ii. internal controls page - diocese of des · pdf filediocese of des moines chapter ii:...

November 2009 II

II. Internal Controls Page

A. Internal Controls Introduction II.1

B. Separation of Duties II.2

C. Bank Accounts II.3

D. Scrip II.5

E. Other Parish and School Organizations II.8

F. Internet Banking / ACH Transfers / Wire Transfers II.9

G. Cash Disbursements II.10

H. Other Cash Receipts II.11

I. Cash Count Procedures II.12

J. Deposits II.18

K. Office Organization II.20

L. Financial Records Retention II.22

Purpose Statement: Canon Law requires administrators to carry out their responsibilities with the prudence of a “good householder.” Good stewardship requires that we protect the goods entrusted to us by the faithful. Effective internal controls will help safeguard and nurture that which has been given to the Diocese, parishes, and schools. This section provides descriptions of basic internal control procedures for all financial functions in a parish or school.

Diocese of Des Moines Chapter II: Internal Controls

November 2009 II.1

Internal Controls Introduction

These guidelines are designed to aid pastors, parish/school staff, and Finance Council members in the establishment and productive functioning of the parish/school business office and in the administration of parish/school temporal matters. Also contained in these guidelines is the basic framework for several internal control systems. Standard Internal Controls Related to Parish/School Finance

Administration of parish/school finances is a sacred trust. It is very important for the pastor to establish a strong system of internal controls because he has the responsibility for overall stewardship of the parish/school. The following procedures are designed to meet the requirements of good internal controls and not unnecessarily burden the parish/school. In today’s environment, it is essential to ensure the protection of assets and protect the reputation of all those involved in financial administration. By implementing and monitoring a well-designed internal controls system, you protect the reputation of your staff and empower them to perform their duties as professionals. These procedures detail the normal controls that should be in place for a medium-to-large size parish/school. Controls for smaller parishes/schools may have to be tailored just for that parish/school, and should be documented. Note that a business manager, parish/school administrator, deacon, or finance board member can be appointed by the pastor as his designee.


April 2010 II.2

Separation of Duties

The following job duties should ideally be done by separate individuals:

� Bookkeeping � Signing checks � Reconciling the bank accounts and reviewing the cancelled checks � Recording and depositing receipts, offertory collections, and other receipts

Other than reviewing the cancelled checks directly upon receipt from the bank, these are the most important internal controls to have in place. If it is not feasible to separate these job functions at your parish/school, please contact the Diocesan Finance Office or your parish/school Finance Council to discuss alternative internal controls to have in place. Achieving Separation of Duties with Limited Personnel When parish/school finance personnel are limited and the duties listed above are not separated, seek assistance from the Finance Council. Have one member of the Finance Council commit to the following monthly duties for a quarter, or have multiple members commit to one of the following (duties could be rotated periodically):

� Examine the Check Register for the following: o Review the order of check numbers. Ask to see copies of any voided checks. o Review payee names, amounts, and general ledger account numbers for

reasonableness o Sign and date check register.

� Scan the detailed general ledger for reasonableness: o Note anything which generates a question, or appears unusual. o Sign and date the detailed general ledger.

� Review and recalculate bank/investment reconciliations. Compare amounts on reconciliations with supporting documentation:

o For checking accounts: � Compare balance on actual bank statement with Bank Statement Balance

on reconciliation. � Compare account balance on ParishSOFT/CMS printout with Bank

Reconciliation Balance on reconciliation. o For investment accounts:

� Compare balance on investment statement with account balance on ParishSOFT/CMS printout.

o Review supporting documentation for any reconciling items. o Sign and date reconciliation.

� Send annual statements. Ensure all parishioners and non-parishioners are included. Provide Finance Council member contact information on the statements for any subsequent questions or concerns that may arise.


