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Financial records keeping and internal controls in churches: a case study of Apostolic church in Ghana

Abstract

This study was on Financial records keeping and internal controls in churches: a case study of Apostolic church in Ghana The total population for the study is 200 members of Apostolic church in Ghana. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made elders, deacons, men and women were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies.

 

Chapter one

Introduction

  • Background of the study

 

Every organization both business and non-business requires and uses finance for its various activities. The business organizations are set up primarily for profit making like banks, companies and other related ventures while the religious organizations are not meant for profit making but for rendering services and winning souls to God. The religious organization of interest is Christian religion

Since finance is very vital for the welfare and growth of these organizations, its administration has to be well accorded financial records keeping. Finance at the macro level is the study of financial planning, assets management and fundraising for business, while macro is the study of finance institution and finance market and how they operate within financial system (Anyafo, 2000:3). In view of Emekekwue (1993:1), finance is primarily concerned with money and momentary matters. In general, finance can be taken as a body of principles and theories dealing with raiding, investing, managing and employing funds by individual and organizations in private and public sectors (Oye: 2002:7). According to Osisioma (1996:63), a system is a complete array of an ordered arrangement of interdependent elements, with a common goal, related by a network of relationships. Such a system has input process-output component, and it is in itself an information system. Financial systems are subsystems in a business organization whose responsibility is to ensure that business transactions are recorded in proper books of account on the basis of recognized accounting practice, analyzed, interpreted and presented to the users of accounting information (Ubesie, 1998:97).

In essence, Church as one of the religious organizations is not meant for profit making but for bringing souls to Christ. The church requires fund to administer its affairs and to carry out its daily religious obligations. The funds are not necessarily adequate to meet up to its numerous demands, though there are various sources of generating income. It is then necessary to determine the financial income being used by the churches whether there are proper record keeping, the financial decisions and reporting made and the accounting system or procedure adopted. There arises the need for the church to keep track of its financial operations, this helps form an adage for it to control its income against its expenditure. Thus, a house built on a solid foundation remains a strong house but that whose foundation is shaky can crumble at any time. In the same way, a good financial background of a church can be said to be the foundation on which the church is built. On this background the researcher wants to investigate the effects of poor financial records and accountability in the church Most concepts regarding financial controls in a ministry are adapted from the corporate/business world, where essentially all successful organizations have developed, implemented, and practiced effective financial controls. However, not every secular financial policy or practice can be directly lifted and superimposed onto a ministry context. As this course notes, Pastors and church staff members need to understand and explain that church finance is different from business finance. Church finance draws from the accounting and management fields of the business world. But the purposes of the church and of business are different. Businesses are profit-making organizations. Churches are non-profit, service-rendering organizations (Schmitt, Week Seven Notes).Similarly, within a denomination-specific context, one writer notes

In these latter days, we Lutherans are inclined to display a certain hubris in thinking that means and methods developed in the business world or by other church bodies can be, if necessary, stripped of their objectionable accouterments, i.e., Lutheranized, and practiced in pure and neutral ways in the parish (Berger 2007, 115). The National Association of College and University Business Officers (NACUBO), consistent with both Schmitt and Berger above, notes a similar concept: The differences between accounting by [not-for-profit] institutions and accounting in the commercial sector result from the reasons such entities exist,‖ whether to increase economic wealth, or to provide goods and services that meet a social need (NACUBO 2006, Conversely, however, the best practices of the corporate world (e.g., double entry  accounting, financial statements, segregation of duties) have proven both their time-tested effectiveness and validity in a wide range of both secular and ministerial applications and should not be avoided by ministries solely for their secular origins.

Regarding financial controls in a ministry setting, Cram (2012) succinctly states.  Internal controls are the procedures and practices we implement to help our organizations achieve their mission. They are the things we do to promote efficiency, reduce the risk of loss, help ensure our financial reports are accurate, and comply with laws and regulations.

In a broader scope, Marshall (2010) segues internal control with internal audit/assessment, giving as its purpose assessing whether an entity‘s objectives are being met, and that those objectives and operations comply with applicable laws, regulations, and accounting policies

 

Statement of the problem

Many religious organizations are now being faced with the problem of finance, the inadequacy of funds to carry outs their religious rites. Churches are not an exception as most of the churches are incapacitated in terms of fund, yet there are several sources of finance but the church seems not to meet up its financial demand. For good financial records, there must be a well developed financial decision and reporting procedures and financial control being used or operated. It is based on this, that the researcher topic is chosen to asses Financial records keeping and internal controls in churches: a case study of Apostolic church in Ghana so as to know how the church manages and controls its fund and to suggest ways they can be improved for a better result.

Objective of the study

The objectives of the study are;

  1. To ascertain whether there is effective financial record in Apostolic church in Ghana
  2. To know the financial decision making procedure and who takes the responsibility in Apostolic church in Ghana
  3. To find the financial reporting and accounting records being used by the Apostolic church in Ghana

Research hypotheses

Research hypotheses

HO: There is no effective financial record in Apostolic church in Ghana

HI:   There is effective financial record in Apostolic church in Ghana Hypothesis Two

HO:  there is no financial reporting and accounting records being used by the Apostolic church in Ghana

HI:  there is financial reporting and accounting records being used by the Apostolic church in Ghana

Significance of the study

It shows at a glance and most importantly, the overview of the financial records, the financial control, the accounting system and procedure and indeed reporting of the church. There is no doubt that the study will benefit not only the selected churches but also other Christians and other religious organizations to borrow a leaf from the church so as to maintain a sound financial system in their various religious groups. Also, the study will help to remove the misconception from the minds of some people that church leaders spend church’s fund anyhow. Also, the analysis and recommendations on this study will go a long way to alleviate this.

In essences, the study will be beneficial to students of finance and accounting so as to enlighten them more on finance and accounting system of religious organizations. It will also serve as a reference point for further studies

 Scope and limitation of the study

The scope of the study covers Financial records keeping and internal controls in churches: a case study of Apostolic church in Ghana. The researcher encounters some constrain which limited the scope of the study;

  1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
  2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

 

1.7 DEFINITION OF TERMS

  1. FINANCE: A body of principles and theories dealing with raising, investing, managing and employing funds by individuals and organizations in the private and public sectors. Financial managers can take three main decisions; finance, investing and dividend decisions.
  2. FUNDS: This is regarded as cash or its equivalent, example cheques, drafts, money orders, etc. The term may be used to include securities which have a ready market and can be quickly liquated.
  3. FINANCE COMMITTEE: This is an association where those involved or are specialized in finance shall have power to supervise the financial affairs of the corporation or organization and shall report to the board from time to time whenever it shall be called upon to do so.

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Disclaimer: This PDF Material Content is Developed by the copyright owner to Serve as a RESEARCH GUIDE for Students to Conduct Academic Research.

You are allowed to use the original PDF Research Material Guide you will receive in the following ways:

1. As a source for additional understanding of the project topic.

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4. Direct citing ( if referenced properly).

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