QUESTIONS & ANSWERS

My Lifetime Journey Briefly Explained

–Through the ministry of Youth for Christ, I became a Christian, got involved in a local church, became a Gideon, started a local mission to share the Gospel, and helped needy families.

–I got married during my college years, became a banker for 8 years, moved from Brazil to Minnesota, graduated from seminary with an MDiv, got involved in church ministry, engaged in Discipleship, Evangelism, Operations, Finance, Facilities, and Projects.

–I moved to So California, got an MBA, ministered to a large Christian School, Rescue Mission, Churches, and Hour of Power.org International Broadcasting Ministry with Bobby Schuller.

–I have been with my own consulting ministry, as time allows me, serving the Christian Communities in So California for several years.

My Dashboard

There are six non-profit financial statements to consider as follows: Balance Sheet, Income Statement, Statement of Cash Flows, Statement of Functional Expenses, Metrics, and Forecasting.

Balance Sheet – Based on the assets equals liabilities plus net assets. It shows the overall perspective on the church’s stability; notably, church leaders want to know if the church is overwhelmed by liabilities. 

Income Statement – Revenues and Expenses (month, quarter, year). These records provide information about the church’s ability or inability to generate positive Net Income (+ -) by increasing Revenue, reducing Costs, or both. Revenues and Expenses equal to Net Income (+ -).

Statement of Cash Flows – Cash and Cash Equivalents (In and Out) or cash position for debt obligations and operating expenses funding. The statement of cash flows includes cash flows from operating, financing, and investing activities (OFI). The primary purpose of the statement of cash flows is to provide information about cash receipts, cash payments, and the net change in cash resulting from the operating, investing, and financing activities of a church during the period.

Statement of Functional Expenses – The statement of functional expenses is described as a matrix since it reports expenses by their function and their nature or type of expenses.

Metrics – Key Performance Indicator (KPI)

  • Managing and Measuring church performance and value contribution will be a top priority for Church Finance Directors of the future.
  • Treating the church’s core accounting duties as a set of processes and determining how can apply technology to improve EFFICIENCY.
  • It connects church performance, finance, operations, and strategy.
  • The right tools, structure, and support staff are necessary to foot the Finance Director’s responsibilities.

Forecasting – Straight-line Method is one of the simplest and
easy-to-follow forecasting methods. The church can use historical figures and trends to predict future revenue growth.

My Steps in Conducting Annual Audits Over 15 years of experience in both Full Audits and Financial Statements Reviews. These are some of my steps in conducting AFAs:

  • Audit Committee (AC): Appoint an audit committee to oversee the audit process. The Audit Committee works directly with the appointed audit firm, not management. That’s my preference.
  • Recommendations and Journal Entries (RJE): Ensure that all previous fiscal year recommendations and journal entries are completed and submitted to the finance committee.
  • Pre-Audit Documentation and Substantiation (PADS): At the beginning of a fiscal year, prepare a 12-month checklist consisting of transaction documents, checks, purchase invoices, receipts, journal entries, bank statements, any tax returns, petty cash records, inventory records, and any other related paperwork as needed. Also, run the month Trial Balance, which shows a snapshot of the period and pay attention to the reconciliation of the major ones.
  • 12-Monthly Accounting Cycle (MAC): PDF all possible pertinent documentation and upload files per checklist. Some of the documentation are bank statements, reconciliation, assets and capital changes, and depreciation, to name a few.
  • New Accounting Standards and Procedures (NASP): Review monthly about any new accounting standards that might affect the upcoming fiscal year audit. Review all significant contract agreements such as leases, insurance policies, or any other written church obligations, including, Bylaws and meeting minutes to verify and review for compliance guidelines.
  • Usual Audit Suspects (UAS): Consistently check the accounting policies, procedures, chart of accounts, internal controls, and multi-month accounting for any possible errors against previous, current fiscal year periods. Moreover, donor contribution In-N-Out allocations per designated operations budget, fundraising, and special project approvals. As an example: senior staff salaries and benefits, and investments.

