The Church Answers Podcast
The Dangers of Your Church Doing Your Bookkeeping and Accounting Internally: An Interview with Steve Chaney
Welcome to the Church Answers Podcast presented by Chaney & Associates. Chaney & Associates are the accounting firm for the church. Now get ready for fast-paced insights on key issues affecting the local church today. We release three episodes each week, so make sure you've seen or heard them all. And now, here's the CEO of Church Answers, Tom Rayner. Okay, you've just heard the nice lady say that this is sponsored by Chaney & Associates. And you've heard the nice lady say that this is the accounting firm. Far the church, and you'll hear that again on the end bumper, but you just heard it on the front bumper. But this is going to be fun because we have the Chaney of Chaney with us today. So we got Steve Chaney, founder CEO of Chaney & Associates with us. Steve, welcome from California. Great to be with you today, Tom. It is going to be great stuff. I got to tell the audience that, for the YouTubers who are looking at us for, those of you who are listening to us on your favorite podcasting out, this guy is one of the most innovative, creative and exciting leaders I have ever been around. And you often think of CPAs and accounting and that kind of stuff. You go, "Ah, not with Steve Chaney. He keeps you going, and boy, I love his ideation." One of the reasons that Church Answers has requested that Chaney & Associates be a ministry business partner with us is because of the mind of Steve Chaney. And if I'm embarrassing you, Steve, I don't care. I absolutely love what you're doing and I love what Chaney & Associates are doing. Well, we love you as well, Tom. Thank you so much. All right, so here's what we want to talk about. We've got really three parts that we want to get to. And for those of you who may be new to the Church Answers podcast, we drop three podcasts a week. They are very quick, counting all the front and the end stuff. It's usually about 10 minutes. And we try to go bang, bang, bang through some issues. And we're going to have Steve Chaney on for all three. All three of them have been downloaded today. So you can listen or view all of them if you're on YouTube. And you need to be paying attention because these are three of the most critical issues that you pastors and others who deal with the bookkeeping, the finances, the money of the Church you need to hear. So don't turn away from this, be ready to listen. Okay, Steve, I'm going to just ask you to do this on each of the three podcasts that we're going to do quickly. Give a little bit of background of Chaney & Associates. I've talked a lot about them on this podcast, but you're founding of it and where you've been and where you are now. Yeah, I live in a Sacramento, California area, specifically Rockland. I started the firm in 2002 and we are a CPA friend that specializes in offering accounting and payroll services to the local Church. Our entire vision is to be the Trusted Ministry advisor and to help churches wisely steward their resources. Well, I cannot tell you how many times I have worked with you and pointed churches to you for so many different reasons. And it's just been an unbelievable help and you're gracious enough to come onto the podcast today where we begin to talk about some of the things that maybe churches should or should not do. And we're going to focus on this. I'm not going to put down bookkeepers in churches. I'm not going to put down any type of internal accounting that is taking place in a congregation. But Steve, I'm going to say this, I have dealt with dozens of churches who will say, "What do I do?" And the problem has been created by someone internally in the Church. It's not always the problem. Understand that this is not a blanket statement of condemnation. But oftentimes the problem is someone within the Church that may not know everything they need to know like a Chaney & Associates. I know you've come across these. I guess you have. We didn't plan this podcast. This is me asking Steve for the first time. For sure. Just tell us without specificity, some of the stories that may be behind this are just the fact that some of the accounts that you have taken over have been those who have been doing it internally. Yeah, for sure. One of the pitfalls to having them, I've got a couple here to share with you, is the idea of just outsourcing something, right? So like a lot of, for example, in a Church, they might have a worship pastor, right? Right. But you don't need to have a full-time keyboardist on staff or a full-time drummer. And you want to have the best. So what they do is they bring those type of people in on maybe a midweek service or a weekend service on Saturday or Sunday to fill in where they don't have good volunteers, right? The same exact thing. So what we found in the last, especially three to four years, especially after COVID, now people are really getting used to outsourcing. And so what is that opportunity for a church and why should they do what we call collaborative stewardship? So our entire intent is not to replace the entire County Department. But it is to work with them and with the Church to add the value. So what are the pitfalls? Sometimes when you're just doing deposits, a person who does the depositing also does the bank reconciliation, also does the check signing, does the, and then they clear all the checks when they come back in. That is right for fraud. We have had this so many times happen and they go, well, how come I didn't catch this? Or why was this person spending the money that way? And I didn't know it. And now, because I'm the pastor, I'm in trouble and the bookkeeper quit and they're off to the races, right? Where did all the money go? And I say to them, like, you just didn't have the segregation of duties in place, meaning you didn't have a second set of eyes looking at certain things. So also, just like that musician, why would you have a person on staff when you can outsource it? Why would a church need to have a CPM staff full-time? Well, they don't. And sometimes they can't even afford it, right? They could never typically afford a person like myself, let alone find a person who would want to do that. But what we do is we bring a CPM level of review and services to bring in those segregation of duties to help offset some of those concerns. And some of those things you can go wrong. Other things that happen