November 2009 II.3

Bank Accounts

Bank Statements The pastor or his designee should receive all bank statements and cancelled checks. The pastor should do the following:

1. Open all bank statements and review to ensure payees are valid and signatures are authentic.

2. Review endorsements and determine if they appear genuine. 3. Ensure all transactions have been authorized. 4. Determine if the balance appears reasonable. He should then sign and date the bank

statement(s) to indicate his review. Authorized Signers The pastor must be included as an authorized signer on all accounts as administrator of the parish/school and its affiliated organizations. This ensures the pastor is aware of all accounts in the name of the parish/school. It also protects the misuse of the parish’s/school’s federal employer identification number (EIN). Individuals with access to record entries in the accounting records and who receive and process cash receipts should not be authorized signers. This separates the duties of those with control over cash to insulate the individual from any implication or temptation of wrongdoing. Ideally, the pastor should be the individual signing all checks. When checks are presented for signature, the supporting documentation (invoice and possibly a purchase order) should accompany the check. In this way he is aware of all parish/school expenditures. When there is a change in signers (ex. if a trustee is a signer and rotates off) notify the bank as soon as possible via a change in signature cards and the bank resolution. Signature Stamps A signature stamp should never be used. The Diocesan Finance Department strongly recommends signature stamps be destroyed. This way, all cash outflow is properly reviewed and authorized. Should a signature stamp be used for correspondence, it should be kept locked and used only with authorization from the pastor. Dual Signature Requirements Establish dual signature requirements and note on the face of the check (i.e. “any check over $2,000 is required to have two signatures.” These checks should have two signature lines printed on the checks.) The signature card (or resolution, depending on the bank) should also show the restriction requirement.


November 2009 II.4

Bank Reconciliations Perform bank reconciliations on a timely basis, preferably within 10 days of receipt of the bank statement. This helps to ensure any errors can by found and corrected promptly by either the bank or the parish/school. Reconciliations of checking accounts should be performed by an individual who does not sign the checks or keep the books (if possible, someone who does not process receipts either). A member of the finance board, the pastor, or the business manager (in larger parishes/schools) should review the reconciliations on a monthly basis, date them, and sign off. Number of Bank Accounts Keep the number of accounts to a minimum. This generally helps to streamline the accounting process by decreasing the number of accounts to reconcile and control. One or two checking accounts would include monies for all necessary funds such as operational, payroll, building, stipends, lunch programs, and auxiliary groups (other parish and school organizations) such as, Altar and Rosary, Home and School, and Cemetery. Separate the funds using the general ledger rather than having a separate bank account for each. Accounts Include any and all checking, savings, and investment accounts on the parish/school general ledger. This guarantees the financial statements are accurate and allows the finance board and the parishioners to have a complete picture of the finances of the parish/school. The responsibility of the pastor and the Bishop to oversee the finances of the parish/school requires full disclosure of all accounts. Name of Bank and Investment Accounts Priests, deacons, parish/school officers, and corporate officers may not hold assets in their own name or purchase in their own name any property that rightly belongs to the church. Bank deposits must be made in the name of the institution from which these funds originated.


November 2009 II.5

Scrip

Scrip is another name for gift cards. Many schools in our diocese use scrip as a fund raiser. The schools may purchase the gift cards from a scrip clearinghouse, such as National Scrip Center, at a discount and sell the cards to parents and parishioners at the regular retail price. The following pages were taken from the Catholic Mutual Group website and discuss recommended internal controls for handling scrip.


November 2009 II.6


November 2009 II.7


November 2009 II.8

Other Parish and School Organizations (Auxiliary Organizations)

In order for an association to be considered a fully integrated component of the parish or school, it must be recognized as such by the parish council as a matter of its written record, and it must be subject to the ultimate fiscal control of the pastor or school administrator. An itemized record of receipts and expenditures must be filed in the parish or school office monthly or made available upon request of the pastor.

For satellite parish/school organizations, it is recommended that either the records be maintained as part of the parish’s/school’s general ledger or the organization send in to the parish/school, at a minimum, quarterly financial statements. This keeps the parish/school management apprised of the financial activity of the organizations. Send monthly bank statements and any investment statements for organization accounts directly to the church office for review before they are handled by the treasurer of the organization.

The parish/school office should review and complete (by signing off and dating) the bank reconciliation and review the cancelled checks on a quarterly basis.