My Accounting, Bookkeeping, and Payroll Monthly Cycle

  • Accounting/Bookkeeping Monthly Cycle
  • Internal Accounting Control – Separation of Duties, Access Controls, Documentation and Substantiation, Approval Authority, Cash Flow and Petty Cash
  • Deposits and Disbursements
  • Banking, Investments, and Credit Cards
  • Trial Balance and Reconciliation
  • Project Allocation vs. Operating Budget, Full Payroll
  • Audit Preparation – Check the monthly accounting cycle against audit prep-list
  • Payroll – Timecard, Processing, Taxes, Benefits Related, Reimbursements, GL, Journal Entries, Adjustments, Trial Balance and Banking Reconciliation, Documentation and Substantiation, plus properly file all docs
  • Benefits, Risk Management Review, and Financial Reports

My experience in leading to a budgeting process

  • I have worked with multiple sub-budgets within the main overall budget. On my end, after the month-end cycle, I checked fixed and variable expenses, and transfer relevant information into an Excel file or 1/12 month.
  • Also, I engage with leaders, pastors, staffing, and volunteers regarding their strategic planning and how their plan will affect the future budget. So, at any point during the fiscal year, I have a “budget draft” for the following fiscal year.
  • Moreover, one-twice a year, I check the risk management policies and procedures.

Success in Operations and Financial Management

  • Church-Schools ministry lost $2,000,000 in a Ponzi Scheme (data: 1994), lost school properties, and I was able to turn them around over nearly 13 years of ministry.
  • Church ministry lost its millions of dollars beautiful property (data: 2011), after a 3.5 million lawsuit, moved them out of the facility, and designed and built a new church building for worship. I was able to turn them around over nearly eight years of ministry.

Managed Church Change

  • I have led and managed a move of the church from its previous facilities and secured long-term facilities, which included all design and improvements. Also, I realigned finances and developed a new budget that decreased expenses by 15%. And, created fundraising venues for church budget, relocation, and new facilities.
  • It was a hierarchal church that decided to break away from the denomination because of its biblical beliefs. There was a lawsuit in which lasted for ten years, and in the end, the church lost its millions paid for facilities as well as millions in the lawsuit.
  • The church hired me at the end of the lawsuit cycle to work on finance and operations. Also, to work with the Senior Pastor and church leaders to create strategic planning for the move and secure long-term facilities.

My IT issues with previous clients

I always worked closely with the pastoral staff, support staff, and vendors in the matters of IT issues. I have learned how to pay close attention to new technology in the day-to-day operations of a church setting. There are two examples of IT from my previous ministry engagements:

IT # A – I designed the layout and computer labs. Then, I worked with staff, and vendors to create the church and schools’ first networking system with ten servers and 250 computers in multi-locations. Plus, all updated Microsoft related software, school database, Website, and security cameras system.

IT # B – After the church moved out of its old facilities, I worked with staff, and vendors to create a “cloud-ready” networking system, including VOIP systems for phones and video conferences, sanctuary projections, security cameras, business, and accounting cloud software. Examples of the software are CDMPlus (Accounting, Giving, Database, Online Donations), Office 365, and Website, to name a few.

My experience in the procurement process, including the vendor selection process, contract negotiation, and overall vendor relations., and overall vendor relations.

There are different approaches in the procurement process, selection, and contract negotiation based on the size and nature of the projects. A church checklist should be available for projects. See example below:

  • Define the Project and Scope of Work. Does it require a Conditional Use Permit (CUP) or it is just a landscaping agreement?
  • Get all required approvals within the church, including the funding. (Budget Expense or Restricted Accounts).
  • Identify long term vendors, experience, current references, and customer base or support. 
  • Check for Conflict of Interest.
  • Check vendors’ background, any past or pending lawsuit, and other related matters.
  • Check for previous work quality, safety, service, convenience, and cost.
  • Check If the vendor fits with the church culture and mission.
  • Check for risk management, lease or contract (the church might have attorneys to assist in the process), certificate of insurance, state license, and other pertinent documentation.
  • Flexibility on Change of Work Orders.
  • Establish the criteria of desired suppliers based on church wants and needs if it is necessary.
  • Three Bid-Quote Requirements.
  • Evaluate the quotes, revisit the scope of work, involve staff, volunteers, finance committee, task force, if it is necessary.
  • Check all required vendor documentation.
  • Revisit the Scope of Work, check for any additional information from vendors and supplies before the church makes a final decision.
  • After that, monitor the scope of work per the signed agreement.