Financial Governance Task Force (FGTF)

The Board of Deacon’s Updates on the Developments
in the Financial Governance of Calvary Church

While Calvary Church has continuously maintained established practices for financial governance, the Church recognizes that there is always room for improvement. As such, a Financial Governance Task Force (FGTF*) was set up, towards the end of 2008, to further enhance the financial governance of the Church.

Financial Governance encompasses a wide area of work and often involves intensive, time consuming and very detailed analysis. So, it is no surprise that the FGTF had to spend an enormous amount of time to gather information on the current systems, structures and processes of the Church as well as to review and understand the practical and, wherever applicable, the spiritual basis for the framework. The FGTF was also engaged in reviewing the financial provisions under the Church Constitution in order to evaluate the adequacy of the various Church policies, procedures and controls and to identify areas for improvement.

The Lord has given much strength and wisdom to the FGTF in prioritizing the immediate focus areas, and we are pleased to report the improvements that have already been made to-date. Cheque Signatories are in total compliance with the Church Constitution. As agreed at the last AGM in 2008, audited accounts of each Extended Ministry will be presented, together with the regular financial information of the Church and Missions Ministry, at the upcoming AGM. These accounts have been audited with the help of external auditing firms, who have confirmed in their reports that the accounts conform to Malaysian Accounting standards.

Some major structural improvements are in the pipeline particularly in the area of strengthening the Accounts and Finance functions of Calvary Church. This encompasses creating a new Finance Controller position to head up the Accounts and Finance division and the forming of an Audit Committee.

In further elaboration, the Financial Controller’s role is to provide better financial governance in ways such as providing leadership and coordination in financial management and to improve the analysis of accounting information to check for procedural compliance and budgetary stewardship. The Controller will also develop strategic financial strategies and treasury management plans and even assist in recruitment and training of accounting and financial staff.

The Audit Committee, on the other hand, is expected to review periodic financial results to ensure compliance with established accounting standards and regulatory requirements. It will review the External Auditors reports and the adequacy of internal controls with the External Auditors. It will discuss and resolve problems and matters arising from interim and final audits and review all areas of significant financial risk and ensure that arrangements are in place to contain the risks. It will also review the results of the internal audit process or investigations undertaken and make recommendations to resolve any identified issues.

The developments in Financial Governance will naturally lead to the need to work with our other committee by the name of the Church Constitution Review Committee to make amendments to the Church Constitution on Rules or By Laws affected by the enhancements in Financial Governance.

There will, in the second half of 2009, be an effort to develop and finalize policies and guidelines to clarify procedures in areas of “Conflict of Interest”, and “Staff Appraisals and Stipend Reviews”. The next step will be to complete similar efforts for “Cash Collections”, “Procurement” and “Disbursements” by the first half of 2010.

As a body, let us we move forward together to greater management of resources and time for the sake of the Kingdom. His Kingdom is our priority.

*Note: Members of the Financial Governance Task Force

            - Bro. Au Weng Sang                             - Bro. Han Joke Kwang

- Bro. Ding Lai Hong                               - Bro. Lee Tuck Heng

- Bro. Edward Rajasingam                      - Bro. Tam Kok Meng

As confirmed by the Board of Deacons in a recent article in the Calvary Connect newsletter (above), Calvary Church will be recruiting a full-time Financial Controller to lead the Finance and Accounts Division. Below is the Job Specifications for this position that was approved by the Board of Deacons. Calvarites interested in applying for this vacancy can submit their resume to the Secretary of the Board of Deacons.

Concurrently, the Board of Deacons have also approved the Terms of Reference (TOR) for the Audit Committee (see below). It is expected that the first elected members of this Audit Committee will be chosen at the AGM in 2010. In the interim, the Deacons will select suitable candidates from among the members of the Church to play this critical role in relation to financial matters in 2009.

GENERAL
Provide leadership and coordination of church’s financial planning, debt financing, and budget management functions. Ensure that the church’s financial and accounting procedures conform to generally accepted accounting governance and principles.

