2013 audit questions and answers

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2013 audit questions and answers


Post by esogs »

We recently had our Audit committee meeting, and we were able to ask some specific questions about things that come up, here is a Q & A.

Q. With regard to testing the bishops and the question about the bishop or any of his close relatives receiving ward welfare, our stake auditor has said:

A. There has been clarification that any person living in the same house as the bishop also qualifies, even if they aren't an immediate family member.

Q. In item 16 of the audit it says: "Look at the payment records. Make sure the bishop has approved the payments by signing at least one of the following: original invoice, original bill, original receipt, or payment request form. The bishop’s signature on the MLS Expense Report is acceptable proof of his approval."

As an auditor, we have been instructed in the past that the Bishop's signature on the MLS Expense Report is not acceptable proof of his approval, what is the policy?

A. Area auditor has clarified this that it is acceptable proof of his approval for this audit, but that the requirements are changing for 2014. Specifically, for 2014, he emphasized that bishops will either verbally or in writing approve all checks before they are paid. It
isn't enough that the bishop has signed the form, if he didn't explicitly approve, either verbally or in writing, the check prior to payment. This isn't substantively different than what we do today.

Q. In item 16, it refers to testing procedures for IROP charges. If you test an IROP charge, it must either be:
- The finance clerk has printed the IROP and the bishop has signed it OR
- The finance statement is signed, and the Bishop verbally confirms with the auditor when reviewing that charge that he approved the charge.

- Discussion about IROP charges and how they can be charged to the ward without any prior approval of the Bishop. Also discussed how Macey's (Grocery store in Utah) charges also can be charged to the ward without any prior approval of the Bishop. Should these trigger audit exceptions?

A. Area auditor said the Bishop is supposed to pre-approve all expenditures, including IROP charges. We noted that some are initiated by the church, and are $0. Area Auditor emphasized the Bishop should conduct training to all ward members and ward councils that
charges should be pre-approved before being charged to the ward. Some discussion about budget responsibility is given to presidents of auxiliaries of their own budgets, and we agreed that presidents could authorize that a purchase occur, but a Bishop must authorize the payment. In the case of IROP where the charge against the "wards" budget rather than an auxiliary, the member should get pre-approval from the bishop. Stake should give serious consideration to closing the Macey's charges.

- Possibly some additional clarification needed here.

Q. When auditing the welfare forms on question 11, it says "were all filled bishop’s orders reviewed and any significant discrepancies investigated and resolved". In practice, the following are fairly common occurrences. An order is filled out, and the pink copy is kept by the Bishop. The white and canary copies are given to the recipient. However, sometimes the recipient doesn't "fill" the order, they never go in and get the goods or services. Therefore, there is never a yellow copy to audit against, and the "invoice" isn't received
to audit against. Should an auditor "ensure" that the orders all exist numerically for the month of the audit? Should it be an exception if there is a pink copy, but not a canary copy or receipt?

A. Area auditor emphasized that a Bishop should be reviewing his pink copies on a weekly or monthly basis and should have a procedure to account for any missing or unfilled orders. If they don't, this would be an audit exception.

Q. What is the proper procedure for negative balances in the "other" account, and what is the proper way to handle the other account. Some discussion was had that the Bishop should direct funds from one other account be deposited into the other account with the negative balance to bring it to zero. However, we also found in the training, it says the following about the "Other" account

https://www.lds.org/callings/melchizede ... y?lang=eng

funds in the other account are "generally raised or collected to pay for goods or services not covered by budget funds or for which there may not be enough budget funds." "Most" (donations) "pass through the account quickly, although some may accumulate if they are earmarked for a future activity. Funds collected and not used should be returned to the donors. If funds in the “Other” category drop to a negative balance, use budget funds to bring the balance back to zero."


"If members designate money for the "Other" category and the purpose is not stated or does not fit within one of the approved subcategories, a bishopric member should contact the member and either return the money or have the member change the donation to another category."

We asked generally for a clarification on this policy. What does it mean that "Funds collected and not used should be returned to donors"? And, given this requirement, can the Bishop elect to move funds from one other account to another other account, or must the donations be used for the purpose they were intended?

See also question 24. "Are funds in the “Other” category spent for their intended purpose within a reasonable time period?" How would an auditor answer this question if funds were moved from one other account to another other account by a Bishop?

One interesting exception to this is the "Other" ward missionary account. That specifically states:

"Stake presidents and bishops inform missionaries and others who contribute to the ward missionary fund that these contributions, including those that are prepaid, cannot be refunded."

