Tuesday, November 18, 2008

Responsibilities of the Church Board

This is an Article we extracted from Crown.org Library Article.


Location: Church Administration

Responsibilities of the church board
by Crown Financial Ministries


Although the authority and responsibilities of church boards are as diverse as the churches they serve, there are some responsibilities that should be consistent and typical for all church boards. These are establishing policy, financial reporting, compensation review, and budget approval.

Establishing policy
One of the primary functions of the church board, regardless of the denomination or size of the church, is the approval, revision, and implementation of church administrative and legislative policies.

These policies should be recorded in the board minutes at the first board meeting of each fiscal year. Any policy revisions or new policy adoptions should be recorded in the minutes of the board meeting in which the revision or new policy was adopted. Then they should be added to the existing policy guide within one week of the revision and/or adoption.

Financial reporting
The board of each church should authorize an independent annual audit, based on generally accepted auditing standards; and financial statements should be prepared, following generally accepted accounting principles.

The auditing firm should do the following.
  • Have a thorough knowledge of current accounting standards and understand nonprofit organization and church finance.
  • Routinely prepare value-added management letters for their audit clients.
  • Help the church reduce its audit fee.
  • Understand the individual church's accounting system.
After the audit has been completed and a financial report has been submitted, the board should review the audit and either adopt it or reject it, with explanations for the rejection.
If accepted, the audit report can be presented to the congregation. If rejected, the board should resubmit the audit with its explanations to the same auditing firm.
The board also should receive staff/department head-prepared monthly or quarterly financial statements that reflect all financial transactions, including income, of the department or ministry.

Compensation review
In most churches in America, the church board generally establishes the compensation package for the senior pastor. The pastor in turn sets the salary of all staff members.

An annual review of the senior pastor's compensation package is vital. The review should focus on all elements of compensation—taxable and nontaxable items, salary, benefits, expenses, allocations, housing and car allowances, retirement, bonuses, use of church property, and reimbursements. In addition, the board should use this time to review the pastor's performance, establish objectives, and set performance criteria.

At the first board meeting of each fiscal year, the entire detailed compensation package offered and accepted by the senior pastor should be entered into the board minutes.

Budget approval
Each department or ministry head should submit to the board for their approval a departmental or ministry budget for the coming fiscal year.

In larger churches these departmental budgets are submitted to a finance committee. From these various department budgets, a general organizational budget is developed and submitted to the board for their approval.

After approval, the budget is usually presented to the congregation for its approval.
The board controller or church treasurer is usually responsible for enforcing the budget, reporting, and presenting budgetary revisions as needed.

Conclusion
In some churches, the board is little more than a representative of the people to the pastor. In others, the board is the governing body in all areas of church business. Whether the church board is passive or active, it has responsibilities that are consistent and should be constant and non compromising.

1 comment:

Lee Holcomb said...

Thanks for the link to Crown. This is such an important topic, great reminder.

Lee @ Crown