Section 3 — Transaction Processing – Income and Expenditure

Cash Counting



The Weekly Count Sheet book, provided by the Local Church Support Services department, is recommended as the form to be used for all offering counts, including recording the content of the tithe envelopes. Each count should be signed or initialled by two persons. Best practice is recording this information prior to the funds leaving the church.

Any variation between written amount and content of the tithe envelope should be communicated with the donor at the earliest opportunity. It is further recommended that all tithe envelopes be dated and filed by the treasurer in a secure place for a minimum of three years, or until audit.

On completion of the counting and totalling procedure each week, the original will be removed to go with the monies for banking. Once all funds for the week are banked the original can be filed with the stamped Bank Deposit Slip, after verification of the deposit amount.

The Weekly Count Sheet Book itself, with all duplicates, should remain in a secure place at the church, or, if premises are rented, be held by the treasurer in a safe place.

This procedure provides not only protection for the givers, but gives integrity to the treasury functions should any question arise. The duplicate would be used as the basis of any insurance claim should the funds be stolen or lost.

Receipting Income

“Receipts should be issued promptly for all money received from members, no matter how small the amount, and a strict account of all receipts and payments should be kept by the treasurer” — Church Manual Ch.11 (Revisions 2010).

Every receipt must include the following elements: date, payee, details of donation, value of donation, name/ signature of treasurer/assistant and sequential receipt number.

Receipts for bulk offerings should not be written to an individual’s name, but to the position held. For example, record receipt to “Head Deacon” or “Sabbath School Secretary”, rather than “John Smith”.

Where the donor has not identified themselves, the giver should be recorded as “Anonymous”. All anonymous donations should be receipted individually. It is recommended that all anonymous amounts be listed individually in your local church bulletin, or acknowledged in some other church publication or on the noticeboard so the donor may have the opportunity to verify the donation.

If a minor error is made on a handwritten receipt, it may be crossed out and counter-initialled by the treasurer/ assistant. Otherwise the whole receipt must be cancelled by writing “cancelled” across the face of the top receipt. The cancelled receipt must be retained in the receipt book.

Individual receipts are to be distributed to the givers on a regular basis in the manner the local church has agreed upon. Where donors continue to not collect previous receipts, it is the Treasurer’s responsibility to notify the donor of the habit and request that the donor retain the receipt for the purpose of confirming the treasurer's receipting process.

Tithes and offerings received from the Conference
There are times when individuals pay money directly to the Conference, but wish for the funds to be recorded at their local church. In these instances the Conference acts as a clearing house and will forward the funds on to the local church for processing. In the majority of these instances there would be no need for the local church to issue a receipt to the original donor.

Schools Building & Maintenance Fund
Seventh-day Adventist Schools (North NSW) Ltd has a tax deductible gift fund with the gifts to be used to assist the funding of new school buildings and the maintenance of existing school facilities.

Tax deductible receipts for donations to the Schools Building and Maintenance Fund can be issued through TOORS. These funds will then be rolled up to the Conference and passed onto the schools company on a regular basis.

Alternatively, local churches are to receipt and bank any donations received for the Schools Building and Maintenance Fund into their local funds and send a cheque to the schools company to cover the donations along with a listing of donors, addresses and amounts. Upon receipt of the cheque and donor listing, tax deductible receipts will be issued to the donor/s. In that these funds attract tax deductibility it is important that any monies for the Schools Building and Maintenance Fund are sent to the schools company head office in a timely manner, especially around 30 June so the donations are receipted in the correct tax year.

Please send your cheques and analysis for the School Building and Maintenance Fund to:

Seventh-day Adventist Schools (North NSW) Ltd
Attention: System Business Manager
PO Box 7, Wallsend NSW 2287

ADRA Donations
ADRA tax-deductible receipts may be issued by the Local Church Treasurer with the provision that the ADRA ABN: 85 109 435 618 is noted on the receipt.
For ADRA Appeal donations, refer to the instructions in the ADRA Appeal Treasurer Receipt book.

