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INCORPORATED SYNOD OF THE DIOCESE OF OTTAWA

INCORPORATED SYNOD OF THE DIOCESE OF OTTAWA. PARISH FINANCIAL & FIDUCIARY RESPONSIBILITIES. MANAGING FINANCES IN THE PARISH. What’s in the Manual? Cash management Accounting and bookkeeping Budgeting Reporting finances General information CBRs (Canons, Bylaws & Regulations) Resources

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INCORPORATED SYNOD OF THE DIOCESE OF OTTAWA

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  1. INCORPORATED SYNOD OF THE DIOCESE OF OTTAWA PARISH FINANCIAL & FIDUCIARY RESPONSIBILITIES 2012

  2. MANAGING FINANCES IN THE PARISH What’s in the Manual? Cash management Accounting and bookkeeping Budgeting Reporting finances General information CBRs (Canons, Bylaws & Regulations) Resources Appendices – Diocesan forms, information 2012

  3. INTERNAL CONTROLSREF: Section 1.4, Appendix 8 • Provide assurance to stakeholders that assets are protected from waste, fraud, and theft • Ensure accurate and reliable accounting information for the provision of reports to parish council, vestry, the Synod and Canada Revenue Agency • Avoid situations that could damage the church’s reputation 2012

  4. PRINCIPLES OF INTERNAL CONTROLREF: Section 1.4 and Appendix 8 • Responsibilities should be clearly established • Adequate records should be maintained • Record keeping and custody should be separated • Responsibility for related transactions should be divided • Assets should be insured 2012

  5. INTERNAL CONTROL FOR RECEIPTSREF: Section 1.4 Appendix 8 & Section 2.5 THREE BASIC PRINCIPLES SHOULD ALWAYS BE OBSERVED: • Separation of duties so that the persons handling receipts, having custody, making deposits, and keeping records are different people • All receipts should be deposited intact as soon as possible • All payments should be made by cheque (Only exception is petty cash for small disbursements) 2012

  6. DISBURSEMENTS AND SIGNING AUTHORITY • All cheques are to be prenumbered & should require two authorized signatures • Cheque requisition form with attached invoices provided with cheque for signer’s review and authorization • A person should never authorize or sign a cheque where they are the payee • Never sign a blank cheque 2012

  7. THE AUDITREF: Section 2.3 • All parish accounts must be audited annually (ref: B5.02) • In Ontario, government regulation states that if an auditor is paid for audit services, the auditor must be an appropriately qualified Ontario accountant, licenced to perform audits in Ontario • Does not apply to “pro bono” audits • The auditor’s role (Ref: R.5.06) 2012

  8. PARISH TRUST FUNDSREF: Section 2.4 Funds received and retained in the parish for specific purposes, e.g. • Future major building repairs • Christian education • New outreach project Also relates to flow-through funds, e.g. PWDRF, charities, etc. Ensure that such trust funds are maintained & used solely for the purposes designated 2012

  9. BUDGETSREF: Section 3.1 • Responsibility of the Corporation • Essential tool in the management of parish finances • Includes setting priorities and objectives of the parish • Budgeted amounts should be realistic and achievable • Treasurer plays a key role in providing accurate information about the trends in income and expenditures • Reference CBRs — bylaw 5.05, regulations 5.02 and 5.05 2012

  10. REPORTINGREF: Sections 4.1 to 4.8 Reports required by church and regulatory law: • Financial statements at least quarterly to parish council • Annual audited financial statements to vestry • Diocesan statistical return (March) • Charity information return to CRA (within 6 months of year end) • Reference CBRs — regulations 5.02 and 5.06 2012

  11. REPORTING - BEST PRACTICES • Provide parish council (PC) with a comparative year to date statement of income and expenditures at each PC meeting • Provide PC with quarterly trend analysis over a 3-4 year period for key income categories • Provide PC with projections of current year income/expenditures against budget in October, November 2012