RESPONSIBILITIES

1. Direct and coordinate church’s financial planning and budget management functions.
2. Recommend benchmarks for measuring the financial and operating performance of departments, ministries, etc.
3. Monitor and analyze monthly operating results against budget.
4. Oversee daily operations of the finance & accounts department.
5. Manage the preparation of the annual financial reports
6. Manage the preparation of financial outlooks and financial forecasts.
7. Prepare financial analysis for decisions.
8. Ensure compliance with regulatory authorities
9. Work with department/ministry heads to develop strategic plans for the church.
10. Work with department/ministry heads to establish and implement short- and long-range departmental financial goals, objectives, policies, and operating procedures.
11. Design, establish, and maintain an organizational structure and staffing to effectively accomplish the finance and account department's goals and objectives.
12. Serve on planning and policy-making committees as required.
13. Serve as primary liaison relative to church’s financial issues.
14. Recruit, train, supervise and evaluate department staff.

KNOWLEDGE AND SKILL REQUIREMENTS

1. Knowledge of following:-
   a)  finance, accounting, budgeting, and cost control principles including generally
        accepted accounting principles.
   b)  computerized financial and accounting reporting systems.
   c)  statutory financial regulations.
2. Ability to analyze financial data and prepare financial reports, statements and projections. Working knowledge of short and long term budgeting and forecasting, rolling budgets, and product-line profitability analysis.
3. Work requires professional written and verbal communication and interpersonal skills. Ability to motivate teams to produce quality materials within tight timeframes and simultaneously manage several projects. Ability to participate in and facilitate group meetings.
4. Person is expected to have a combination of the completion of a Degree in Finance or Accounting plus five to ten years of experience in a senior-level finance or accounting position, and a member of any recognized professional accounting association.
5. Work requires willingness to work a flexible schedule.

1. Composition of Audit Committee (in line with Church Constitution)

The Audit Committee shall consist of 5 members where 2 members will be appointed by the Board of Deacons from amongst their members and 3  members elected by the members of the Church at the Annual General Meeting of the Church. The Board of Deacons shall nominate at least 2 candidates (from the Church’s membership) to each vacancy for election. The elected audit committee members shall not be members of the Board of Deacons, the Board of Trustees, Church Elders or paid employees of the Church.

At least one (1) member of the Audit Committee:

1. must be a member of the Malaysian Institute of Accountants, MIA; or if he is not a member of the MIA, he must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act 1967; or
    

2. fulfils such other requirements as prescribed or approved by Board of Deacons

No alternate member(s) shall be appointed as member(s) of the Audit Committee.

The members of the Audit Committee shall elect a Chairman and a Secretary from among the elected audit committee member.

2. Meetings

The quorum for meeting of the Audit Committee shall be three (3) members of which the majority of members present must be elected Audit Committee Members.

The Audit Committee shall meet not less than four (4) times a year and as many times as the Audit Committee deems necessary with due notice of issues to be discussed.

The presence of external auditors and/or internal auditors at any meeting of the Audit Committee may be requested if required by the Audit Committee.

Other members of the Board of Deacons and officers of the Church may attend the meeting (specific to the relevant meeting) upon the invitation of the Audit Committee.

3. Authority

The Audit Committee shall, in accordance with its Terms of Reference:-:

1. have authority to investigate any matter within the terms of reference;
    

2. have the resources which the Audit Committee requires to perform its duties;
    

3. have full and unrestricted access to any information, which the Audit Committee requires in the course of performing its duties;
    

4. have direct communication channels with the external auditors and persons carrying out the internal audit function, if any;
    

5. be able to obtain independent professional or other advice in the performance of its duties, at the reasonable cost to the Church; and
    

6. be able to convene meetings with the external auditors, internal auditors or both without the attendance of any Deacons and service providers of the Church, whenever deemed necessary. Other Deacons and service providers may attend only at the Audit Committee’s invitation.

