The Church Treasurer's Handbook. Robert Leach

The Church Treasurer's Handbook - Robert  Leach


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has advantages and disadvantages. Computer system have the advantage that copies are easily made, and calculations and reconciliations are easily prepared. Against that, bound books have the advantage that you do not need a computer or print-out to read them, and they are simpler to keep up to date.

      Computer systems tend to copy the disciplines of manual accounting systems. For this reason, we consider the requirements of record keeping in terms of manual records written in ink on the pages of a book, and then separately consider the additional factors for computer records.

      Basic disciplines in handwritten accounts

      1. All entries must be made in permanent ink

      It is never acceptable for entries in accounting records to be in pencil or some other erasable form. Entries may be made in fountain pen, ballpoint pen, rollerball pens or with any other permanent writing implement.

      2. All entries must be legible

      There must never be any doubt as to what the entry says. This usually means writing numbers more slowly and carefully than normal. It is easy for 1 and 7, and for 0 and 6 to look similar when written quickly.

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      Badly written number

      If an entry becomes illegible, such as through an ink blot or spilt coffee, the illegible entries should be copied with a cross-reference.

      3. All amendments must leave the original figure legible

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      How not to delete a cash book entry

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      How to delete a cash book entry

      You never use opaque correction liquids on accounts. You never paste over the original paper. Never write over a figure to make it look like another figure. Always delete the original figure and enter the correct figure.

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      How not to correct a wrong figure

      4. An amendment usually requires two correcting entries

      Suppose you enter £127 for an electricity bill, instead of £172. The best practice is to make one entry to reverse the incorrect entry, then make the correct entry. If you simply make one additional entry for the extra £45, your records will still agree and give the right answer. However, the records are not correct, as you did not receive electricity bills for £127 and £45; you received one bill for £172. It is not immediately obvious from the records to what the £45 refers.

      If the two entries are close on the page, it is sufficient to mark the original entry and the reversal entry with the contra sign, ¢.

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      How to correct an entry in a cash book

      A fundamental requirement of all accounting records is that they maintain what is known as the audit trail.

      There are various levels of accounting records. Typically accounts have four levels:

      Published accounts

      |

      Annual trial balance

      |

      Entries in cash books

      |

      Original documents

      This simply means that you can look at the records at any level in the accounts, and trace the figures up or down to any other level. For example, the published church accounts for 2006 say you spent £23,997 on building work. From this you look at the trial balance and see that it comprises these amounts:

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      Note that whatever figure you find at one level must be there at the next level above or below in the accounts. Whatever figures are included in the published accounts must be present on the trial balance. No one should have to hunt or guess how any figure has been derived.

      You turn to February’s page in the cash book. There is a column headed ‘Repairs and maintenance’. At the bottom of that column you see the total £4,629.23. In the column above, you see that there are three entries:

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      You note that the figure of £4,629.23 found at trial balance level appears at the adjacent level. The column marked ‘Folio’ is your reference to the next layer down. You look in the file of bills for number 127, and find an invoice from K. Bloggs dated 9 January for:

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      On the invoice the treasurer has written 127 in a circle in the top right-hand corner and ‘Paid 11 February 2012 ’ on the invoice.

      You have now managed to go from the published accounts right back to one of the invoices.

      Similarly, it is possible to follow the audit trail in the opposite direction. You could look at the invoice and see ‘Paid 11 February 2006’, which tells you where to find the item in the cash book. The cash book shows that this is included in the monthly total of £4,629.23. The trial balance shows that this total is included in the annual total of £23,996.83.

      Vouchers

      The lowest level of accounting record is the voucher. This is a document which gives the details of an item of income or expenditure. Normally the treasurer keeps two sets of vouchers:

       remittance advices (income)

       invoices (expenditure).

      These documents are usually kept in lever-arch files in numerical order.

      Sometimes it may be convenient to keep different types of voucher separately, such as keeping weekly cash sheets of collections in a separate folder from forms detailing other sources of income.

      Every item of income and expenditure has a voucher unless its details are otherwise known. Two examples of the latter include:

       bank charges (which appear on the bank statement)

       transfers to or from other accounts (which match an equivalent entry in that account).

      Sometimes the treasurer may need to create a voucher for the records. Vouchers may also comprise sheets prepared by other people, letters, statements, appeal literature or photocopies from other books. A voucher is any document which gives information about a payment.

      Never pay a statement or reminder, nor regard either as an invoice. A statement is basically a list of unpaid invoices at a particular date. Statements are commonly issued about once a month by suppliers. Reminders are sent when an invoice is overdue. The purpose of a statement or reminder is to check that you have received all invoices. If you find that you are missing an invoice, ask for a copy.

      One common reason for losing invoices is that they are sent with the goods and thrown away with the packaging. The best practice for suppliers is to send a delivery note with the goods, and send the invoice separately. However, not all suppliers do this. A delivery note simply allows the recipient to check that


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