that we find all the time, and this is really, let's just say that everything is good, right? Let's just say that you go into a place and a church goes, oh, all of our accounting is right. And everything is reconciled, and we know exactly what's happening, and my people are good. Wonderful. But ultimately, sometimes I'll use a thing like QuickBooks, right? Or something like that. And they usually just, it's not even categorized correctly. And it looks like a P&L, profit and loss, like income in, it expends us out. And all of a sudden, we go into a church and we're saying, wait, did you know you spent all your designated funds? Because the church operating fund is extremely negative, but you have plenty of cash in the bank, right? And that's building fund, that's missions fund, that could be something that the board and the leadership wanted to do with those funds. But the operating fund, which is really funded by all ties and offerings, what I call ministry activity income, like events, things like this, BBS, kids, camp, things of this sort. They get to it and they say, oh, the month of May was incredible, the month of June was incredible. July was horrible, what happened? Well, because you're looking at a one column income statement, and that's all combined funds into one, right? And then all of a sudden, the expenses for all those VBSs and kids camp and mission trips and all that goes out and you're like, wait, we thought we were doing great. Now we spent all the cash, now where do we have the cash set aside to pay for these trips? And we find stuff that you wouldn't believe, churches that are million dollars upside down, even a church that would be 10,000 dollars upside down. The issue still exists, so what we do is we come in and we say, you have to use a fund county system. Now it's not fun, F-U-N-D, it's fund, F-U-N-D, fund accounting. And that fund accounting is determined by how donors or activities or type of income comes into your church. And that's important, that can go sideways like you cannot believe. And then all of a sudden, everybody questions the intent of the pastor and the integrity, like, oh, you're stealing my funds and everything goes crazy. And then the pastor didn't even know, like he's just like, oh, the profit and loss statement looked good, right? Well, it wasn't good. And that's a major pitfall that we see in there. The other thing that happens once in a great while is we see churches that are still not using cloud-based software. They're using it on the desktop. And all of a sudden, bookkeeper gets mad at the pastor and takes off with the computer and won't give it back to the church. We've literally had to send the police department out to the bookkeeper's house to get the computer back, right? There's things that you can do about that that just amazes me. And again, there's no accountability, like myself, we're a CPA firm in the state of California. So I'm answerable to the California Board of Accountancy. That is a regulatory body. If the church had an issue, they can go there and say, hey, we file a complaint. Just like a pastor would answer to a denomination, I answer to an organization. A bookkeeper does not. And I'm, again, not being rude about it. I'm just saying, is there the protections put in place that will protect the integrity of the senior pastor, the leadership of the church, and ultimately the organization itself. Steve, you and I were doing a webinar some time ago. And during the webinars watching the comments come up and I captured one in my mind. It was obviously one of your current clients. And the client said, oh, I'm with Cheney. He said, I used to think I couldn't afford to outsource all the things I do. And I've learned I cannot afford not to. And he was not only talking about safeguards of which you spoke, but he's talking about the efficiencies. Your firm knows the church. That is what you do. That's practically all that you do. And I just, I keep trying to encourage churches. Look at Cheney, look at Cheney because they're the, we say this again and again, the accounting firm for the church. And so when you give these stories about fraud, about a computer that everything's on the hard drive instead of in the cloud where you can capture it at any time. When you tell us these stories, it's just a reminder again and again. This is not something that you need to ask, can we afford it because your prices are very reasonable, but can we afford not to when we're talking about the money within the church. So I love it. Yeah, I love it. We're going to talk about a lot of things and believe it or not, this podcast is already over. I told you it would be quick. We just, we just go through these bite sides. We have been talking to Steve Cheney, Cheney and Associates. Obviously, you see the name there. He is the Cheney of Cheney and Associates. We've been talking about this whole idea of why you need to have someone who knows the church, do your bookkeeping, do your accounting and do your taxes and it is an incredible opportunity for them to come in. So get, go to Cheney and Associates, you can see it in the show notes. That's Cheney Associates.com. We have Steve Cheney on, but listen, if you just got a bite size nugget of listening, Steve Cheney. After this podcast is done, the nice lady talks about Cheney and Associates on the back bumper. Come back, YouTube are your favorite podcasting out and we'll be talking to Steve Cheney this next time. And we're going to talk about some more of these issues that take place and we're going to be talking to him about what we do it. And this next one is something near and dear to my heart. Does your CPA, your bookkeeper or whoever you use really understand churches and ministry finance. We'll talk about that in the next episode. Thank you for being here, Steve. Thanks again, Tom. Appreciate it. All right. We'll see you in the next episode on YouTube on your favorite podcasting out. Give us a rating and review. If you're YouTube, give us a thumbs up or please subscribe there as well. We'll see you on the next episode of the church answers podcast. You have been listening to the church answers podcast presented by Cheney and Associates. Cheney and Associates are the accounting firm for the church. You need to focus on ministry. Cheney will focus on finances. Also, please subscribe and give a review to the church answers podcast on YouTube and on your favorite podcasting app. [MUSIC PLAYING]