Some traps church business administrators need to avoid

The urgency of things that must be addressed now can take focus away from bigger issues that have long-term payoff.  Verne Hargrave, CPA, of PSK has started a good series on traps that business administrators can fall into because of tyranny of the urgent.

Looks to be a very helpful series. Would be worth your time to visit his blog regularly. Maybe even set it up on your RSS feed.  I’ll highlight it occasionally.

Ten Things to Avoid  in Church Administration starts the discussion. Mr. Hargrave points out a few problems that can arise if tyranny-of-the-urgent takes over your life:

“Once Upon Internal Control” is available on Kindle platform

My tale on internal control done well and poor at two churches is now available in Kindle format at Amazon.

Price is $0.99.

You can read the book on your Kindle device, on any smart phone with a Kindle app, or on your computer using the Kindle-for-PC application.

At Amazon, search for my name, Ulvog, or the book title, Once Upon Internal Control.

Or click here to go directly to the book.

Ethical atmosphere of an organization is set by the ‘tone at the top’

The ethical attitudes and values of senior leadership will set the ethical atmosphere for an entire organization.  This is called “tone at the top.”

This is something an auditor considers on every audit.

If you would like a short explanation of this idea, along with suggestions on what senior leadership can do to create a good environment, check out Tone at the Top, a post by Sharlynn Garza at the Nonprofit/Government GPS blog.

In my years of auditing, it has long been obvious that organizations have a corporate personality. 

Free book offer for pastors of local churches

I would like to provide a complementary copy of my book Once Upon Internal Control to pastors of local churches. This short fable is the basis for the cartoons you see on my other blog.

Update:  This book is now available on Amazon for $0.99USD. 

Offer good for delivery in U.S. only, effective December 5, 2011.  Free offer will expire on December 31, 2011.

How should you handle expense reimbursements?

Verne Hargrave has a great, short explanation at Faith Based Accounting on how to handle expense reimbursements.

 Question #1 – What is the best way to handle expense reimbursements?

Extremely short summary:

Essentials of Internal Control – full article

Here is the full text of my article, Essentials of Internal Control, appearing in Church Management News from Bank of the West.  The online article is here.

The article discusses three key ideas:

• The bookkeeper should not sign checks
• Trust is NOT an internal control
• Review unopened bank statement by someone outside of accounting

Essentials of Internal Control

By James L. Ulvog, CPA

The business administrator of a nearby church has been formally charged with embezzling close to $1 million over four years, according to a recent newspaper article. Few details are publicly available. I have friends who worship there, so this hits close to home. I grieve for my friends, the congregation, believers whose faith has been shaken, and even the accused man and his family.

Last year, the bookkeeper of a women’s shelter in my area was sentenced to one year in prison for embezzlement. The executive director of the center was quoted in a newspaper article as saying the shelter had to sell one of their several houses in order to keep operating. The director said eighty women and their children were denied services.

I was going to start this article with a rational appeal to logic as the way to encourage more emphasis on internal controls in our churches. Instead, I would like you to ponder the devastation that follows in the wake of a disaster that can arise from a breakdown in internal controls. The previous reports are only two examples. One of the main goals of developing internal control is to prevent these situations. I could tell you of many more tragedies. A few moments of searching the internet will find dozens of stories.

Cartoon posted to illustrate good controls protect the innocent from false accusations

I have a new cartoon posted at Once Upon Internal Control showing good internal controls in a local church. The dramatization is based on a reporter calling for comment about rumors of a high-flying lifestyle.

Cartoon called: When a reporter calls, good procedures save the day. Visit the other blog for the cartoon. I will be posting cartoons there.

Essentials of Internal Control – article for Bank of the West newsletter

I wrote an article for Bank of the West called Essentials of Internal Control.  It discusses one superb internal control you should be using for cash, explains that trust is not an internal control, and offers a creative idea to improve control over cash.

A one sentence summary of internal control is at the end of this paragraph:

Dual control over offering count explained in new cartoon

One place where churches often struggle to have good procedures is the way they count the offering.  Those struggles discussed in my cartoon:

New blog for cartoons from Once Upon Internal Control

Just launched a new blog, Once Upon Internal Control, at www.onceuponinternalcontrol.com.

That  will be the home of cartoons I create to illustrate the ideas from the book of the same name. Will also have extracts from the book and eventually the full text.

Once Upon Internal Control: The Cartoon – chapter 1, bank reconciliations

A cartoon that discusses some internal controls over bank reconciliations in a local church:

The cartoon is based on the book Once Upon Internal Control – A tale of good and bad ways to implement internal controls in a local church, written by James Ulvog, CPA.

If you want more detail, the video above is based on the following selection from the book:

Illustration of internal control from the Scriptures – one good example and one not so good

Maintain dual control over the offering! You hear that unending refrain from us accountants.

Document those disbursements!  Another routine comment you hear.

One story in scriptures has a good illustration of the first control along with missing the boat on the second idea.  Jehoiada, the priest during the reign of King Joash, did a good job on the dual control over the offering and not so great on accountability for the disbursements.

Things to make sure your ministry staff understand

Bryan Baughman describes a number of things you as a ministry leader should make clear with all of your staff.  In his post, Is Your Church Exposed, he suggests you should:

New blog – attestationupdate.com

I started a new blog today, Attestation Update, www.attestationupdate.com. It will provide news and updates to the CPA community on audits, reviews, and compilations.  Some posts are only at the new site and some attestation posts will be left here. In the future, posts that are focused more on the CPA community will be at the new site.

Why make this change? I realized there are very two distinct audiences for my writing:  the non-profit community and CPAs. While there is a lot of overlap, particularly with the CPA firms in Southern California with whom I count as friends at the same time as competitors, the interests are very different.  Thus, two blogs.  This will allow for more focused attention by time constrained readers.  Enjoy them both!

Crooks stealing money from your account using your computer

I’m reading more articles describing cybertheives hacking a business computer (could just as easily be a ministry computer), gaining access to bank accounts, then wiring money out of the country.