Ukrainian Catholic Archeparchy of Winnipeg Media

An interview with Walter Dubowec by Father Richard Soo, sj, Chancellor of the Ukrainian Catholic Archeparchy of Winnipeg

Father Richard: You keep talking about “I see.” What is it you see?

Walter Dubowec: No, no, no, Father Richard, it’s “I.C.” - which stands for “Internal Control.”

Father Richard: I see, Walter, but what does “I. C.” have to do with any of our parishes?

Walter Dubowec: You see, every parish should have an established practice for the safe guarding its assets, handling collection plate monies, and other sources of funds, and making expenditures, from beginning to end.

Father Richard: I see, you are suggesting that some of our current practices are maybe a bit out of date and that our Parish Councils, Treasurers, and Clergy should consider evaluating their internal practices and consider the merits of adopting some modern day procedures to minimize their exposure to risks.

Walter Dubowec: You see, “Internal Control” means that there is a practice in place whereby no one person has full control over collections, counting, depositing, expenditures, and recording thereof. Simply put, there has to be a division of duties amongst several people. At an absolute minimum it has to be at least two people for “Internal Control” to work, but the more the better.

Father Richard: I see, to put it bluntly, you are suggesting that in a parish, if there isn’t a proper system of “Internal Control” in place, the parish might be exposing itself to the temptation for fraud, simply the result of one’s human frailty.

Walter Dubowec: You see, Father, its not a very pleasant situation if a misappropriation of money occurs, no matter how small. The parishioners lose confidence in the system, there is finger pointing, the parish suffers a cash loss, a stigma is attached to the perpetrator, and so on. Isn’t it better to ensure that there is a proper system in place and that the proverbial barn door is properly closed?

Father Richard: I see your point Walter. Sounds like good advice to me. Can you give us some suggestions about the kinds of procedures we should be thinking about, or what we should be doing to ensure that some form of “Internal Control” is in place and is actually being followed?

Walter Dubowec: You see, the best advice I can give you is to use common sense to deter temptation. For starters, here is some food for thought:

1. Immediately after the Sunday collection, the ushers should place the collections into a box with a sturdy padlock attached, and store it in a secure place, in the event that the counting is not done that day.

2. A third person should be the custodian of the key.

3. Some parishes count their donations on Sunday and then use a bank drop envelope for depositing the funds, which is an excellent security practice.

4. Deposit all funds collected into the bank account as soon as practicable.

5. Have at least two persons jointly count the cash and cheques, prepare a count sheet, retain the donation envelopes for posting to the parishioners’ donation record, and sign off the count sheet. The donation envelopes should be kept for at least one year.

6. Encourage parishioners to use donation envelopes and to mark the amount they are donating on the face of the envelope in ink, not pencil. Promote the use of cheques rather than cash, so that the cash handled is at a minimum.

7. The use of donation envelopes is perhaps the best practice for achieving good “Internal Control”, because at the end of the year the donor will be receiving a donation receipt and if it is incorrect, you will soon hear about it.

8. Many parishioners are arranging with their parishes for “pre-authorized direct deposits” for their contributions, the same way as you might pay some of your household bills.

9. Make sure that loose change collection boxes, candle offerings, and the like are emptied out frequently and deposited.

10. Never ever pay bills from the cash collections. It is only acceptable to make small disbursements out of a petty cash fund. Pay all bills by cheque as it provides a permanent record for a transaction.

11. Whoever does the bookkeeping should not have anything to do with the counting of monies, however, they can make the bank deposit where a count sheet has been prepared and signed off. Basically, their responsibility should be limited to recording transactions which have been performed by others.

12. The banking transactions as recorded in the books should be reconciled monthly to the bank statement and reviewed by the audit committee members. Don’t wait until the end of the year before you start a review.
    Have two signing officers co-sign cheques and never pre-sign cheques (not even a single signature). The person that keeps the books should not be one of the signing officers, nor should two related people sign jointly .

13. Keep a historic record of donations by Sunday, by year, and track variations. Computerized accounting systems facilitate this kind of analysis.

14. At the end of the year, reconcile the donation receipts issued with the donation envelopes recorded in the books of account. Do not issue donation receipts to persons who have not used the envelop system but claim to have made a certain amount of loose cash donations. Remember, you might be subjected to an audit by Canada Revenue Agency at a later date.

15. Rotate duties as much as possible. Do not have the same people doing the same job week in and week out, year after year. Encourage more people to get involved.

This list is only intended as a primer and there are many other facets such as church sponsored dinners, teas and other events which should be looked into and subjected to “Internal Control” procedures. Parishes might wish to engage some professional assistance in evaluating their existing “Internal Control” systems. Remember that Parish Councils, Treasurers and Clergy have a duty of care to ensure that a parish’s assets are being properly handled, recorded and administered.

Father Richard: I see what you have been driving at, and you and I see the importance and value of having proper “Internal Control” procedures in effect in all of our parishes, be they large or small. God trusts us all to do the right thing!

Walter Dubowec, FCA, CIRP (ret’d) is a Chartered Accountant. He can be reached at dubowec@mts.net

Copyright © 2007 Archeparchy of Winnipeg