not start work in a blaze of enthusiasm and then let things slip once the enthusiasm has waned.

      Accessible records

      Records must be accessible both to the treasurer and to anyone else who is legitimately entitled to see them. This always includes the minister, and usually it will include the churchwardens, trustees or equivalent. The auditor or examiner has the right to see such records whenever he wishes; the audit is not necessarily restricted to an audit period. Such people must know where the accounts are kept.

      There is no objection to keeping the accounts at the treasurer’s home rather than on church premises, provided the exact location is known to at least two other people, such as an assistant treasurer and the auditor (or examiner).

      The right to inspect the accounts does not mean that the auditor can knock on your door and demand immediate sight of the records in the middle of a dinner party. It does mean that such a person may ask to see the records at a convenient time and place at no more than a few days’ notice.

      If you go away on holiday or for any other reason, the records should be temporarily transferred to another location and arrangements made for day-to-day transactions to continue and be properly recorded.

      Types of funds

      A treasurer must understand that the church may hold up to four types of funds:

      1. endowment funds

      2. restricted funds

      3. designated funds

      4. unrestricted funds

      Endowment funds

      These are often funds where only the interest may be spent. Technically, such funds are called capital endowment funds or permanent endowments. For example, an individual donates £100,000 which is invested at (say) 5% a year providing an indefinite income of £5,000 a year for a specific purpose. The £100,000 is the capital and £5,000 is the interest. Any expenses of administering an endowment fund should be charged to that fund and not to unrestricted funds.

      In accounting, the capital of the endowment does not appear in the church accounts at all, but in a separate note to the accounts. The interest is included as income for the appropriate type of fund. In such a case, both the £100,000 capital and £5,000 a year interest will lose their value as the years pass. This is known as withering on the vine. While a few per cent each year may not seem much, the effect over a long period is immense. Inflation led to a sixty-six-fold increase in prices during the twentieth century, and a thirty-fold increase since 1945. This means that £100,000 today is worth about £1,500 from 100 years ago. If the twenty-first century has similar inflation to the twentieth, £100,000 and £5,000 today will be worth about £1,500 and £75 in a hundred years’ time. How to deal with funds which have become small during the passing of years is addressed below.

      There is also a rare creature, the expendable endowment fund, where the church is allowed to spend the capital as well as the interest. In such a case, the capital (or so much of it as may be spent) is included with the appropriate restricted, designated or unrestricted fund.

      An endowment fund may hold assets in addition to funds. Someone may leave a house on the basis that the church may spend the rent generated, for example. If the asset is sold, the proceeds must be treated as part of the same endowment fund.

Restricted funds

      These are when the church is not allowed to do what it wishes and may only use them for a specific purpose, such as to maintain the buildings or to replace the church hall one day. Restricted funds commonly arise from legacies where the deceased stated the restriction. This is legally binding on the church.

      The restriction is imposed either by the donor or by the church. A donor may leave money on condition that it is used to maintain the church building, or the bells, or whatever. Alternatively the church may have launched an appeal for a specific purpose, such as to replace the roof or build an extension. The money collected for such a specific appeal must be used only for that purpose.

      For this reason, it is advisable to say at the outset what the church authorities intend to do with any surplus. The restriction then only applies until the original objective has been satisfied. If a church appeals for funds to replace the roof, raises £120,000 but only needs £100,000, a statement at the outset that any excess funds will be held to maintain the church fabric generally will allow that £20,000 excess to be transferred to a fabric fund where it could be used to repair the floor or walls the following year. If it did not make such a statement at the outset, the £20,000 would have to be held in a roof fund where it may not be needed for thirty years while the church is desperate for funds for other purposes.

      Another issue is what the church will do if it raises insufficient funds. A church may always use unrestricted funds to meet an objective of a restricted fund, provided it has or can generate sufficient unrestricted funds. Otherwise it is advisable to say at the outset that insufficient restricted funds will be used for another but related purpose.

      The treasurer must know exactly what the restrictions are for each fund. A restricted fund to replace the church hall cannot be used to maintain the existing hall. Conversely, if the church incurs expenditure within the scope of a restricted fund, the treasurer should use the restricted fund rather than unrestricted funds.

      Sometimes there may be a special trust which is defined in Charities Act 1993 s.97 as ‘property which is held and administered by or on behalf of a charity for any special purposes of the charity, and is so held and administered on separate trusts relating only to that property’. Such funds are treated as a restricted fund of the church.

      In practice, the only advantage of a restricted fund is that people tend to give more generously СКАЧАТЬ