Other Auxiliary Organisations
For Auxiliary Funds that are not part of the regular Tithes & Offering stream, it is recommended that the Local Church Treasurer receipt and bank the monies into their local funds. Then pass on those funds by cheque or EFT to the Auxiliary Organisation.

“The funds of auxiliary organisations, often donations given for specific purposes, are ... held in trust by the treasurer, and they too may not be borrowed or in any way diverted by the treasurer or the board from the objective for which they were raised” — Church Manual Ch.11 (Revisions 2010).

Income Not To Be Receipted By Local Church
The following forms of income should not be accepted or receipted by the Local Church Treasurer, but should be passed on to the appropriate recipient or returned to the donor to be mailed to the appropriate recipient.

a.    Distributions from a trust or estate, even if the local church is the intended recipient. To meet legal parameters, these funds need to be sent to the Conference in the first instance. The Conference will then pass the funds back to the local church, or forward the funds onto the intended recipient.

b.    Distributions destined for ACA Ltd. c.    Generally, any other distributions destined for a third party that requires a tax deductible receipt.

Conference Offering Calendar



Each year, the NNSW Conference publishes an Offering Calendar Booklet. It is general church policy that all church groups, plants, companies and churches follow this program of giving. As a principle, the Treasurer/Assistant must allocate all offerings in accord with the publicly published or announced purpose or project.

An Offering Calendar Booklet is published yearly and distributed for local churches to give them information about each of the weekly offerings. This booklet is also available on the NNSW Conference website http://nnsw.adventist.org.au. To download a copy, follow the links on the Stewardship and Treasury pages.

Bank Deposits

‘All church bank accounts are exclusively for church funds and are never to be combined with any personal account or funds.’ — Church Manual Ch.11 (Revisions 2010).

All church funds collected (local and non-local) should be deposited into a bank or financial institution account in the name of the church. Banking of the funds must occur within two business days of the weekend. Cash in Transit cover insures the funds for this period only (see Section 3).

It is best practice for the individual who is doing the banking to not have counted or receipted the cash. It may be done by an assistant, elder or other trusted church member. Common sense and caution is the best security for cash in transit from the church premises to the bank. If the amount of cash carried exceeds $10,000, two responsible persons must accompany the deposit to the bank for the funds to be insured under Cash in Transit cover.

In no circumstance should a weekly collection of tithes and offerings be banked net of any cash expenses paid out. If it is necessary to make reimbursement to an individual, then a local church cheque should be drawn, appropriately signed then included in the weekly banking to make up the amount paid out as a cash reimbursement. When the weekly collection is banked intact, it is infinitely easier to successfully complete the bank reconciliations.

It is considered best practice that all church deposits go to the CMF bank account and any funds required for a local bank account be transferred by CMF cheque or electronic transfer to keep the local bank account in credit. Splitting deposits between the CMF Bank and a local bank account is not encouraged.

eGiving

Church members are encouraged to use the eGiving website, https://egiving.org.au, themselves to make credit card and BPAY donations, once off and recurring. Instructions for using eGiving are available on the NNSW Conference website: http://nnsw.adventist.org.au.

Local church treasurers are able to control which local accounts are listed on eGiving, and to choose one featured offering. TOORS users are able to make changes to local eGiving accounts through TOORS (see TOORS Training Manual). Non-TOORS churches should contact the Local Church Support Services Department for assistance in making any changes. eGiving deposits will be processed automatically for churches using TOORS. Non-TOORS churches will need to enter all the eGiving deposits on the monthly report correctly allocating between Conference and local church funds.

Credit Card Processing

If a local church receives credit card details from an individual requesting funds be taken, the details should be sent directly to the Conference office for processing. Local church treasurers should not process or store this information. The payment will be processed by the Conference and the funds sent back to the local church.

