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.