4. Duties and Responsibilities

The duties and responsibilities of the Audit Committee are to review the following and report the same to the Board of Deacons:

(i)        Matters relating to External Audit

• To review the nomination of external auditors and the external audit fee and make recommendation for approval by the Board of Deacons;
   

• To discuss with the external auditors, the nature, scope and quality of external audit plans/arrangements;
   

• To review the evaluation of the systems of internal control with the external auditors;
   

• To review  periodic financial results and year end financial statements of the Church, prior to approval by the Board of Deacons, focusing in particular on the going concern assumption, compliance with accounting standards and regulatory requirements, any changes in accounting policies and practices, significant issues and unusual events arising from the audit and major judgement issues;
   

• To review the external auditors’ audit report on the financial statements;
   

• To review any management letter sent by the external auditors to the Church and the management’s response to such letters;
   

• To review any letter of resignation from the external auditors;
   

• To consider and review whether there is reason (supported by grounds) to believe that the Church’s external auditors are not suitable for re-appointment;
   

• To review the assistance given by the Church’s officers and service providers to the external auditors; and
   

• To discuss problems and reservations arising from the interim and final audits and any matters that the external auditors may wish to discuss.

(ii)        Matters relating to Internal Audit function

• To review the effectiveness and competency of the internal audit function;
   

• To review the internal audit programme and results of the internal audit process or investigation undertaken and whether or not appropriate action is taken on the recommendation of the internal audit function;
   

• To review the follow up actions by the management on the weaknesses of internal accounting procedures and controls;
   

• To review all areas of significant financial risk and the arrangements in place to contain those risks to acceptable levels;
   

• To review the assistance and co-operation given by the Church’s officers and service providers to the internal auditors;
   

• To review any appraisal or assessment of the performance of staff of the internal audit function, compliance with accounting standards and regulatory requirements, any changes in accounting policies and practices, significant issues arising from the audit and major judgement issues; and
   

• To review any letter of resignation from internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.

(iii)        Roles and Rights of the Audit Committee

• To consider and review any significant transactions, which are not within the normal course of business and any related party transactions that may arise within the Church;
   

• To carry out any other function that may be mutually agreed upon by the Audit Committee and the Board of Deacons which would be beneficial to the Church and ensure the effective discharge of the Audit Committee’s duties and responsibilities.

(iv)        Tenure of Elected Member of Audit Committee

• The tenure of an elected member of the Audit Committee shall be for a term of two (2) years, subject to a maximum of two consecutive terms.
   

• An elected member of the Audit Committee who wishes to resign should provide written notice to the Church two months in advance so that the Board of deacons may appoint a replacement to complete the remaining term.

1.2. Proposed Action Plans

Church Organization Structure

(Assemblies of God: Theology of Ministry)
 

Assemblies of God’s Organizational  Structure

Most if not all Assemblies of God organizational structure are similar.  The structures are in line with the positions taken by the General Council of the Assemblies of God. The following extracts from the Assemblies of God Positions Papers are useful in explaining the structure of the local assembly:

“ God’s method by which the church of Jesus Christ has moved forward down through the centuries is that God selected a person to the leader (the pastor) and then gave the leaders others (deacons) to serve as support to the leader and as fellow servants to the congregation”

“ The pastor and deacons shall be the official board of the local church”

“ The pastor is the chairperson and a voting member of the church boards”

(The above extract is taken from the Position Paper: Qualifications and Responsibilities of Deacons and Trustees – full version can be viewed as per attached or at the following weblink.

www.ag.org/tp/Beliefs/Position_Papers/pp_4171_deacons.cfm - refer to attachment

“ In making an application of biblical leadership roles to the modern era, we conclude that pastors carry out the functions of elders and overseers in the local congregations.”

(The above extract is taken from the Position Paper: Theology of Ministry – full version can be viewed as per attached or at the following weblink.)

www.ag.org/top/Beliefs/Position_Papers/ - refer to attachment

19th January, 2009

At the Calvary Church EGM on 15^th August, 2008, the Board of Deacons announced that they will be looking at the overall improvements in the financial governance of the Church finances.

2.0  Charter

4.2. Proposed Action Plans

“For we are taking pains to do what is right, not only in the eyes of the Lord but also in the eyes of men.”
2 Corinthians 8:21 (NIV)