  12. PARISH FAIR SHAREREF: Section 5.1, Appendix 3 • Synod's operating budget is funded from various sources, e.g. • investment income • grants • fees • contributions from all parishes • Contributions from parishes are called "Parish Fair Share" or PFS • PFS takes into account the ability of each parish to pay • When parishes report income at year-end, the figures are reduced by allowable deductions to give an assessable income (AI) • AI for each parish is the basis of the proportional percentage of the total of all parishes' AIs 2012

  13. PARISH FAIR SHARE(PFS) The key components of PFS are: • Assessable income (AI) • Deductions from assessable income • Averaging of last 3 years AI There is a PFS appeals process - Prior to the calculation of PFS, a request can be made to the fair share review committee for a review of major anomalies in income 2012

  14. PARISH FAIR SHARE(PFS) • The PFS calculation is based on the average of the parish's assessable income for the most recent three years • Purpose of averaging is to even out anomalies that create significant swings in some parishes' apportionment figures from one year to the next • Once the PFS percentages are known, the Synod's budget is proportioned out to each parish 2012

  15. PARISH FAIR SHARE(PFS) PARISH’S 3-YEAR NET INCOMEx DIOCESAN BUDGET All parishes’ 3 yr net income = YOUR PARISH’S CONTRIBUTION TO THE DIOCESAN BUDGET 2012

  16. PARISH FAIR SHARE “THE FORMULA” 2012

  17. PARISH FAIR SHARE “THE FORMULA”(cont.) 2012

  18. PARISH FAIR SHARE 2012

  19. SUPPORT GRANTSREF: Section 5.2 • Support Grants • Parishes in financial difficulty • Funded in part from trust fund income & Synod budget • Must apply by November 1st for next year on special form • Applications considered by Financial Affairs committee 2012

  20. ECOPS (REF: Section 5.3)EQUALIZED COST OF PRIESTLY SERVICES Parishes are no longer wholly responsible for the costs of a particular clergy(s), but pay a fair share of a total COPS pool, which is the total cost of all stipendiary clergy in the Diocese (excluding housing) 2012

  21. ECOPSEQUALIZED COST OF PRIESTLY SERVICES ORIGINAL CONCEPTS • To make individual clergy gifts accessible to all parishes • To make COPS proportional to a parish’s ability to pay • To improve on the Equalization Assessment and Grant systems previously used • To create a more stable year-to-year system, allowing for better long-term planning 2012

  22. ECOPSEQUALIZED COST OF PRIESTLY SERVICES With ECOPS the costs of all stipendiary clergy are pooled and then distributed according to the ECOPS Formula = Base COPS + Equalization: • Base COPS = base stipend on stipendiary scale, travel allowance, and benefits (excluding housing); for 2012=$49,081 • Equalization = Equalization Total (i.e. Total COPS minus Total Base COPS) x PFS% 2012

  23. ECOPSEQUALIZED COST OF PRIESTLY SERVICES 2012

  24. ECOPSEQUALIZED COST OF PRIESTLY SERVICES • Implementation is being done gradually over a maximum five-year period • A 2% per year ceiling on ECOPS increases over the implementation period, calculated in addition to the regular annual increase to clergy stipend, travel, and benefits • Equalization Assessments are no longer being charged to parishes = savings • Gives a parish a reduction in Base COPS for the newly ordained assistant curates for 3 years • PFS calculation now exempts the costs of all stipendiary clergy from parish assessable income 2012

  25. PARISH INSURANCE REF: Section 5.4 and Appendix 1(a) DIOCESAN INSURANCE COVERS: • Property and contents (Replacement Value) • General liability ($2 million) - covers all employees including voluntary workers while engaged in activities on behalf of the parish • Umbrella liability ($8 million) • Boiler • Crime • Abuse • Employment practices • Directors & officers • Loss of income 2012

  26. PARISH INSURANCE REF: Section 5.4 and Appendix 1(a) It is important to note that, in order to keep premium costs at an affordable level, deductibles at the parish level are set at $2,500. The Diocese covers deductibles between $2,500 and $25,000 from its Insurance Reserve Fund 2012

