When it comes to church finances, being clear, honest, and organized isn’t just good business; it’s a reflection of our faith. Churches are entrusted with money that’s been given sacrificially by members, and it’s important to handle those funds with integrity and transparency. One of the best ways to show that a church is being a good steward is through an audit. But let’s be honest, most people aren’t quite sure what an audit really involves, whether their church needs one, or if there are simpler options that still keep things above board. That’s what this article is here to explore.
In basic terms, a financial audit is when a licensed CPA (Certified Public Accountant) comes in to take an independent look at a church’s financial records. Their job is to give an opinion on whether those records accurately reflect the church’s financial situation. This kind of review follows standard accounting rules (called GAAP) and can help reassure church members, spot weaknesses in financial practices, and meet certain legal requirements.
That said, not all financial reviews are the same, and the word “audit” often gets used too broadly. There are three main types of financial reviews churches might consider. The first is a full audit. This is the most thorough and gives the highest level of assurance. The CPA will dig into the church’s financials, test the records, and issue a formal report. It’s also the most expensive option. Next is a review, which is a bit more relaxed. The CPA asks questions and looks at overall patterns and trends but doesn’t go deep into the records. It’s less expensive and still gives some outside perspective. Lastly, there’s a compilation, which just means putting the financial data into a clean set of statements. There’s no checking or testing, just organizing what is already there. This option is common for smaller churches that just need help getting their numbers in order. This can be done by a CPA or an accountant. A compilation is great but generally comes with no assurances as it is just a gathering of data.
So when should a church consider doing a full audit? While there’s no one-size-fits-all answer, there are some situations where it makes a lot of sense. If your church brings in more than $1 million a year (especially if it has multiple sources of income or a lot of activity), a yearly audit is a smart move. Leadership transitions, like a new pastor or treasurer, are also good times to do a financial checkup. If your church is applying for a loan, running a capital campaign, or trying to secure a grant, an audit may be required. And of course, if members raise concerns or if something seems off, an audit can bring clarity and peace of mind. Some churches even have bylaws that require an audit every year or every few years, so it’s worth checking your church’s governing documents.
Audits aren’t cheap. Depending on the size and complexity of your church, a full audit can cost anywhere from $5,000 to $20,000. That’s a big investment, especially for smaller congregations. Thankfully, there are some practical alternatives. An internal review done by a trusted committee of church members who aren’t involved in day-to-day finances can go a long way in providing accountability. Another option is what’s called an agreed-upon procedures review. That’s where you hire a CPA to look at a specific area, like payroll or designated giving, without doing a full audit. Some churches do a full audit every few years and do simpler reviews or compilations in between. There are plenty of ways to be wise and transparent without breaking the bank.
Whether your church chooses to do a full audit or not, strong financial practices are non- negotiable. One of the biggest safeguards is making sure no one person handles every part of a transaction like receiving, depositing, and recording money. That’s called separation of duties, and it is a key to preventing mistakes or fraud. Monthly financial reports should be shared with church leaders, and summaries should be shared with the congregation to keep everyone informed. It’s also important to have a solid budget process in place, from planning and approval to tracking how things are going during the year. Keep records organized (bank statements, receipts, meeting minutes, donor info, etc.) and be consistent about how things are handled. Most importantly, be transparent. When members know their gifts are being handled well, trust and generosity grow.
Audits aren’t about catching people doing something wrong, they’re about making sure the church is doing things right. They’re one of many tools that help churches show they’re handling God’s money with care. Whether your church is large or small, a church plant or an established church, there’s a level of financial oversight that fits your context. If you’re unsure what’s best, the Arkansas Baptist State Convention’s Business team is here to help.
Faithful stewardship builds trust, strengthens ministry, and honors the Lord. Whether through an audit, a review, or strong internal processes, every church has a responsibility to be wise with the resources God has provided.