A church audit must be completed annually and submitted to the diocese. Audits are due September 1.
A completed audit will include:
Audit Recommendations (you can return a copy of the audit document with notations or type out a report)
Audit Opinion of the Discretionary Fund
Statement of Financial Position (Balance Sheet of all funds)
Statement of Activities (YTD Income/Expense)
If revising your Parochial Report, you must provide your worksheet for the revision along with the new Parochial Report, page 3.
All documents regarding audit procedure can be found in the Resources section below.
It is helpful if you review the process first, to be familiar with what is required. The process provides your audit team a plan to follow and to accomplish. They also provide uniformity to the audits performed by all audit committees throughout the diocese. The process is for use only by the church’s internal audit team, they are not to be given to an outside CPA to use or to follow.
All funds of the church need to be audited, not just the operating funds. This includes any endowment funds, auxiliary organizations, as well as the clergy’s discretionary fund. The Episcopal Church’s accounting manual, Manual of Business Methods in Church Affairs states, all clergy discretionary funds are classified as restricted funds of the church. As a fund of the church, clergy discretionary funds are subject to audit. However, the member of the clergy may be permitted to maintain confidentiality over the expenditures of the fund while maintaining a strict confidence.
When the audit is completed, the audit committee issues a report consisting of:
(1) an audit opinion
(2) any recommendations or improvements
Remember to include year-end financial statements with your audit. The audit committee must submit and sign the standard audit opinion. The original should be given to the Rector/Vicar and Vestry/Mission Council and kept in a permanent file. A copy of the audit opinion, recommendations, and financial statements must be sent to the finance office by September 1 of each year to be in accordance with The Episcopal Church and diocesan canons. Electronic format pdfs are the preferred method of receiving the documents. Failure to file jeopardizes seat and voice at the annual diocesan convention, and potential other consequences for non-submittal of the audit report by September 1.
Auditors should use the December 31 year end treasurer prepared financial statements and agree all numbers back to the filed parochial report for the year. Any revisions to the parochial report must be sent to the finance office, by September 1, as revisions could affect the Mission Share calculation. No Mission Share calculations will be changed after September 1 due to parochial report revisions.
Audit procedure for a congregation in transition
Parishes in transition have an audit requirement beyond that of the annual audit that is required by diocesan canon. The audit of a parish in transition requires a certified public accountant to review the financial reporting and operations of the parish. Many types of audits can be performed by the CPA. These audits have various scopes, outcomes, and costs.
Parishes in transition and needing to fulfill this requirement have options
Submit the financial audit currently completed by a CPA
Engage a CPA to complete a financial audit using the guidelines set by the AICPA
Engage a CPA to complete the agreed upon procedures developed by the diocese with specific additions suggested by the parish or CPA.
Below are a set of documents outlining the diocesan agreed upon procedures (AUP) to be used by parishes and CPA’s. This AUP may have additions but no deletions. The cost of the audit are the responsibility of the parish. Results of this AUP should be sent to the transition minister of the diocese and the Finance Office.
2021 Audit Documents
Download Audit Process
Download Audit Terms
Download Audit Procedures for parishes in transition
Download Audit Procedures for total income below $150,000
Download Audit Procedures for total income $150,000 - 600,000
Download Audit Procedures for total income over $600,000
Manual of Business Methods in Church Affairs
Sample Monthly Financial Report
Template for Employee Handbook/Resource Guide
Parish Inventory Workbook
A risk management tool from the Church Insurance Agency Corporation
Charitable Contributions Substantiation and Disclosure Requirements
IRS publication 1771 for tax exempt and government entities
Submit your audit
Questions about audits should be directed to the Rev. David Getreu, Associate for Financial Management & Oversight at firstname.lastname@example.org or 740.334.9775
A webinar on conducting church audits was held on April 23, 2021. You can view the webinarhere.