  27. 3RD PARTY LIABILITY INSURANCEREF: Section 5.5 and Appendix 1(b) Why 3rd party liability insurance? • Because of facility users’ operations or actions, parishes and the Diocese are open to possible suit from third parties. • This Policy covers legal liability for bodily injury to, or damage to property of, participants and others. • Diocesan insurance does not cover the actions of 3rd parties. • Essential that appropriate insurance be obtained if outside users of parish facilities cannot provide proof of insurance – this can be arranged through the Synod Office 2012

  28. 3RD PARTY LIABILITY INSURANCEREF: Section 5.5 and Appendix 1(b) • When a person or group not associated with your parish is about to rent or use your facilities (indoor or outdoor) for an event that your church is not sponsoring, you ask if they have "third party liability insurance" • If the answer yes, request a copy of their insurance certificate, for your file • If the answer is no, you should provide relevant details in the User Group Program Overview and Rates document www.ottawa.anglican.ca/Insurance_Property_Liability_Other.html • Collect the appropriate premium • Complete the Third Party Liability Insurance Form, requesting basic information about the event • Mail the form and premium cheque to the Synod office 2012

  29. CONSOLIDATED TRUST FUND(CTF) REF: Section 5.9 • Established in 1970 to assist parishes in task of managing & investing sums received in trust, a bequest or a sale of property (usually a rectory) • The Financial Affairs Committee (FAC) responsible for the day-to-day activities of the CTF; its Investment Subcommittee helps meet this responsibility • Each time a parish makes a contribution to the CTF, it is credited with a certain number of units of the fund based on the unit value at the end of the quarter in which the monies are received 2012

  30. CONSOLIDATED TRUST FUND(CTF) • The unit values of the CTF can fluctuate in the short term depending on market circumstances • The "total return" combines the annual change in value of the units as well as the annual dividend received • This reflects the total benefit that the benefit holder has gained by holding units in the CTF • CTF has consistently paid annual dividends even during down markets - enables parishes to rely on a steady flow of income 2012

  31. CONSOLIDATED TRUST FUND(CTF) • A dividend is paid to the unit holder (parish), based on the number of units held in the CTF • The Investment Policy Statement outlines the objectives of the fund as well as specifics regarding its asset mix • This policy guides the money managers in investment of the assets • The portfolio is invested to provide income as well as to preserve the capital for the long term, taking inflation into consideration 2012

  32. CONSOLIDATED TRUST FUNDREF: Section 5.9 Appendix 4 Securities and monies received by way of gifts or bequests are to be deposited to the CTF in trust for the parish Exception: If funds are required within 18 months of receipt, and approvals have been given, then: • Invest locally – GIC, etc. • Avoids possible downswing in CTF value in the short term See CBRs Bylaw 3.21(4) 2012

  33. RECTORY TRUST FUND (RTF) POLICY REF: Section 5.12 • Parish may either withdraw or borrow from its RTF • Withdrawal is not subject to parish fair share (10% contribution to Church Extension Fund instead) • Borrowing – since funds belong to parish there is no interest charged • Application to FAC after approval from vestry • Allowable uses – capital or pay down CEF loans – not for operating expenses 2012

  34. CHURCH EXTENSION FUND LOANSREF: Section 5.13, Appendix 5 • The fund provides loans to parishes • For new buildings • Expansion or renovations of existing buildings • Rates are reasonable & based on current bank rate less up to 3% • Never below 4% or higher than 12% 2012

  35. FAC (Financial Affairs Committee) SUBMISSIONS Parishes must obtain the approval of FAC for: • withdrawing any significant amount from the CTF • undertaking any mid- to large-size capital projects • withholding a gift or bequest • applying for a loan from the CEF • permission to sell properties • approvals of leases • FAC also responds to other specific finance-related requests from parishes • It meets 2nd Wednesday of each month (summer excluded) 2012

  36. FAC (Financial Affairs Committee) SUBMISSIONS Before making a submission, be sure to review the Application Form instructions and the Decision Rights details (Manual, Sections 5.18 & 5.19) Copies of the Application Form and the Decision Rights matrices are shown in Appendix 5(a) & 5(b) 2012

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