Accounting and Money for Ministerial Leadership

Key Practical and Theological Insights

Wariboko

• Publisher: Wipf and Stock
• Year: 2013
• eBook ISBN: 9781621897200
• Topic: Theology & Religion
• Subtopic: Religion

This book will help seminary students and ministers with no training in accounting to expand their core management competency and church leadership skills to include basic issues of finance and accounting. It will also provide pastors/ministers with financial management orientation to become better leaders/managers of their churches and organizations. Specifically, this book is designed to bring pastors, ministers, and seminary students up to speed in the language of accounting and money in contemporary American society. It gives them practical resources for effective (not hands-on) management of church finances. Among others, it will offer training on basic accounting and budgeting, reading of financial reports, and elementary tax and legal issues in order to develop pastors'/students' core competency in stewardship leadership. After going through this book, most students and pastors should be able to read, exegete, and make sense of the financial reports that will be given to them by church accountants (treasurers, finance committees). This book helps pastors to understand and interpret the accounting and monetary issues of their ministries in a professional and theologically sound way.

Chapter 1

Introduction to Basic Accounting

Accounting Is a Narrative

Accounting data or reports never come to us raw; they are mediated through narrative. All accounting is a story. It is an imagination (abstraction) with the virtues of economy, consistency, and broadband resonance. Though the language that paints this picture is always simple and restrained, it is filled with panorama and process. The accounting reports of a corporation deal with images that are at the very margins of reality. They are neither a perfect rendition of the past nor a perfect predictor of the not-yet. Yet they capture a period, a fleeting moment as the past slides into the future with the accountant’s capacity to present the absent as the real. Figures and data are not unmediated undeniable realities, which can be abstracted from practices of representation and the stories they create or describe.

Accounting is a story of how an organization has worked and why it works. It shapes how the persons in the organization view the reality of the organization, how they should respond to life, and what the organization might become. Accounting presents how an organization imagines itself in terms of the flow of financial resources at its disposal and how others imagine it.

Understanding the “identity” of the organization being portrayed by accounting is crucial for a pastor defining the clarity of her organization’s or mission’s goals. Accounting records, reports, and analyses shape unique expectations and characters of organizations. Accounting reports are not just simple narratives of financial flows meant for board or committee meetings; they are part of the social ecology of ministerial leadership.

The accounting world, the community of practitioners, is a narrative-formed one. As narrative it also presents a particular view of the world. It is based on two philosophical ideas. First, is the idea that an organization is a unit, a single entity that can be identified in and of itself. The organization is an entity that can be succinctly distinguished from others and a set of accounts can be kept to recognize and record its activities. Second, there is the notion that equality is the fundamental principle in the organization’s life: assets must exactly match liabilities (Assets = Equities; Assets = Liabilities + Owners’ Equity). The whole process of measuring, recording, and reporting the transactions of an entity must always end up with this equality.

The social practice of accounting takes the form of ideas and principles that are clearly based on or warranted by this set of central convictions. Any effort to understand the mindset and “social ethics” of accounting as a profession or discipline in itself must recognize the critical significance of its narrative. “Every social ethic involves a narrative, whether it is concerned with the formulation of basic principles of social organization and/or concrete policy alternatives. . . . The form and content of a community is narrative dependent and therefore what counts as ‘social ethics’ is a correlative of the content of that narrative.”15 How does the narrative and ensuing social ethics of the accounting profession (community) relate to the kind of narrative that determines the life of the church as a communion?

We will engage with various dimensions of this narrative from multiple angles as we dynamically formulate a combined theology of accounting and money in every chapter of this book. This book provides students with the basic resources and skills to engage the accounting dimension of ministerial leadership; to enter into the imaginative landscape of church leadership via the portal of accounting.

The Basics of Accounting

Accounting

There are two ways to understand what accounting is. First, you consider it as a history of your church in numbers, figures, and statistics. It is snapshot of the financial status of the church. Second, it is a means of organizing and presenting key information and data of the church in financial terms. Accounting as a photograph or means of reporting on the resources of the organization works by producing financial statements, which help to evaluate the performance of the church and estimate its future prospects.

How Does Accounting Work?

Each transaction is entered into a book or journal. Each is entered twice or has two sides to it, positive and negative. Each entry has its own mirror image. When the entry is positive it is called debit. The negative is called credit. This way of keeping each transaction as two components is called double entry bookkeeping. The debits and credits in the book must be equal and this is what keeps the book balanced.

Before the accountant can record transactions in the ledger or journal the organization needs to make a decision on how to recognize its revenues or expenses. It can account for transactions on the basis of cash or accrual. The organization either focuses on recording when resources are used or gained instead of when cash is finally paid or received for them. Churches can choose to recognize revenues or expenses when cash has been received or expended irrespective of the time of the service. For instance, pledges will not be recognized as cash until actual money is received even if the person making the pledge has an impeccable pledge redemption record. This is what cash accounting means. On the other hand, accrual accounting records revenues when earned and not when received and recognizes expenses when incurred instead of when they are actually paid off. For a church on the cash method, water bill for December 2011 will not be included in the expenses of t...

Table of contents

• Title Page
• Acknowledgments
• Preface
• Introduction: Ministerial Leadership and Accounting
• Chapter 1: Introduction to Basic Accounting
• Chapter 2: What is a Church and Who is a Minister?
• Chapter 3: Key Financial Statements and Indicators
• Chapter 4: Money, Meaning, and Well-Being
• Chapter 5: Budgeting and Pro-Forma Statements
• Chapter 6: Holy Clarity: Transparency and Internal Controls
• Chapter 7: Liabilities, Compliances, and Good Practices
• Chapter 8: The Moral Roots of the Global Financial Industry
• Chapter 9: Theological-Ethical Critique of Accounting
• Chapter 10: A Relational Theology of Money
• Bibliography