Payments

Before making a payment from church funds, an invoice or other similar documentation should be obtained to validate the reason for the payment. This may require a form to be completed by the claimant with the claimant’s name, date, details of supply, amount claimed and claimant’s signature.

The type of expense to be paid helps determine the authorisation needed to pay the expense. Expenditure in the local church can generally be classified into two groups:

•    Fixed costs over which there is little or no control by the Board. These include electricity, water, council rates, building and contents insurance, music copyright licence, pest control and fire risk inspections. All these types of expenditure should be included in the approved annual church budget and would not need any further authorisation by the Board or Business Meeting during a financial year.

•    Variable costs over which the Board has absolute or nearly absolute control. These include evangelism programmes, Sabbath School/Church supplies, equipment, kitchen supplies, general stationery, maintenance of plant & buildings (mostly) etc. Most of the anticipated variable costs should be carefully estimated and included in the annual church budget as approved by the Business Meeting. Where significant expenditure has not been anticipated or included in the approved church budget, the Treasurer should seek authorisation from a Church Business Meeting before payment of the expenditure. When a particular department uses all of their allocated budget, any extension of the budget should be approved by the Church Business Meeting.

All church payments, whether cheque, EFT or BPAY, should require two signatories. All bank account signatories, including CMF and any other local account, should be approved by the Board or Business Meeting and recorded in the minutes. It is recommended that where feasible, signatories be members of the Church Board.

The first signatory approves the appropriateness of the payment including authorisation, budget provision and arranges the payment (writes the cheque or sets up the electronic payment). The second signatory reviews the validity of the documentation and the validity of the payee, along with the amount to be paid. If a cheque payment, the second signatory should ensure that the amount written on the cheque and cheque butt agree. It is strongly advised that no signatory sign any cheque or electronic transfer until they have first sighted the supporting documentation authorising the payment.

EFT and BPAY
CMF Online is available for EFT and BPAY payments from your CMF account. Two local church signatories are required to have access to the system.

Cheques
Access to books of blank chequest must be restricted to authorised persons. This prevents attempts at illigitmate payments by the forging of signatures.
The practice of pre-signing cheques is a high-risk activity and may lead to financial abuse. It is strongly discouraged. Ensure that the amount written on the cheque and the cheque butt agree.

In the case of CMF cheques, it is mandatory that the signatories sign on the bottom left hand side of the cheque, prior to submitting the cheques to the Conference for the counter signing on the bottom right hand side of the cheque.

Petty Cash
It is the local church decision whether or not they wish to run a petty cash account. All risks need to be considered and evaluated. It is important to understand that the cash is not covered under insurance unless it is kept in a safe and covered under Cash in Safe cover (See Section 7). By running a petty cash account, the local church accepts all risks involved.

To set up a petty cash account, a cheque needs to be written to cash for the amount of the float and the cheque exchanged for cash. Petty cash must only be issued if receipts are provided. Regularly (once a month), reimburse the petty cash float by writing a cheque to cash for the total of used funds. Record the cheque and expenses on your monthly report.

Goods and Services Tax (GST)

Goods and Services Tax (GST) is a broad based tax of 10 per cent on most goods, services and other items sold or consumed in Australia. The SDA Church (North NSW Conference) Ltd is registered with the Australian Tax Office for GST (submitting regular BAS returns). The conference ABN covers all local church GST issues. In this context, all local church GST components in income and expense are processed by the conference.

The conference must include GST in the price of most goods and services it sells/provides (tithes and offerings are exempt). It can also claim GST credits for the GST included in the price of certain things it purchases.

The SDA Church (North NSW Conference) Ltd is also registered as a charitable institution. Churches are considered religious institutions by the AustraliaTax Office. This status makes tax concessions available, including the Income Tax exemption, FBT rebate and GST concessions.

GST Paid (Purchases)
To claim GST credits for GST paid, the supplier must be registered for GST. To check whether a supplier’s ABN is GST registered, visit http://abr.business.gov.au/.

