Leader to Leader, Ministry

Do’s and Don’ts of Creating a Financial Report

May 11, 2017 | Posted by Taylor Overstreet

“May we have the Financial Report?”

I’ve heard that request in several congregations I have served as a District staffer and a consultant. The answers often fall into one of these categories:

  • “I don’t have the figures with me. They are pretty much the same as last month. But we are in good shape. All the bills are paid, and we have a healthy balance in the bank.”
  • An unusual report giving checkbook figures jotted down on the back of an envelope.
  • A written report of multiple pages that is often beyond the ability of the average person to decipher or understand.
  • A controlling treasurer who is fiscally ultraconservative or who is deeply opposed to a project, perhaps even to the point of refusing to pay certain bills without specific congregational approval. This person has often served in the position for multiple terms and is the real power in the congregation.

On the other hand, I’ve heard excellent reports that incorporate many of the following features:

They contain both written and oral features.

All financial information about income, expense, comparison to budget, etc., should be written. But it doesn’t help just to hand out a few sheets of paper and say, “Here is the report.”

Not everyone knows how to read a financial report correctly, so there should be an oral summary of the financial condition and attention drawn to certain figures of significance on the report.

Avoid using jargon your members without a strong financial background may not understand. Circulate copies of the report before the meeting so that people may have a chance to digest the information before it is simply brought up to the floor for a vote.

They are appropriate to the size of the organization.

If you are the Treasurer of the Congregational LWML or bowling league, a simple Income and Expense Report is probably all that is needed. Most congregations will probably also need a Designated and Restricted Funds Report to report on Memorial Funds, Organ Funds, etc. Larger congregations, schools, colleges, etc., will want a regular Balance Sheet (Statement of Financial Position) on a quarterly or annual basis, although parts of these, like depreciation, can be difficult for many to understand.

Sample reports are given in the Treasurer’s Manual Resource found on the LCMS.org website. Use what is simple, yet gives a clear picture and needed detail for decision making for your situation.

They have a focal point for comparison.

This is usually the budget. How well are we doing in relation to the budget? It could be the calendar. This year compared to last year. It may be a combination of both. There needs to be an objective standard to show progress or decline.

There should be a report of all existing funds.

There should be a clear distinction between restricted and unrestricted funds, and income and expenditures to those funds. There should be no hidden funds or unreported funds, including petty cash.

Do an annual audit.

That may be the subject of another blog. Suffice it to say that an audit helps to assure proper order, instills confidence, and sets forth helpful suggestions for improvement. It is not a lack of trust in the Treasurer.

AUTHOR
Taylor Overstreet