1. Meeting with Independent Verifiers
12 November 2016

2. Agenda Timetable Standard form of accounts Verifiers checklist
Taxation issues
Parish taxation
Clergy and layworker tax

3. Timetable
22 days before Vestry – Notice of Vestry to be published and nominations called for Wardens and Councillors. Ideally, financial statements should also be available for inspection by this time and in any event not less than 6 days before Vestry
6 days before Vestry, nominations close and financial statements on notice board
15 March – Last date for Vestry meeting including presentation of verified accounts. (Note that Vestry cannot proceed until accounts have been approved by Vestry)
Within 7 days after Vestry, all documents must be submitted to the Diocesan Office

4. Documents to be submitted to the Diocesan Office
Within one week of Vestry, the following must be submitted (forms available on the website):
Copy of the audited or verified Financial Statements;
Electronic copy (the copy must include all signatures of responsible parties) including taxation return.
Copy of the budget for present year;
Copies of the Churchwarden’s Report and the Rector’s Statement of Needs;
Declaration of those elected as Churchwardens, Alternate Churchwardens, and Parish Councilors.
Return of attendance and communicants.  

5. Standard Form of accounts
Accounts should preferably be submitted in the standard form on the website.
The standard form includes the following tabs:
File names
Instructions for completion
Standard codes Trial balance – all financial information should be loaded here – make sure the opening balances agree to the previous year verified accounts
Standard cover sheet
Wardens report
Independent Verifiers report
Income statement – automatically completed from TB
Balance sheet – automatically completed from TB
Notes
Rental summary
Tax calculation – automatically completed from TB
Checklist

6. Verifiers checklist To be initialed on completion
Section
Description
Checked
Notes
Minute Books
Vestry
Council
Executive
Portfolio Committees
Cash And Bank
Any payments taken from collections must be supported by vouchers
Entries where the above happen have been grossed up
Purchases of large items have been approved by council prior to purchase
Bank statement checked to vouchers (2 signatures) (Matches cheque)
Vouchers checked to bank statement (2 signatures) (Matches cheque)
Files for vouchers
Petty cash - Count
Petty cash vouchers have 2 signatures
Regular monthly payments (Are there 12? Telephone, lights, etc.)
Deposit book rather than loose deposit slips
Deposit checked to bank statement
Deposit in bank statement checked to deposit slip
Receipt book (All cash receipts must have a receipt)
Banking done timeously
Days and times of banking varied for security purposes (but still timeously)
DG / Dues / Tithes / etc. Receipts consistent
Bank reconciliation done regularly (Monthly)
Fixed Assets
Register
Physical asset found in register
Item in register found physically
Insurance values realistic.
Inspect registration papers and current licence disk of all parish vehicles
Inspect lease agreements for office equipment
Ensure that all property transactions of a capital nature have been done in accordance with Diocesan Rules
Include any comments on
errors or non- compliance

7. Taxation issues
All parishes and organisations are taxed as part of the Diocesan PBO.
It is critical that all information is properly completed as failure to do so may result in additional tax being paid by the parish
All commercial income is taxable
Rental of property
Rental of cell phone masts
Trading activities such as tea rooms or jumble shops. Once off activities such as jumble sales are not taxable.
Expenses directly attributable to the income may be deducted in terms of a formula
Expenses may include electricity consumed and other direct costs
The Standard accounts template automatically calculates tax

8. Remuneration and taxation - PAYE
All employees are subject to the deduction of PAYE if their earnings exceed certain thresholds.  
To ensure compliance by the Diocese of its obligations in this regard, the earnings of all clergy and layworkers must be processed through the Diocesan office.  
Earnings include all amounts whether received directly or indirectly by clergy or layworkers.  
This includes special collections for clergy and gifts to clergy by members of the congregation.

9. Examples where tax must be paid by clergy
1.Farewell gifts collected by parishioners for a priest who is moving on
2.Farewell gift given by a parish council to a departing clergy person
3.Something (e.g. a computer or car) that a priest is permitted to acquire at less than market value– the discount is taxable.  (The fact that its value in the books might be nil  or very little is irrelevant– market value is the test.)
4.Easter or Whitsun / Pentecost collections taken by clergy
5.Retirement gifts collected by church entities such as parishes, archdeaconries
6.Welcoming gifts from parishes – example: a particular archdeacon was given R1,000 per parish when he became their archdeacon:  fully taxable
Principle:  Whenever a gift arises because the connection between the giver and the recipient has its origins in the church, the employer of the priest, tax is payable.
If in doubt – ASK!

10. Other remuneration issues
The rules on clergy remuneration are on the website
Specific issues to watch
Clergy must have a written MOU with their parish
Clergy increases are restricted where parishes are in a loss making position or have unauthorised loans from the Diocese
It is not acceptable for clergy to receive both the proceeds of a collection (eg Easter) and a 13th cheque unless the parish is not indebted to the Diocese and are giving at least 10% to the Diocese
Layworkers should all have letters of employment
Watch for staff who should be on pension and medical aid but are not. There may be hidden liabilities

11. Other matters to watch Municipal accounts
Ensure that all liabilities are recorded or include a qualification in the report including the amount outstanding and the period to which it applies
Parish groups (such as fellowships) that are not included in the financial statements
This is not normally permitted and should also be reported upon should it happen
Management accounts
The DFB has requested all parishes to present accounts on a quarterly basis both to their Council and to the Diocese. Please assist parishes in their compliance with this request.

12. Thank you