Wednesday, March 27, 2013

DRAFT: Towards Financial Management, Accountability and Stewardship principles for Christian service, in groups and organisations

The management of money is always a challenge, and so it is important to seek to lay out a framework for wise and diligent handling of this pivotal resource. Hence, this draft, which speaks of the XYZ inc group or body as a fictional entity:


>> An essential feature of management is that a manager is a delegate of a principal, responsible to make and carry out decisions for a delimited field of work, to achieve desirable results by working with others, deriving his or her authority from that delegated responsibility, i.e. stewardship. This means that planning, organising, binding efforts and resources into a coherent whole, delegating responsibility and authority, co-ordinating team efforts, monitoring and controlling leading to adjusting the path to better achieve realistic goals are all typical features of managerial responsibility. It also means, given the flexibility of money and its usefulness as a universal (albeit imperfect) yardstick of value, accurate, timely financial information and effective controls play a vital role in management.

However, since money is so flexible and pervasive, it is particularly prone to waste, diversion, misuse, and outright fraud or theft.

Therefore, the proper management of and accountability over money is necessarily a major focus of sound stewardship of XYZ inc. Accordingly, we need to heed the Apostle’s counsel:

1 Cor 3: 10 According to the grace of God given to me, like a skilled master builder I laid a foundation, and someone else is building upon it. Let each one take care how he builds upon it. 11 For no one can lay a foundation other than that which is laid, which is Jesus Christ. 12 Now if anyone builds on the foundation with gold, silver, precious stones, wood, hay, straw- 13 each one's work will become manifest, for the Day will disclose it, because it will be revealed by fire, and the fire will test what sort of work each one has done. 14 If the work that anyone has built on the foundation survives, he will receive a reward. 15 If anyone's work is burned up, he will suffer loss, though he himself will be saved, but only as through fire.

16 Do you not know that you  are God's temple and that God's Spirit dwells in you? 17 If anyone destroys God's temple, God will destroy him. For God's temple is holy, and you are that temple. [ESV]
In short, the responsibilities of oversight offices among God’s people are awesome and call for all due diligence, competence and commitment. Accordingly, it is important – not only as a legal matter, but a spiritual one – to lay out certain “yardstick” principles of and policies for financial and general accountability, stewardship and controls for XYZ inc., as a general guide to action and decision-making:

1] It is the duty of all concerned, from Directors to Executives and Officers, Paid or Voluntary Staff and Members, to see to it that financial and other resources are used appropriately, wisely, transparently, and as much as possible without waste, misuse or fraud. Accordingly, in alignment with legal and professional requirements and recommendations, effective systems, rules, procedures, documentation and training shall be put in place by the Directors to provide for:

  • transparency, accountability, and accurate, timely record, security, inventory management and maintenance of valuable assets (whether tangible or intangible),
  • proper qualification, training, management and circulation  of staff (and job descriptions for positions),
  • separation of processes linked to requesting, authorising, effecting, and recording transactions, activities or events
  • “paper trails” and controls on such events, activities, information and transactions,
  • associated due controls on cash, bank accounts and financial information,
  • proper book keeping, accounting and auditing (or independent examination/review . . . where the entity is sufficiently small that a full audit would be too expensive) in accordance with generally acceptable principles, and for
  • associated regular reporting that the Trustees have reason to be confident credibly gives “a true and fair view” of the state of affairs, circumstances and trends of XYZ inc.
  • Regular annual review by the Directors of the management and financial controls and related systems, towards lessons learned and continuous improvement
2] The XYZ inc. Chaplain -- a Trustee member of the Directors -- shall be the designated ombudsman, for stewardship matters that are otherwise unresponsive to concerns or complaints, and may initiate an inquiry on his or her own accord should this seem necessary based on observations. Accordingly, the Chaplain shall have the power of investigatory visit without prior notice. In matters of complaint or observed deep seated problems, the Chaplain shall report to the board's body of Trustees (here, defined as Directors who do not manage the affairs of the firm, holding no executive office in the firm)  who shall act to resolve the matters without undue delay, in accord with sound ethical and business principles and fairness to all, tempered by gracious mercy.

3] To foster the proper management of funds and proper book keeping and accounting, the Board of Directors shall create, oversee the implementation of and update from time to time, a set of financial rules governing key procedures to give effect to the principles at 1 above, covering a scope such as:

  • Describing the scope and operating framework for managing financial resources of the XYZ inc.
  • Managing receipts by The Company, by category, maintaining a registry of bank accounts, deposits, financial investments and similar repositories of funds, and associated book keeping and software
  • Deposits to and receipts from Bank accounts and similar repositories of funds
  • Managing of petty cash based on authorised imprests and record keeping
  • Agreements, contracts and commitments, project management and reporting, etc.
  • Procurement, bidding process and preferred supplier lists and policies
  • Payments to and by the XYX inc., approval for payments, signature requirements, including the use of honour certificates in (rare) cases where there is no receipt
  • Separation of processes and persons involved in transactions
  • Management of “paper trail” documents
  • Receipt and management of grants, donations, gifts, legacies, etc.
  • Inventory management, equipment maintenance record, disposal of equipment and other assets
  • Sales and commissions, income generating activities
  • Book keeping, accounting, management accounting, budgeting, costing, pricing, regular financial reporting, audit/independent examination, etc.>>

The issue is that hings must be doe in an orderly, effective, controlled, reasonably efficient and sufficiently safe-guarded manner as to discourage the emergence of the sloppy habits that foster errors and open room for fraud. END