A church financial report is a document that provides members and others with a picture of the organization’s financial health. These reports may be simple or complex, depending on the information and users of the reports. Church members often desire information on how their church spends the money received through gifts, tithes, and offerings. Each church financial report can be similar to the standard financial statements issued by a for-profit company. These statements include activity reports, financial position, and cash flows.
A statement of activity provides the revenue and expenses of a church. Revenues on this church financial report include monies received from members, gifts from businesses, interest on monies invested, and other sources. Expenses are any capital spent on items necessary to keep the church operating normally. Utilities, rent, maintenance, and wages are common inclusions on this statement. The difference between these two categories is the total cash gained or lost by the church for a specific period, such as month.
The second church financial report is the statement of financial position. This is similar to a balance sheet, listing all items owned or owed by the church. Assets — items owned — include cash or investments, insurance policies, buildings, or other items. Liabilities — monies owed — may be loans for church operations or buildings. Smaller churches may not be interested in this statement as they may not have many assets owned outside of their church building.
A final church financial report is a statement of cash flows. This reports all sources and uses of cash. Large churches are often users of this report. They prepare and release this report to detail where they spend cash on different activities. The report can outline cash receipts and expenditures for activities such as missions, local soup kitchens, private schools, or other activities outside of normal church operations.
Churches often use the fund accounting techniques for their reports. Fund accounting separates all monies received into specific groups for use at a later time. This separation also prevents the church from using funds from one project on another, unless church members give consent. Large churches may have committees that make these suggestions, which need approval from the church body. Professional accountants may donate time in order to prepare each church financial report.
Like any organization, a church needs accurate financial reports to detail their activities. The reports help obtain loans, prove financial viability, and present a transparent use of member funds. Though reports may be much simpler than the ones described here, they are nonetheless important to the organization’s operations.