However, organizations are strongly discouraged from having separate bank accounts. Such accounts may exist only with the approval by the pastor or school administrator. The pastor or school administrator must be included as an authorized signer on all its affiliated organizations that use the parish/school’s tax id number. This ensures he is aware of all accounts in the name of the parish or school and prevents an organization from keeping parish/school-related assets (primarily cash) out of the control of the pastor or administrator.


November 2009 II.9

Internet Banking/ ACH transfers/ Wire transfers

Internet banking has potential for a great degree of exposure. Pastors and administrators in larger parishes and schools should always closely monitor internet banking because any individual who has access to online transactions literally has an open checkbook. It is strongly recommended that the pastor should be the only individual that “releases” the funds – wire transfers, ACH payroll deposits, 403(B) deposits etc. The pastor or his designate should be the system administrator of the bank password and software. He should generate the bank report that lists a detail of all transactions, sign it, and date it. He should then forward the bank report to the bookkeeper for recording in the general ledger. In the event an outside payroll service is used, or there are ACH payroll transfers made, at a minimum, the pastor or his designee should sign off and review every report processed by the bookkeeper. If the bank’s software makes it possible for the system administrator to set up two people to release funds – each with their own confidential password – the Diocesan Finance Department recommends that two individuals jointly process a transaction. Not all bank software is programmed with this capability; therefore, it is important that the pastor release funds or carefully review all bank, payroll and 403(B) transactions on a timely basis.


February 2010 II.10

Cash Disbursements

All disbursements should be made via check and should be recorded in the general ledger. This includes bonuses, Christmas or other gifts, and payroll, but excludes any case in which petty cash is used. Cash should not be used to pay vendors, contractors or employees. A regular schedule, such as every Thursday, helps to control the work associated with paying bills and issuing checks in the business office. The Diocesan Finance Department strongly discourages the use of hand-written checks. Check Forms Store blank check stock in a locked location, preferably in the safe or fireproof filing cabinet, and limit access to those who are authorized to prepare checks. This reduces the risk of stolen and forged checks. Signing Blank Checks Never sign blank or partially blank checks. The practice of signing blank checks severely decreases the effectiveness of other cash controls established related to accuracy and propriety of transactions. Only sign checks when the payee and dollar amount are filled in and the supporting documentation (original invoice and check request) accompany the check for review by the signer. Having this information readily available makes the process more efficient if there is a question related to an expense, especially if the pastor signs checks after regular business hours. It also provides for an additional verification of the accuracy of the payment being made. Wire Transfers If wire transfers are made, they should be infrequent, and a policy should be in place stating who is authorized to make such transfers and in what amount; preferably, the authorized individual would be limited to the pastor. Computer Checks Computer checks are utilized for several reasons. Mistakes between what is recorded and what is written on checks are eliminated, saving time later looking for errors. Access to the computer program which generates checks can be intentionally limited to certain individuals. Without access, a computer check cannot be generated. It is also more difficult for third parties to alter computer generated checks. Lastly, computer checks are easier to read and look more professional. Manual Checks If checks are prepared manually rather than generated by computer, a process should be in place to ensure that the disbursement is recorded accurately and timely in the accounting records, rather than waiting until the bank statement is received to record the transaction from the cancelled check. For example, if an authorized signer takes a check to a retail store, that individual would promptly submit the receipt to the accounting department so the transaction can be recorded, including payee, amount, date, and related expense account.


November 2009 II.11

Other Cash Receipts

Processing of cash receipts, opening mail, preparing the deposit, and making the deposit, should be done by an individual who does not enter the information in the accounting records. If possible, two individuals together would be preferred.

