financial record keeping in religious organizations: a case study of catholic church ...€¦ ·...
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OZOTAMBGO CHRISTOPHER O. PG/MBA/06/45965
PG/M. Sc/09/51723
FINANCIAL RECORD KEEPING IN RELIGIOUS ORGANIZATIONS: A CASE
STUDY OF CATHOLIC CHURCH IN ENUGU DIOCESE
ACCOUNTANCY
A THESIS SUBMITTED TO THE DEPARTMENT OF ACCOUNTANCY, FACULTY OF
BUSINESS ADMINISTRATION, UNIVERSITY OF NIGERIA ENUGU CAMPUS
Webmaster
Digitally Signed by Webmaster’s Name
DN : CN = Webmaster’s name O= University of Nigeria, Nsukka
OU = Innovation Centre
MARCH, 2009
FINANCIAL RECORD KEEPING IN RELIGIOUS ORGANIZATIONS: A CASE STUDY OF CATHOLIC
CHURCH IN ENUGU DIOCESE
A
PROJECT REPORT
BY
OZOTAMBGO CHRISTOPHER O. PG/MBA/06/45965
IN PARTIAL FULFILMENT FOR THE AWARD OF MASTERS DEGREE IN BUSINESS ADMINISTRATION
(MBA) IN ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY FACULTY OF BUSINESS ADMINISTRATION
UNIVERSITY OF NIGERIA ENUGU CAMPUS.
MARCH, 2009
TITLE PAGE
FINANCIAL RECORD KEEPING IN RELIGIOUS ORGANIZATIONS: A CASE STUDY OF CATHOLIC
CHURCH IN ENUGU DIOCESE
A
PROJECT REPORT
BY
OZOTAMBGO CHRISTOPHER O. PG/MBA/06/45965
DEPARTMENT OF ACCOUNTANCY FACULTY OF BUSINESS ADMINISTRATION
UNIVERSITY OF NIGERIA ENUGU CAMPUS.
MARCH, 2009
CERTIFICATION The work embodied in this project report is original and has not
been submitted in part or in full for any other diploma of this any other
university.
……………………………………….. OZOTAMGBO, CHRISTOPHER O.
PG/MBA/06/45065
This is to certify that OZOTAMGBO, CHRISTOPHER O. a post
graduate student in the Department of Accountancy and with
registration number PG/MBA/06/45065 has satisfactorily completed
the requirements for project research in partial fulfillment of the
requirements for the Award of Masters of Business Administration
(MBA) in Accountancy.
……………………………. …………………………. DR. [MRS.] R.G. OKAFOR DR. [MRS.] R.G. OKAFOR SUPERVISOR HEAD OF DEPARTMENT
DATE……………………… DATE:………………………
DEDICATION
This project is dedicated to all men and women of goodwill.
ACKNOWLEDGEMENTS
To accomplish an academic research of this nature, many
people must have contributed in one way or the other towards the
success. To start with, this project would not have been made
possible without the research and writings of many authors,
researchers and academicians and clerics. Attempts have been
made to recognize them by citing where appropriate the authors
whose work have been helpful to the successful accomplishment of
this project. I feel indebted.
I am particularly grateful to my supervior and HOD of
Accountancy, Dr. Mrs. R.G. Okafor for the able way she has
supervised this write up to its conclusion. I cherish her knack for
thoroughness and objectivity. In fact I enjoyed every bit of my
tutelage under her.
My thanks goes to other lecturers and staff of the Department
of Accountancy, University of Nigeria Enugu Campus for their
contributions collectively and individually in making me who I am.
Thanks to Rev. Fr. Louis S.C. Ndulue, the Parish Priest of St.
Jude’s Parish 9th Mile Corner Ngwo, Enugu, Bro. Chivu Joe
Catechist, Our Lady of Lourdes Imezi Owa and Sir Pius Onyia,
Secretary C.M.O Enugu Diocese Holy Ghost Cathedral Ogui Enugu
and the Vicar General Rev. Fr. Msgr. Onaga, the director (CIDJAP);
Catholic Institute for Development, Justice, Charity and Peace, Rev.
Fr. Msgr. Obiora Ike for their immense contributions.
My thanks also go to my employers – State Universal Basic
Education Board, Enugu and Ezeagu Central LGEA Aguobu Owa for
having tolerated me while combing this programme with my work. I
extend much grace to my colleagues in the Department of
Accountancy – Ogbonna Ogbu, Esom Stanley, Agu Betty, Angela,
Ngozi Obeta and especially Innocent Okonkwo of Department of
Banking and Finance who was also the General class rep for is
enviable contributions. Thanks go to other innumerable friends for
their personal material contributions which I found quiet useful for my
research.
