Financial Audits¶

Overview¶

Annual financial audits are conducted for all wards and stakes to ensure proper stewardship of sacred funds. The audit process helps identify areas for improvement and ensures compliance with Church financial policies.

Key Dates¶

Spring Audit¶

• Between 15 January and 28 February

• Audits are conducted and completed.

• Between 16 March and 15 April

• Exceptions are reviewed and resolved.

Fall Audit¶

• Between 15 July and 31 August

• Audits are conducted and completed.

• Between 16 September and 15 October

• Exceptions are reviewed and resolved.

Common Audit Exceptions¶

Based on recent audit findings, here are the most frequent exceptions and how to prevent them:

1. Duplicate Transactions¶

Issue: Multiple payments made to the same individual or vendor.

Prevention:

• Always check existing expenses before processing new requests
• Use LCR Finance search to verify previous payments
• Document the specific purpose of each payment clearly

2. Self-Approval by Bishopric Members¶

Issue: Bishopric members submitting and approving their own expense requests.

Prevention:

• Never allow submitters to also be approvers
• Require two independent approvals for all expenses
• Financial clerks should verify approval independence

3. Missing Supporting Documentation¶

Issue: Expenses processed without receipts, invoices, or reimbursement forms.

Prevention:

• Require original receipts for all expenses
• Scan and upload legible documentation to LCR Finance
• Use reimbursement forms for all requests
• Verify documentation matches the expense amount

4. Unapproved Financial Statements¶

Issue: Monthly financial statements not reviewed and approved by bishop within 45 days.

Prevention:

• Schedule recurring monthly meetings between bishop and financial clerk
• Review statements line-by-line within the first week of each month
• Mark all tabs as reviewed in LCR Finance

5. Fast Offerings Issues¶

Issue: Fast offering payments without proper documentation or approvals.

Prevention:

• Never allow bishops to submit and approve their own fast offering expenses
• Require two approvals for all fast offering disbursements
• Document the purpose and recipient clearly
• Use disbursement forms for non-receipt situations

6. Gift Card Purchases¶

Issue: Gift cards purchased without documentation or proper tracking.

Prevention:

• Treat gift cards the same as cash advances
• Require two people to receive and track the gift card
• Require two people to oversee spending and obtain receipts
• Return any unused balance immediately

7. Missing Donation Slips¶

Issue: Donations received without accompanying donor slips.

Prevention:

• Require donor slips for all donations, including checks
• File and preserve all donor slips
• For online donations, ensure proper categorization

8. Training Deficiency¶

Issue: Bishopric members not watching the annual "Sacred Funds" video.

Prevention:

• Schedule annual viewing of "Sacred Funds, Sacred Responsibility" video
• Document completion for all bishopric and clerk training

Financial Statement Reviews¶

Monthly financial statement reviews are critical for audit compliance:

Review Process¶

1. Access statements in LCR under Reports > Financial Statements
2. Review all tabs: Donations, Balances, Fast Offering Analysis
3. Check for unusual transactions or duplicates
4. Address any action items
5. Mark each tab as reviewed

Key Areas to Check¶

• Balances: Monitor missionary fund balances (transfer excess after 3 months)
• Fast Offerings: Ensure proper documentation and approvals
• Duplicates: Look for multiple payments to same recipients
• Timeliness: Complete reviews within 45 days

Practice Audits¶

When to Schedule a Practice Audit¶

Practice audits are particularly beneficial when:

• A bishop or financial clerk is new to their responsibilities
• There's uncertainty about the current state of financial affairs
• You want to identify potential oversights before the official audit
• The ward hasn't had an audit in several years
• There have been recent changes in financial procedures or personnel

Benefits of Practice Audits¶

• Identify Issues Early: Uncover potential audit exceptions before they become problems
• Receive Guidance: Get direct support and training from experienced audit committee members
• Build Confidence: Help bishops and clerks become more comfortable with financial responsibilities
• Prevent Stress: Reduce anxiety about the official audit process
• Learn Best Practices: Receive personalized recommendations for improvement

How to Schedule¶

Contact your stake audit committee to arrange a practice audit. This service is designed to be supportive and educational, not punitive.

Audit Preparation Checklist¶

Monthly Tasks¶

• Review monthly financial statements within 7 days
• Verify all expenses have two approvals
• Check for duplicate transactions
• Ensure all documentation is uploaded and legible
• Monitor missionary fund balances

Annual Tasks¶

• Watch "Sacred Funds" training video
• Review previous audit exceptions
• Update signature cards if needed
• Verify all donation slips are filed

Before Audit¶

• Prepare list of all expenses and documentation
• Review recent transactions for completeness
• Ensure all approvals are properly documented
• Practice audit procedures if available

Resources¶

• Church Handbook - Chapter 34: Financial Management
• LCR Finance System
• "Sacred Funds, Sacred Responsibility" training video
• Stake audit committee (contact for practice audits)