Internal Controls and the Role of the Parish Finance Council

Kevin O’Brien, from the Office of Finance and Administrative Services in the Diocese of Fort Worth, Texas discusses Internal Financial Controls in the Parish.  What practices should a parish have in place to prevent against fraud and the misappropriation of funds?  How can the Parish Finance Council assist the pastor in developing and implementing such controls for the parish?

This and other videos can be found at the Video Training Resources for Catholic Parishes - A collaborative effort of The Emerging Models of Pastoral Leadership and the Conference for Pastoral Planning and Council Development.

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I would be interested in hearing the experience of others who have implemented (or attempted to implement) internal controls--how did you present the concept to the pastor and the parish staff responsible for finances? Also, if it has occurred, how have you dealt with a pastor who simply refused to relinquish control?

An Internal Control Document was introduced to parishes in the Archdiocese of Denver in 1996 as part of an annual Financial Review process being initiated in the parishes at the same time.  It was explained to both priest personnel and Parish staffs that this was a way to standardize procedures in all of the parishes, as well as a way in which to implement protections for both staff and volunteers who handle receipts.


Looking back on the initial introduction, the internal controls were introduced somewhat incrementally, starting with those practices that might present the most temptation for wrong-doing.  By introducing the ICD in such a way, at least in our experience, the accounting standards which were being integrated into parish practices weren't quite so overwhelming or threatening.


The annual Financial Review process included a review of a respective parish's compliance with the requisite ICD, offering both observations of actual practices and recommendations for amending these said practices if indicated.  It included a "management letter" reflecting the parish's response to the recommendations...In some cases modifications in parish practices were made, in others, the recommendations might be "taken under advisement" .For example, our annual management letter has carried the observation that our Pastor of record (there have been three since 1996) has not implemented an annual staff evaluation process since the process was initiated in 1996...


It seems to me that the implementation of an ICD has to be measured but, at the same time, a "line in the sand" must be drawn somewhere by the implementing agency in order to encourage compliance.  If it is apparent that there are no repercussions for failing to comply--if there isn't a way to enforce compliance with an ICD process--it will be avoided because it is a time-consuming process and disruptive to the current ways of doing the business of ministry.

Being the Pastor, I've found it relatively easy to implement financial controls.  Still, old ways die hard and there was a surprising amount of opposition at first, since we were changing the way things had been done for years.  

But, I gave a copy of the Standards of Excellence to the Finance Council, and said I'd like to implement them.  Then, we had a Parish financial audit, and were able to use those recommendations to come into conformity with the guidelines of the diocese.  I also asked our staff to attend a workshop for new employees which covered the Temporalities Manual.  (That's the book of our diocese's financial control policies.)  

We have a few things left to accomplish, but we're getting there.  I just kept stressing that using best practices and following the guidelines would make life simpler for all of us, help with transparency, and assure people that their financial donations were being honored. 

As you're not the Pastor, why not simply approach him, and/or someone on the Finance Council?  While I'm surprised that some dioceses don't have regulations regarding internal controls, I'm also not surprised!  But, while it may be foreign territory and seem unnecessary at times, it actually has made life a lot simpler, and eliminated questions regarding our finances.  

Hope this helps!

Another place that has sorted out the internal controls for parishes really well is the Dicoese of Bismarck, ND. Contact Tony Chap in Parish Services at the chancery. Two others who have addressed internal controls for parishes really well are the CFO of the Dicoese of Corpus Christi in TX, Greg Seagrave and the CFO in the Dicoese of Lexington KY, Deacon Bill Wakefield. The best overall instrument for this, however, are the Catholic Standards for Excellence: They are simply a means for implementing best practices. Best practices solves a multitude of problems.


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