My appreciation goes to the members of my family and
relations for their love and understanding of my position during this
time of work.
Finally, my thanks and supplications go to the Almighty god for
His infinite mercy and kindness.
Ozotamgbo Christopher
March, 2009
ABSTRACT
This research project concerned a study of the financial record
keeping of religious organizations: A Case Study of Catholic
Churches in Enugu Diocese. A sample of sixty-three parishes was
made from the diocese. Investigations were carried on their financial
control used both internally and externally, the accounting system
and financial decisions/reporting adopted. This showed whether there
was an efficient and effective financial record keeping in the church.
Since rth research aimed at investigating existing financial record
keeping or practice the employment of descriptive method of
research was found adequate. The main instruments used for the
collection of primary data were the structured libraries and other
research units served as secondary data. The researcher ensured
that the questionnaire possessed to a large extent the characteristics
necessary and adequate for the purpose of validity and reliability.
Data collected were analyzed and presented with percentages and
tables and hypothesis were tested with the chi-square (X2) statistics
and the following results emerged.
The study revealed that the church keeps proper record of its
accounts and that there is accountability and responsibility, every
member of the finance council has to give account of the money
entrusted to him. It also showed that the church makes yearly budget
before expenses are incurred and that authorization and control of
church expenditure is vested on the management team.
Based on the finds, both short and long term measures were
recommended as ways of enhancing financial record keeping in
religious organizations.
TABLE OF CONTENTS
Title page ……………………………………………………….. i
Certification……………………………………………………… ii
Dedication ………………………………………………………. Iii
Acknowledgement………………………………………………. iv - v
Abstract…………………………………………………………… vi
Table of Contents……………………………………………….. vii
List of Tables……………………………………………………… viii
CHAPTER ONE: INTRODUCTION
1.1 Background of the Problem………………………………. 1-4
1.2 Statement of the Problem…………………………………. 4-5
1.3 Objectives of the Study……………………………………. 5
1.4 Research Questions………………………………………… 5-6
1.5 Statement of the Hypothesis ……………………………… 6
1.6 Scope of the Study ………………………………………… 7
1.7 Limitations of the Study …………………………………… 7-8
1.8 Significance of the Study …………………………………. 8-9
1.9 Definition of Terms …………………………………………. 9-12
References
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 (A) Origin of Catholic Church in Nigeria………………….14-15
(B) The History of Catholic Church in Igbo Land………..15-17
2.2 The Growth of Catholic Church in Enugu Diocese………...17-21
2.3 The Administrative Set Up of the Diocese………………….21-23
2.4 The Diocesan Financial Management Procedures……..…24-28
2.5 The Concepts of Financial Record Keeping/Evolution
of Record Keeping…………………………………………….29-31
2.6 The Nature and Characteristics of Financial System
of Non-Profit Organizations…………………………………..31-36
2.7 The Church Accounting Manaual……………………………37-41
2.8 Financial Decision Making Procedures in
Religious Organizations……………………………..………..42-51
2.9 Financial Control: Internal and External…………………….48-51
2.10 Financial Reporting and Accounting Records in Catholic
Organizations………………………………………………….52-59
References…………………………………………………….60-61
CHAPTER THREE : RESEARCH METHODOLOGY AND DESIGN
3.0 Introduction……………………………………………………..62
3.1 Sources of Data………………………………………………..62-63
3.2 Data Collection Method………………………………….……63-64
3.3 Population and Sample Size………………………………....64-65
3.4 Method of Data Analysis………………………………………..66
3.5 Re-statement of Hypotheses…………………………..…….66-67
3.6 Statistical Method of Data Analysis………………………….67-68
References……………………………………………………..69
CHAPTER FOUR: ANALYSIS OF RESEARCH RESULTS
4.1 Presentation and Analysis of Data………………………………70
4.2 Analysis of Questionnaire……………………………………...…71
4.2.1 Parishes Returns to the Dioceses……………………………….71
4.2.2 How the Church Keeps its Money……………………………….72
LISTS OF TABLES
2.0.1.1 Diagram of Financial Function……………………………...46
4.2.1.1 Parishes Returns to the Diocese……………………………71
4.2.1.2 How the Church Keeps Its Money…………………………...72
4.2.1.3 People that forms Signatory to Church’s Account………….74
4.2.1.4 Authorization of Church’s Expenditure…………………..….75
4.2.1.5 Method Used as Good Financial Management………….....76
4.2.1.6 How the Church’s Fund are Accounted for……………...….77
4.2.1.7 Maintenance of Proper Books of Accounts……………...….78