Also, GST credits can only be claimed if the church obtains a valid tax invoice from the supplier. A valid tax invoice must include the words ‘tax invoice’, identify the supplier’s name, supplier’s ABN, date of sale, description of what is sold and total price specifying what parts include GST. In addition, if the purchase is over $1000, a valid tax invoice must also include the buyer’s identity and/or ABN.

In order to validate any GST claims, original GST paid invoices for all purchases are required to be submitted to the Conference with the monthly GST report. There are some goods and services that do not have GST included in the sale price and may be GST free.

GST Collected (Sales)
A gift or donation to a non-profit organisation is not subject to GST. Therefore the majority of a local church’s income is GST free.

However, all other income collected is subject to GST unless it falls under a GST concession as outlined in the GST Act. The Act contains various concessions for charities and religious entities, some of which are outlined below. If applying a concession to a situation, it must be clearly documented why the particular supply is GST free.

GST concessions include:

•    Non-commercial supplies
Non-commerical supplies by charities are GST free. A supply by an endorsed charity will be a non-commercial supply if the consideration received is less than:
> Accommodation - 75 per cent of the GST-inclusive market value of that good or service, or: - 75 per cent of the cost to the charity of providing that good or service
> All other goods and services - 50 per cent of the GST-inclusive market value of that good or service, or: - 75 per cent of the amount paid by the charity for acquiring that good or service

Note: the cost includes all direct costs incurred and a reasonable apportionment of indirect costs. Costs for things like volunteer labour, donations and free rent cannot be included.

•    Second-hand goods
Sales of donated second-hand goods are GST free, provided there is no change in the character of the goods.

•    Religious service
Religious services provided by a religious institution are exempt from GST provided those services are integral to the practice of that religion. For a supply from a church to be GST free under this exemption it must be:
- a service (and not a supply of goods such as bibles or other religious books)
- provided by a religious institution
- integral to the practice of the religion Note: a church camp is not exempt if it is mainly recreational.

Non-profit Sub-entities
A non-profit entity can choose to treat a particular activity as a non-profit sub-entity of the main entity for GST purposes only. If the turnover of the non-profit sub-entity is less than $150,000 per annum, it does not need to register for GST and is not required to charge GST on supplies. However, it cannot claim back any input credits in relation to that activity.

To be a non-profit sub-entity,

- the sub-entity must keep an independent accounting system
- the sub-entity must be separately identifiable by the nature of its activities or by its location and
- a minute must be approved by the Church Board indicating that the activity is treated as a non-profit sub-entity for GST purposes.

Therefore, for example, churches can choose to treat Pathfinder clubs as a non-profit sub entity.

This GST section is written in conjunction with the GST advice received from Saward Dawson Chartered Accountants.

Conference KCHURCH Current Account

The KCHURCH current account is an account through which the local church is charged for items by the Conference. These items can include wages for local church employees, copyright charges, resource purchases and insurances. Some of these charges are received from third parties to be passed on to the churches.

The Conference sends out KCHURCH statements each month. Payments are required in a timely manner (i.e. within the month after the statement where the invoice is first disclosed). Any account queries should be directed to the Conference.

Current account payments can be made by a cheque posted to the Conference or CMF transfer along with the monthly tithes and offerings. TOORS users, please see the TOORS Training Manual for more information on processing CMF transfers. For non-TOORS users, under the transfers section on your report, on the ‘Payment Conference Current Account’ line record the amount you would like to pay.

Better Books and Food (BBF) accounts should be paid directly to BBF. Any account queries are to be directed to the BBF business centre on (02) 4977 2444.

Conference KFUND Account

The KFUND account at the Conference is for those local churches that do not have a CMF bank account operating for the automatic transfer of the tithes and Conference offerings, and need to send in a cheque each month to cover the total received.

The Conference will process a debit amount to this account for the amount of tithes and other offerings that are required to be remitted to the Conference. A cheque for the same amount should accompany the monthly report and will be credited to the account. Ideally this account will then have a zero balance.