Make certain that donations are recorded in the proper year. Use the postmark date on the mailing envelope to record the date received at year-end. Record checks received in envelopes postmarked January 1st or later in the following year. Record checks received through the offertory collection baskets on the date received as opposed to the date of the check or deposit. Restrictively endorse all checks “for deposit only” with the parish/school name and account number as soon as they are received. This ensures that any lost or stolen checks cannot be cashed or deposited to any other account. Provide pre-numbered, two-part receipts (carbon and original) for all cash received through the parish/school office. If cash/checks are received and not deposited to the bank the day they are received, keep the checks in a locked, fireproof location. If receipts are processed in batches, the batch total should match the deposit total and the cash portion of the deposit should match the total of the receipts in the receipt book. This is another way to verify the accuracy of the information entered in the general ledger. Record all receipts/payments in the general ledger. This is the only way to make sure the records are complete and accurate. It also helps the Finance Council as they plan and budget. Keep a list of receipts by name or category either from the accounting software or detailed on the bank deposit slip, especially if copies are not made of the checks as they are received. Deposit on a daily basis, or as often as feasible. No cash or checks should be retained in the office for longer than five days, so as to safeguard the asset from theft or loss.


April 2010 II.12

Cash Count Procedures The management and control of the Mass collections is one of the most important functions in a parish. Therefore, the following procedure is outlined and parishes should implement the process in the manner that fits the local need, with attention to the control points within the process. If large deviations are made from this process, the Diocesan Finance Department staff should review the process and will offer advice and acceptance. STEP #1: Guarantee all donations collected by the ushers are delivered intact (as collected) to

the count team by supplying pre-numbered tamper-resistant bags. The donations are

consolidated into one sealed bag and secured, without any strays, prior to the collection count.

1. Before Mass, inform the ushers of the number of collections. Assign tamper-resistant bags for these collections (regular collection and special collection) plus a spare bag in the event of a defective bag seal or an error made in closing the bag. If a bag is spoiled, retain it and submit it with the collections. Each bag should be labeled and assigned to a mass for that weekend beforehand. If there is a second collection that weekend an extra bag should be assigned for each mass and labeled “second collection”.

2. During the offertory, the ushers move pew to pew with the basket collecting from the

worshippers. 3. The collection is maintained in its original form. No change is ever given from the

collected funds or checks cashed from the collected funds.

4. The ushers consolidate the individual collection baskets to a pre-numbered, sealed tamper-resistant bag assigned to that Mass and lining the main collection basket. This is always done in the presence of a witnessing usher.

5. If there is a second collection, consolidate and seal the tamper- resistant bag for the

first collection before the second collection is started. The ushers move pew to pew with the basket collecting from the worshippers for the (if any) second collection. Be sure the second collection tamper proof bag is labeled “second collection”.

6. The bag(s) for the regular collection and, if applicable, the second collection are

transported to a secure area for safekeeping prior to delivery to the count team. 7. It may happen that someone missed the basket and wishes to add an envelope to the

collection. Any loose envelope is placed in the pocket in the front of the sealed bag, or added to a smaller sealed bag and transported to a secure area for safekeeping prior to delivery to the count team. If this is a regular occurrence, review the usher procedures.

8. Document the procedures for the ushers to follow, especially how to properly seal the

bags. Post and communicate these procedures with the ushers. Let the ushers know how much you appreciate their cooperation in successfully implementing these procedures.


April 2010 II.13

STEP #2: Promote the integrity of the parish, its employees and volunteers, and instill

confidence within the parish community through a well-controlled collection process. Ensure

the proper use of safekeeping devices, such as safes, to safeguard funds.

1. A limited number of people should maintain lock combinations and/or custody of keys

to parish safe(s). Never store combinations and keys in an unlocked desk drawer, on a wall, the back of a door, or in an unsupervised area where anyone can gain access to them. The safe should be maintained in working condition at all times.

2. Limit the amount of funds secured in a safe, to a minimum, with the excess deposited in a bank or night depository. Make the deposit immediately following the count. If there is a day or so wait for armored pickup, secure the stored collections. If possible, avoid storing cash receipts overnight. Whenever possible, deposit daily.

STEP #3: Make available a secure area for counting and provide supplies to aid the count

process.

1. The count area should be free of distractions. There should be no “through traffic” to

access a supply closet or bathroom by individuals other than counters. Limit the number of people, other than the counters, in the room. Only the counters, priest overseeing count, and /or someone from parish staff should be in the room. The parish staff should not be counting the collections.

2. Set up the count room with the counting supplies, collection worksheets, and bank deposit tickets. Also, supply a new tamper-resistant bag to secure the funds to be deposited after the count is complete.

