Why bother with internal controls? Accountability
For members of a local church, the idea of being accountable to others is not a new concept. It is second nature that when you are running a program, you are accountable to the elders, trustees, church council, or whatever your governing body is called. The governing board is going to expect you to run your program properly, in the manner they expect it to be run, and within the financial parameters they set. If you teach a bible study or Sunday School class, the governing board has a very strong expectation you will be accountable for what you say. It is very easy to see how accountability enters into a church’s responsibility to the government in terms of complying with payroll laws, safety regulations, and zoning rules.
When we move into financial issues, accountability is also involved. When a donor specifies that a contribution should be used for a particular program, it is obvious that the church should spend the money on the specified program. Similarly, nonprofit organizations show their responsibility to the public by reporting on Form 990 what money they received and how they spent it.
Accountability is present everywhere in the background when you look at internal control procedures. Requiring proper receipts and explanations for purchases creates accountability for a person spending money that each disbursement was for a ministry purpose. Approval of expense reports creates accountability for what travel costs and out-of-pocket expenses you incurred. Monthly budget-to-actual reports hold each of the program managers accountable for the overall costs in their department – they have to explain why their costs are above the planned amount. Having the offering in custody of two people at all times creates accountability for all of the funds that were collected.