When is our parish audit due?

Audits are due on or before October 1. Failure to submit an audit by its due date will cause a congregation to be considered “Non-Reporting” and subject to provisions of Article III Section 3 (3) of the Constitution (Canon 13 section 4). 

Are there any instances in which a full audit is not required?

A full scale or normal audit is expected. However, the auditor may under some circumstances propose an audit scope exception. If there is a scope exception proposed, please contact Kathy Williams, Administrative Secretary, at 716-881-0660 ext. 12 before completing the audit. It is usually not permitted to exclude investments, report solely on the “operating fund”, or omit a balance sheet.

What is the reporting standard our CPA or PA should use? 

Certified Public Accountants (CPAs) and Public Accountants (PAs) should report using either the cash basis or accrual basis of accounting. The report format and disclosures should be consistent with generally accepted accounting principles. Questionable accounting methods or significant deviations from GAAP should be discussed with the Treasurer of the Diocese. Please call Kathy Williams at 716-881-0660 ext. 12, and she will see that the Treasurer gets in touch with you. 

Is it necessary to hire a CPA or a PA to do our audit?

Your parish can opt to use a diocesan approved audit committee. Because such a committee is made up of volunteers, this is a cost-saving option.

What is an “audit committee”?

An audit committee is a panel of three (3) qualified volunteers. In rare cases, an exception maybe granted to reduce the number of members of the panel. If your parish wishes to use an audit committee with fewer than three people, you must receive special permission. Contact the Bishop’s Office at 716-881-0660 ext. 11 to explain why a full panel cannot be used and to request permission. At least one member of a panel must not be a member of the congregation, which is being audited. 

What is a “qualified person” who can serve as a member of an audit committee?

Members must be both independent and experienced.

What do you mean “independent”?

Each member of the audit committee is “independent” of the decision making and financial record keeping functions of the congregation. The “decision making” functions of a congregation are considered to have been made by the rector or vicar, the wardens and employees of the congregation. Individual members of the vestry or mission council, while they are “leadership” and therefore participate collectively in decision making, are not automatically disqualified on the grounds of independence, but they are not encouraged to become members of the audit committee for their congregation if sufficient others are available to serve.  The“financial record keeping” functions are considered to be performed by those people who function as administrator, parish secretary, bookkeeper, or treasurer. Persons who are “offering counters” are not automatically disqualified on the grounds of independence, but they are not encouraged to become members of the audit committee for their congregation if sufficient others are available to serve. Persons who are married to, or members of the immediate family of,persons who are disqualified on the basis of lacking independence are also disqualified by reason of the marital or blood relationship. Membership in the Episcopal Church is not required for qualification but may be helpful in providing an insight into the polity and mission of the church. 

What do you mean experienced?

You do not have to be an accountant or an auditor to serve on an audit committee. Your qualification does not relate to your theological perspective – you do not have to be Episcopalian or even Christian. But it is helpful if you understand the polity and mission of an Episcopal congregation. Audit committee membership is not limited to age but each member of an audit committee should have sufficient financial skills and experience to conduct an audit. Prior service on an audit committee or training provided by the diocese is an indication of financial experience, as is secular employment in areas of finance or financial records.

How do I become “qualified” to serve as a member of an audit committee?

You submit a Volunteer Information Sheet to the Diocesan Office at least two weeks prior to the first meeting of the audit panel on which you will serve. The form permits you to describe your training or experience.

When should the committee panel be formed?

Since the audit is due on or before October 1 it is strongly recommended that the committee be formed on or before May 1. The “management” of the congregation takes the initiative to identify at least three persons who will serve as a panel for its audit. Deaneries have often identified persons who are willing to serve and Kathy Williams keeps a listing of persons who have volunteered in the past and might be able to assist again. You can contact her at 716-881-0660 ext. 12.

When you have formed your panel, which should consist of not less than three persons nor more than five, you describe it in the Notice of Audit Panel. This is sent to the Bishop care of the Mrs. Kathleen Williams, Dispatch of Business, at 1114 Delaware Avenue, Buffalo, New York 14209. Assume the panel is properly constituted and accepted unless you are notified to the contrary.

What is the reporting standard for an audit done by an audit committee?

An audit committee does not develop a report format. It uses the financial report for the congregation given to the vestry or council by the Treasurer. The financial report is to include the balance sheet at December 31 and the income statement for the 12-month period then ended. The audit committee must submit, with its report, the financial report given to them by the treasurer and upon which the report is based. Please note: The Parochial Report is not acceptable as the congregation’s financial statement.