STEP #4: Deliver the tamper-resistant bags unopened to the count team, preserving the chain

of custody from the ushers. No one should handle money to sort or organize it prior to the

arrival of the count team.

1. Once the counters (three or more unrelated people) are assembled, the pastor or his

designee will deliver the tamper-resistant bags containing the Mass collections. Other sources of revenue received by mail or in person at the parish office are also delivered to the counters.

2. The counters will examine the bags to note if the condition is secure with no breaches of the seal or other irregular conditions of the bag. Record the condition of the bag and the bag number on the Bag Tracking Form. If the integrity of the bag is compromised (torn, ripped, not sealed properly), document the irregularity on the Bag Tracking Form. Notify the pastor should immediately of any irregularity.

3. The counters will verify the bags delivered to them are the bags listed on the Bag

Tracking Form by matching the bag number listed to the number on the bag.


November 2009 II.14

STEP #5: Count, classify, and record collections by alternating count teams or rotate duties

among several count team members. The complete collection is deposited. None of the

collection is kept at the parish as convenience cash.

1. Open the bags using a pair of scissors. Separate envelopes, checks, cash, and coin to

ease counting

2. Open the donation envelopes and verify the content amount is to the amount indicated on the front of the envelope. Notate this review by check marking the amount on the envelope. Photocopy loose checks (for example, those not contained in an envelope) and retain along with the donation envelopes. If a photocopier is not readily available, then list the names and dollar amounts recorded on the checks.

3. Add up the donation envelopes and photocopies of loose checks, set aside, and save for posting to the parishioners’ accounts in the ParishSOFT system.

4. Stamp checks for deposit only, restricting endorsement to the parish account.

5. Separate the currency by denomination, count, and band. Record the amount and the counters initials on the band. The banded currency is then given to a second counter who opens the band, recounts and records their initials. The band will now have the amount counted and two sets of initials.

6. Two adding machine tapes are run to verify the total of the checks. Two adding machine tapes are run to total the currency and coin. There are now three separate tapes duplicated for checks, currency, and coin. Verify these amounts with the adding machine tape on the envelopes and the copies of the loose checks.

7. The counters complete the count sheet by documenting the currency, coin, and checks. The adding machine tape should be identified by indicating cash or check; initialed and dated. One copy of the tape is attached to the collection worksheets. Each counter signs or initials the collection worksheet to provide accountability for the amounts.

8. The counters will record the currency and checks on a duplicate bank deposit ticket. Complete all information on the deposit ticket. Send the original, along with the adding machine tapes to the bank and retain a copy at the parish.

9. Retain the count sheet, along with the deposit ticket, and bag tracking form. Bank deposit receipts may arrive in the mail within a few days of the transactions. Immediately match the deposit receipt to the count sheet to verify and attach both. If a receipt is not received, review the bank statement or contact the bank. Such documents should be readily available for review. Records should provide clear documentation of cash receipts from the time of collection to the time of deposit.


February 2010 II.15

10. Place the collection in a tamper-resistant bag ready for transport, along with the deposit ticket and second copy of the adding machine tape listing check amounts. Transport the collection for deposit processing at the bank.

11. If the collection is transported to the bank via armor courier service, then the deposit

ticket is placed in the bag with the collections. The bag is then sealed and placed in the safe awaiting pickup. If the collection is to be delivered to the bank by someone from the parish, then the bag is sealed and the deposit ticket is retained outside the bag and delivered to the bank.

Order Tamper Proof Bags from Kemco by calling (203) 762-1902, faxing (203) 762-2548, or emailing [email protected].


April 2010 II.16

WEEKLY COLLECTION WORKSHEET DATE:

Mass Time>>> Total

Mass Date>>>

LOOSE:

Cash

Checks

Coins

Sub-total

ENVELOPES:

Cash

Checks

Coins

Sub-total

Total Collection

OTHER:

Undesig. Donations

Religious Ed Tuition

Memorials

Offerings

Desig. Donations

Total Other:

Total Deposit:

Notes:

Counters:


November 2009 II.17

Bag Tracking Form

Bag # Given Received by Mass Date Mass Time Bag # Used Counted by Bag Condition

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm

/ / : am/pm


November 2009 II.18

Deposits Confirm the amount of deposit credited to the parish/school account and add the transaction to the general ledger, if not done through the Offerings module interface with the general ledger.