So even if a ward member contributes to a specific elder, and the funds aren't used
to support that Elder, the funds aren't returned to the contributor. I'm not sure why that is, given the prior instruction to return those funds if they weren't used for the purpose the donor intended. Some families have asked for some excess funds returned in the past.

https://www.lds.org/callings/melchizede ... s?lang=eng

A. Area auditor says that the Bishop has full authority to spend those funds or reallocate those funds as needed, so he says it is appropriate to use one other account to pay for a deficit in another other account. Area auditor may provide additional instruction on this, per above questions.

Q. For question 20 it says "Did the bishop and the ward clerk for finances promptly review and sign each month’s Unit Financial Statement?" What is the definition of promptly? We have been instructed in the past that this should be 1 month from the time the finance statement was received. We discussed this, with the question of what was reasonable. Some said 90 days might be reasonable, and Area auditor said he thinks we should have the last one signed before the next one arrives, so roughly 30 days.

A. Generally it was decided that we should "go by the spirit" a little bit on this one, ideally it would be within 30 days, but 34, 40 days might be acceptable, however much longer might not be.

Q. Many wards will create a sub for santa or other christmas pass through fund. Often times one thing they will do is buy "gift" cards, say at the mall or a store, and give the cards to a family member, often a child. In some cases there is concern about giving the card to the parent as it could be misused. Per the instructions on the audit form, "Payments should be made to the providers of goods and services, or where made directly to individuals, the individual needs to submit receipts to show how the funds were spent."

It isn't clear how to handle this with Christmas gift cards. Mostly we've instructed the Bishop's that we've talked to about this that they should try and purchase the gift card in the child's name, and only make it usable at the store they get it from. Then they should deliver it to the person w/two people, usually the bishop and one other person, say the primary or young women's president, and then they should both sign something that says they gave the card. The person purchasing the card should also keep any receipt they have when purchasing the gift card and turn that in for reimbursement.

However, while that covers the purchaser of the card mostly, there are still some "spots" around this. First, there is really no way to verify that the card that was given has the money on it, or the money on it was for the amount specified in the receipt. Second, once the card is given, there is really no way verify it was used in the way intended, as the families or children don't typically don't turn back receipts on what was purchased. Is there any council around auditing gift cards?


Our auditing council has asked that all variances to the "printed" audit instruction be sent out from the area auditor to the stake so we can distribute. This could include:

1. If the Bishop's signature on the MLS form isn't acceptable proof
of payment
2. Definition of family member as being anyone living in the same household
3. Any clarification around IROP approvals process, what it means to
"pre-approve" and IROP expense (more a 2014 question), given 2014 changes
4. Is there any definition of "significant" discrepancy of a welfare
order form?
5. Proper use of the "other" account, what it means to audit if the
funds have been used for the "intended purpose" and if the Bishop can
use the funds for other reasons at his discrepancy.
6. If there is any formal definition of "promptly" for signature of
finance statements
7. What should be done about gift cards for christmas?
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Re: 2013 audit questions and answers


Post by eblood66 »

esogs wrote:One interesting exception to this is the "Other" ward missionary account.
The Ward Missionary category is NOT an "Other" account. It is a top level account, not under the 'Other' top level account. So the policies that apply to authorized member funded activity accounts to not apply to ward missionary accounts.

What the area auditor said makes perfect sense for ward missionary accounts. Those are pure donations to the church and the bishop has authority to use them for any missionary.

However, I don't know why the area auditor says the bishop had authority to transfer funds between Other:AMFA accounts. Those are not considered donations to the church and they must either be used for the intended purpose, returned to member or (if it isn't possible to determine the purpose or member) sent to church headquarters. That's very clearly spelled out in https://www.lds.org/callings/melchizede ... y?lang=eng. An area auditor can clarify these rules but I don't think he can contradict them.

I'm assuming the was really only talking about ward missionary accounts. Deficits in Other:AMFA accounts should be cleared using budget funds once all member payments have been received.
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Re: 2013 audit questions and answers


Post by esogs »

good clarification.

I appreciate the info on the other account usage too, I honestly think that was was mistake, which is why we were seeking clarification on that. The above is helpful.
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Re: 2013 audit questions and answers


Post by B_Seegmiller »

In our stake, we have two Spanish-language units. Does LUCAS and the electronic signature cycle for audits only support English?
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Re: 2013 audit questions and answers


Post by lajackson »

On the LUFAS sign in page, there is a long list of languages. Espanol (Spanish) is one of them. If you select that language and then log in, I do not know how far the Spanish will go, but it starts out that way.
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Re: 2013 audit questions and answers


Post by B_Seegmiller »

(Sorry, mistyped the LUFAS) I ended up having to complete it in English for the Spanish-speaking bishop.
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