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3 policies for managing incidental expenses

Incidental expenses arise during the normal course of business, but many churches don’t have policies in place to prevent temptation in these seemingly small areas. Here are three policy recommendations that will keep your church covered for out-of-pocket expenses incurred by staff:

Petty cash

Log all petty cash and create a reconciliation statement. The person who manages the petty cash should not be the same person that reconciles the log. Only a small amount of money needs to be kept, such as less than $100. The cash should be in a locked location, with access by a limited number of personnel (ideally only one person). In your policy statement, determine the amount to keep on hand, the location, and the name(s) or title(s) of the staff that have access and that reconcile the log on a monthly basis.

Credit cards

1)     Determine and limit which employees will be issued a church credit card. Before issuing a card, perform a credit check. (It is a good idea to run a credit check on all employees prior to hiring.)

2)     Create a policy statement regarding types of expenses for which the credit card will be used.

3)     Create a disciplinary provision for the credit card policy to detail the consequences of unauthorized use.  (For example, loss of credit card privileges ranging to legal action.)

4)     Request a merchant code from the credit card provider that will block the use of church credit cards at ATM and certain types of establishments determined by the church.

Check reimbursement requests

All reimbursement requests should be pre-authorized to qualify for reimbursement. Determine who approves expenses for each department or program area. Without proper approval, the reimbursement should not be made.

A church can create an audit trail by pre-numbering all check request forms that are not recurring payments. Such a log facilitates matching of invoices and payments, and prevents possible double payment of requests that are copied.

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