1. The deposit advice received from the bank is compared to the balance of the count

sheet. The deposit advice is maintained along with the count sheets.

2. The deposit is coded by the type of revenue and entered into the accounting system. Provide management oversight by the pastor/parish and school staff of the performance of the

collection and processing of funds.

1. Review overages and shortages between count worksheets and bank deposit receipts to

determine if additional count team members should be recruited or if count duties should be changed. Immediately notify the Pastor.

2. Compare the actual collection to the budgeted collection for the week, the previous week results, and periodically the previous year results.

3. Document evidence of weekly periodic supervisory reviews of collection worksheets, journal entries, and deposit slips.

4. Publish the actual collection in the church bulletin each week, by regular and special collections.

5. The Finance Council should periodically review the collection process steps for lapses in procedures and to refresh the process.

To the extent staffing levels permit, separate the duties of collecting, recording, depositing, and reconciling cash receipts among different individuals. If a parish/school does not have sufficient staff to separate responsibilities for cash handling, record keeping and reconciliation in the most desired manner, closer day-to-day supervision by the pastor or someone authorized by the pastor is necessary.

1. Someone independent from the cash receipt function summarizes the cash receipt and this cash summary is compared to the validated bank deposit; to ensure that all collections were deposited intact.

2. All cash receipt accounting entries are supported with validated bank deposits tickets and other documentation to ensure an independent verification of cash deposits.

3. Different individuals are responsible for handling each aspect of the cash receipt procedures. For example, the person who receives cash does not prepare the deposit; the person who prepares the deposit does not handle the reconciliation.


November 2009 II.19

4. If a donor makes an individual contribution of more than $250, send the donor timely tax acknowledgement in writing stating the amount and date of the contribution.

5. Only the counters, priest, and business manager should be in the count room.

6. Restrictedly endorse checks received.

7. Records should provide clear documentation of cash receipts from the time of

collection to the time of deposit. Parishioner contributions from donor envelopes and checks are tracked, reviewed, and reported back to parishioners.

1. Develop written procedures to instruct the person completing the data entry. Do not back date envelopes to the Sunday date printed on the envelope; use the date of the collection. For instance, enter school families submitting multiple envelopes for previous Sundays on one Sunday with the Sunday date the multiple envelopes were received, not the day the data was entered, or the Sunday dates printed on the envelopes.

2. Each week, print the Contribution Summary Report and compare to the envelope total for both number and dollar amount recorded on the Sunday collection worksheets. Depending upon the percentage of envelope usage, you can verify if the deposit is reasonable. The amount contributed on the Contribution Summary Report should be lower by the amount of cash on the Sunday collection worksheet.

3. Someone who is independent of the counting, depositing, and recording of collections prepares the year-end parishioner statements.

4. Send donors an annual statement identifying the donation amounts received from the person.

5. If there is a discrepancy, review contribution records immediately to resolve the discrepancy.

The importance of adhering to these procedures cannot be overemphasized. If adequate

internal controls are not in place, the personnel handling cash are not afforded the protection

to which they are entitled should allegations of impropriety ever be made.


November 2009 II.20

Office Organization Physical Security A secured location is necessary for safeguarding negotiable assets and vital information. Ensure the following items are secured:

� Mass collections

� Cash, petty cash

� Certificates of deposit

� Other negotiable instruments

� Scrip

� Blank check stock

� Tamper-proof bags

� Data backups (CDs, DVDs, Tapes, Flash Drives, and External Hard Drives): Secure in a place other than where the data resides.

� Employee Information

Limit access to these areas to the individual(s) who are allowed custody. Secure certain files with sensitive information, including payroll, bank, investment, taxes, and legal documents. Files Various files will need to be established and maintained. The main categories are listed below.

� Bank Files: Include all bank (financial institution) statements and related reconciliations and file by bank and then account number.

� Investment Files: Include all investment statements and related reconciliations and file by company.

