Legal Question in Legal Ethics in Wisconsin

Non-profit org - accountability safeguards?

Hi:

I am on the board of trustees for a local (mainline denomination) church with about 500 members. In my year on the board, I've learned that our church does not have a Treasurer. Instead the head Pastor approves all purchases and then a paid bookkeeper signs the checks upon his approval. We do not have a CPA or accounting firm (only a bookeeper). There is no annual audit of the books. There are no set rules for spending pre-authorization from the trustees (the Pastor basically spends at will, although he does seem to be pretty frugal). The Pastor determines all staff salaries, and they are not known by the board. He also has several family members on the paid staff. Im trying to convince our church leadership that we basically have no real financial accountability mechanisms in place to protect our contributors. There seems to be no real urgency to make any changes though. Is any of the stuff that I mentioned ''illegal''? How can I make a convincing case when the church seems to be quite happy doing things the way I've descibed (even though it's not ethical). Any advise you can give me would be appreciated.

--Jim


Asked on 12/14/02, 5:34 pm

1 Answer from Attorneys
JAY Nixon nixon law offices

Re: Non-profit org - accountability safeguards?

At minimum, you should have a formal audit by a CPA firm annually. Someone other than the Pastor should also be familiar with the IRS rules relating to 501 (c)(3) charities, which are unimaginably complex, in order to protect the tax deductability of your contributions. Board members can also suffer personal liability if these rules are not followed.

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Answered on 12/15/02, 6:20 am


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