The On-Site Church/Ministry Review

The On-Site Church/Ministry Review
By Richard D. Locke, C.P.A.
Richard D. Locke is a Certified Public Accountant with extensive knowledge and expertise in nonprofit tax and accounting. He is the Founder and President of Locke & Associates accounting firm in Tulsa, Oklahoma. He can be reached at (918) 488-0880 or dick@lockecpas.com.

What is an On-Site Review?

An on-site review is a visit to the offices of your church or ministry by a tax and accounting professional to review your financial reporting and accounting procedures. During the visit, the CPA makes inquiries of management; conducts reviews of accounting records and financial statements; performs reconciliations of detailed records to the general ledger; and reviews corporate minutes and other documents as deemed necessary. After the visit, a written report of findings and recommendations is delivered to the board of directors.

What is the Purpose of an On-Site Review?

The purpose of the visit is to assure that the organization is in compliance with federal tax laws, to determine that appropriate financial reporting systems are in place, and to identify areas where the organization could improve its tax compliance or financial reporting. The review is not intended to be an audit of the financial statements although errors on the financial statements would be noted and adjustments may be proposed in the report of findings. The on-site review is not intended to be a comprehensive analysis of the legal or financial status; instead it focuses on the major items affecting the tax and financial reporting.

What is the Benefit of an On-Site Review?

The greatest benefit of the on-site review is the objective review of your financial reporting by a competent professional to identify areas where the church or ministry is deficient. Given the complexity of federal tax laws and the potential penalties for noncompliance, the peace of mind resulting from this outside professional review would be of great benefit to any organization. Many nonprofit organizations are not able to hire a full-time employee who is an expert in nonprofit financial reporting requirements; therefore, an outside consultant is the next best thing. Recommendations on the corporate structure, accounting procedures, compensation arrangements, payroll taxes, donor records, etc. could increase efficiency and help avoid problems with the IRS, employees, and church members.

Who Needs an On-Site Review?

Depending on the size and organization of your church or ministry; the pastor, board of directors, trustees, finance committee, treasurer, and administrator may be involved in the decision to have an on-site review conducted. We would recommend an on-site review in the following instances:

1. Starting a new church or ministry.
2. Receiving notices from the IRS or other tax authorities.
3. Changing the corporate structure.
4. New pastor or board taking over an existing organization.
5. Key employees or board members having doubts about the accuracy and completeness of financial reporting.