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V. Financial Reporting

A. Audit Guidelines | B. Annual Balance Sheet | C. Church Financial Policies and Practices

INDEX

B. Annual Balance Sheet

This information is for congregational financial officers and those monitoring fiscal trends or planning.

INTRODUCTION
An annual balance sheet can provide a congregation with a fiscal “snapshot” of its financial health and needs. Each congregation is counseled to prepare one yearly to insure fiscal accountability.

PRESENTATION
An important document for every congregation to have is an annual balance sheet prepared and distributed at close of fiscal year. Because so many year-ending financial reports are far too detailed, the balance sheet provides a concise summary of the assets, liabilities, and fund balances of a congregation at a particular time. The balance sheet is a key piece in the annual fiscal audit and can serve as well for trend analysis over successive years.

Essential components in a balance sheet are presented in the fictitious sample below. Please note:

• that both assets and liabilities need to be documented. Some accounts like to list them respectively in left and right columns to demonstrate “balance.”
• the total unrestricted cash available at year’s end
• the values of property at year’s end (essential for proper insurance coverages)
• accounts payable as continuing liabilities
• distinctions between unrestricted and restricted funds and designated and undesignated funds
• inclusion of any long-term debt as liability

For the sample balance sheet on the next page please note the following examples and/or definitions:

A “current restricted fund” might be an endowment for camping/ministries/fee

An “unrestricted designated” fund is a temporarily designated item for specific ministry areas, e.g. evangelism workshops, worship resources, etc.

Note FASB (Financial Accounting Standards) rules especially if congregation is utilizing an external auditing service and/or has an annual budget over one million dollars.

Note that sample is dated and intended to be illustrative of format rather than current normal amounts.