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Church leaders who keep expenses within an approved budget will impress their members. A good budget must build in enough allowance for variations, of course, but a reasonable, consistent pattern of expenses will be comforting to a congregation.

By contrast, lack of wisdom or integrity in people who handle expenses will often have an adverse affect on a church budget. Giving should be to the Lord, not in relation to where the money is spent. Nonetheless, congregants may give less if they lose faith in how church leaders are spending money.

The pastor has a great responsibility to interpret—from the pulpit and in printed communication—the financial condition of the church. This includes providing information on both revenues and expenses. The church might also consider the following safeguards on the ingathering and disbursement of funds:

Three elements are key to controlling the disbursement of church funds and safeguarding them from misappropriation:

1. The person who approves purchases should not prepare the checks for payment.

2. The person who prepares the checks should not be authorized to sign them.

3. The check signer should not be the person who approves invoices for payment.

In many small churches, all three of the above procedures are performed by the same individual. That's not an ideal situation and one that could lead to a problem somewhere down the line. At the very least, a church should appoint different individuals to count weekly offerings as to pay the bills. But segregating the duties of purchase approval, check preparation, and check signing is the best way to control the disbursement of funds.

More safeguards include:

Two signatures. More than one signature should be required on checks over a certain amount. The dollar amount ($500, $1,000, $5,000) could vary, depending on the size of the church. One signature is generally adequate on checks of a modest amount.

The level of a church's controls on expenditures should help you determine when more than one signature is necessary. For example, if a large church has a business administrator who approves purchases, and all check requests require the approval of the church treasurer before checks are written, then one signature may be sufficient for most checks. However, if a church has no budget and no written procedures for disbursing funds, requiring two signatures on all checks should help offset the missing controls.

Limited signers. Access to a church checking account should be limited to a few individuals. Having more than one signer is very helpful when the treasurer is on vacation or unavailable. But church pastors should not be authorized to sign checks. That would be a serious breach of good internal control.

No blank checks. Checks should never be signed in advance of filling in the amount of the check. Use petty cash for minor cash expenditures. Larger expenditures that might require an immediate disbursement are better handled by establishing open accounts with vendors or charging items on a church credit card. Otherwise, an expenditure should wait until an exact amount can be determined and documented.

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