Church financial reports provide information on the financial health of the organization, including income, expenses, assets, liabilities, and cash flows. Fund accounting techniques are often used to separate funds for specific projects, and professional accountants may donate their time to prepare the reports.
A church financial report is a document that provides members and others with a picture of the financial health of the organization. These reports can be simple or complex, depending on the information and the users of the reports. Church members often want information about how their church spends money received through gifts, tithes, and offerings. Each church financial report may be similar to standard financial statements issued by a for-profit company. These statements include reports of activity, financial position, and cash flows.
An activity statement provides the income and expenses of a church. Income on this church financial report includes money received from members, gifts from businesses, interest on money invested, and other sources. Expenses are any capital spent on items necessary to keep the church operating normally. Utilities, rent, maintenance, and wages are common inclusions on this statement. The difference between these two categories is the total cash earned or lost by the church during a specific period, such as the month.
The second financial report for the church is the statement of financial position. This is similar to a balance sheet, which lists all items owned or owed by the church. Assets (items of property) include cash or investments, insurance policies, buildings, or other items. Liabilities (money owed) can be loans for church operations or buildings. Smaller churches may not be interested in this statement, as they may not have many assets outside of their church building.
A final church financial report is a statement of cash flows. This reports all sources and uses of cash. Large churches are often users of this report. They prepare and publish this report to detail where they spend cash on different activities. The report may summarize cash receipts and expenditures for activities such as missions, soup kitchens, private schools, or other activities outside of normal church operations.
Churches often use fund accounting techniques for their reports. Fund accounting separates all funds received into specific groups for later use. This separation also prevents the church from using funds from one project on another, unless church members give their consent. Large churches may have committees that make these suggestions, which need the approval of the church body. Professional accountants may donate time to prepare each financial report for the church.
Like any organization, a church needs accurate financial reports to detail its activities. The reports help obtain loans, prove financial viability, and present transparent use of member funds. Although the reports can be much simpler than those described here, they are important to the operations of the organization.
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