� Fixed Asset Files: Detail records for all fixed assets should include the following: o Date of purchase o Description of asset o Amount o Expected life o Depreciation schedule, if applicable o Copies of related invoices

� Employee Payroll Files: o Completed application o W-4 o I-9


November 2009 II.21

� Employee Payroll Files: (Continued) o Emergency contact form o Pay rate authorization o Background checks o Completed insurance forms, if applicable o Retirement savings form, if applicable o Signed flex plan form, if applicable o Employee evaluations o VIRTUS Training o Exit interview

� Tax Files: Federal and State o Federal

- Tax form 941: This form reports FICA and Medicare (both employer and employee portions), and Federal taxes withheld from employee pay checks.

- Tax Form 1099-Misc: Give this form to vendors who provided services greater than or equal to $600. See Accounting Functions section (1099s) in this manual for more information.

o State - Deposit state taxes withheld from employee paychecks quarterly online.

See Accounting Functions section (Payroll - Payroll Taxes) in this manual for more information.

� Paid Vendor Files: Create separate alphabetical files for vendors used frequently. A “Miscellaneous” file can be created for any alphabet letter for vendors who are not used very often. Attach a check stub to the front of the paid invoice and file in date order in appropriate vendor file.

� Unpaid Vendor Invoice Files: File by day of month when vendor invoice should be paid. A list of bills to be paid may be set-up in ParishSOFT’s Ledger and Payables Module with corresponding due dates.

� Financial Report Files: o Annual Financial Reports o Backup copies of ParishSOFT financial statements, reports, and records

� Legal Files: o Attorneys o Contracts

� Council Minutes: o Finance Council o School Finance Council, if applicable

� Sacramental Records


November 2009 II.22

Financial Records Retention Schedule

Source: Diocesan Financial Issues, November, 2002, United States Conference of Catholic Bishops. Reprinted with permission.

The Records Retention Schedule represents the periods of time that records must be kept according to legal and/or organizational requirements. Records older than the retention period should be destroyed. Those of permanent value should be stored appropriately.

Records Type Retention Period

Financial

Banking

Bank deposits 7 years

Bank statements 7 years

Cancelled checks 7 years

Check registers/stubs 7 years

General

Audit reports Permanent

Statements of Financial Position, Statements of Activities, annual Permanent

Statements of Financial Position, Statements of Activities, monthly/ quarterly

Destroy after 1 year

Budgets, approved, revised 7 years

Financial reports, annual Permanent

Financial reports, monthly Destroy after 1 year

Financial statements Permanent

Investment/Insurance

Bonds, cancelled 7 years from date of cancellation

Certificates of deposit, cancelled 3 years after redemption

Insurance policies/active Permanent

Insurance policies/cancelled Permanent

Letters of credit 7 years

Mortgage records Permanent

Securities sales 7 years

Stock investment 7 years after sale


November 2009 II.23

Accounting

Accounts payable invoices 7 years

Accounts payable ledgers 7 years

Accounts receivable ledgers 7 years

Credit card statements/charge slips 7 years

Invoices and paid bills, major building construction Permanent

Invoices and paid bills, general accts 7 years

Cash books 7 years

Cash journals 7 years

Cash journal, receipts on offerings and pledges 7 years

Receipts 7 years

Mortgage payments 7 years

Chart of Accounts Permanent

Other Records

General ledger/annual Permanent

Journals, general and specific funds Permanent

Journal entry sheets 7 years

Ledgers, subsidiary 7 years

Payroll journals 7 years

Payroll registers, summary schedule of earnings, deductions and accrued leave

7 years

Pension records Permanent

Pledge registers/ledgers 7 years

Permanently restricted gift documents Permanent

Temporarily restricted gift documents 7 years after meeting restrictions

Tax Records

Employment taxes, contributions, and payments, including taxes withheld, FICA

7 years from date of filing

W-2 forms 7 years from date of filing

W-4 forms 7 years from date of filing

IRS exemption determination letters, for organizations other than those listed in The Official Catholic Directory

Permanent

Form 990 Permanent

State tax exemption certificates (income, excise, property, sales/use, etc.) Permanent

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