Fix these before December and an audit becomes a formality. Leave them until February and you're in cleanup mode under pressure — which is a bad place to make financial decisions.
1. Bank accounts that haven't been reconciled
Reconciliation — matching your bank statement to your accounting records — is the most basic control in bookkeeping. It's also the one that slips most often in churches, especially those relying on a part-time bookkeeper or a volunteer treasurer managing things alongside a full-time job.
Auditors check this first. An account that hasn't been reconciled for three months doesn't just create cleanup work — it signals that other controls may be loose too. It puts everything else under more scrutiny.
An unreconciled account doesn't just create work. It tells the auditor to look more closely at everything else.
The standard is monthly reconciliation, completed within two weeks of the statement date. If that's not happening, it's the first thing worth addressing — not because it's the most dramatic problem, but because it's the foundation everything else sits on.
2. Restricted gifts spent on the wrong thing
This one is the most serious, and it comes up more than most churches would be comfortable admitting. A large gift comes in designated for the building fund. Cash is tight in November. The gift is sitting in the checking account. Someone makes a judgment call.
The problem is that restricted gifts aren't yours to reallocate. They belong to the purpose the donor specified — and spending them otherwise, even temporarily with full intention to "pay it back," is a breach of donor intent. Auditors are trained to look for it. In serious cases, it creates legal exposure for the organization and its leadership.
The fix is structural: restricted funds should be coded separately in your accounting system from the moment they arrive. Releasing a restriction — moving money from restricted to unrestricted — requires documentation that the condition has been fulfilled. Not a mental note. A ledger entry with a reason.
3. Cash offerings with no paper trail
If your church takes up a cash offering and it goes from the plate to the treasurer's car to a deposit slip with nothing in between, you have a problem — not because anything dishonest is happening, but because there's no way to prove it isn't.
Auditors look for dual custody on cash: two unrelated people counting together, a written count sheet, and a deposit that matches. The absence of that process doesn't mean fraud happened. But it means that if any discrepancy ever surfaces, everyone involved is in a difficult position — including people who did nothing wrong.
This isn't about distrust of your volunteers. It's about protecting every person who handles money from ever being in an impossible-to-defend situation.
Dual custody on cash isn't about distrust. It's about making sure no one who handles money honestly can ever be put in an impossible position.
The practical fix: two counters, a signed count sheet, and a deposit that day or the next morning. Fifteen minutes of process that closes an enormous exposure.
If one of these is familiar, you're not alone
These aren't the problems of disorganized or dishonest organizations. They're the problems of organizations doing their best with limited staff and limited time. But the churches that walk into audit season calmly are the ones who didn't wait until February to think about it.
If you're not sure where your books stand heading into the back half of the year, that's exactly what a free consultation is for.
Not sure where your books stand?
A 30-minute conversation can tell you a lot. No obligation, no sales pitch — just an honest look at where you are and what, if anything, needs attention.
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