4.2.1.8 Types of Accounting System in Use………………………...79
4.2.1.9 Preparation of Budget…………...…………………………….79
4.2.10 Audited Account……………………………………………….80
4.2.11 Observing Church Accounting Manual……………...………81
4.3.1 Contingency Table on Proper Record Keeping as
Financial Control………………………………………………82
4.3.2 Contingency Table on Budgetary System as a Financial
Management Strategy………………………………………..83
4.3.3 Contingency Table for Testing Hypothesis 3 ………….......89
4.3.4 Contingency Table for Testing Hypothesis 4……………….91
4.2.3 People that Form Signatory to Church’s Bank
Account…………………………………………………….73-74
4.2.4 Authorization of Church’s Expenditure………………….74-75
4.2.5 Method Used as Good Financial Management……...…75-76
4.2.6 How The Church’s Funds are Accounted for…………...76-77
4.2.7 Maintenance of Proper Books of Accounts…………..…77-78
4.2.8 Types of Accounting System in Use……………………..78-79
4.2.9 Preparation of Budget………………………………………..79
4.2.10 Audited Accounts………………………………………………80
4.2.11 Observing Church Accounting Manual………………….80-81
4.3 Testing of Hypothesis……………………………………….81
4.3.1 Hypothesis I ………………………………………………81-83
4.3.2 Hypothesis II………………………………………………83-88
4.3.3 Hypothesis III……………………………………………...89-90
4.3.4 Hypothesis IV……………………………………………...90-92
CHAPTER FIVE: SUMMARY, RECOMMENDATIONS AND
CONCLUSION
5.1 Summary of Major Findings……………………………...93-98
5.2 Other Findings……………………………………………98-100
5.3 Recommendations….………………………………….100-101
5.4 Conclusion…………..………………………………….101-102
Bibliography…………………………………………….103-104
Appendix C…………………………………………………105
Questionnaire………………………………………..…106-110
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Every organization both business and non-business requires
and uses finance for its various activities. The business organizations
are set up primarily for profit making like banks, companies and other
related ventures while the religious organizations are not meant for
profit making but for rendering services and winning souls to God.
Religious organizations can come from inform of Christianity, Islam,
Buddhism, Hinduism and other religious sectors of organizations. The
religious organization of interest is Christian religion and indeed
Catholic Church.
Since finance is very vital for the welfare and growth of these
organizations, its administration has to be well accorded financial
records keeping. Finance at the macro level is the study of financial
planning, assets management and fundraising for business, while
macro is te study of finance institution and finance market and how
they operate within financial system (Anyafo, 2000:3). In view of
Emekekwue (1993:1), finance is primarily concerned with money and
momentary matters. In general, finance can be taken as a body of
principles and theories dealing with raiding, investing, managing and
employing funds by individual and organizations in private and public
sectors (Oye: 2002:7).
According to Osisioma (1996:63), a system is a complete array
of an ordered arrangement of interdependent elements, with a
common goal, related by a network of relationships. Such a system
has input process-output component, and it is in itself an information
system.
Financial systems are subsystems in a business organization
whose responsibility is to ensure that business transactions are
recorded in proper books of account on the basis of recognized
accounting practice, analyzed, interpreted and presented to the users
of accounting information (Ubesie, 1998:97). He further stressed that
financial system consists of financial intermediaries, financial market,
financial instruments, rules and norms that facilitate and regulate the
flow of funds through the macro economy.
In essence, Catholic Church as one of the religious
organizations is not meant for profit making but for bringing souls to
Christ. The church requires fund to administer its affairs and to carry
out its daily religious obligations. The funds are not necessarily
adequate to meet up to its numerous demands, though there are
various sources of generating income. It is then necessary to
determine the financial income being used by the churches whether
there are proper record keeping, the financial decisions and reporting
made and the accounting system or procedure adopted. There arises
the need for the church to keep track of its financial operations, this
helps form an adage for it to control its income against its
expenditure. Thus, a house built on a solid foundation remains a
strong house but that whose foundation is shaky can crumble at any
time. In the same way, a good financial background of a church can
be said to be the foundation on which the church is built.
Therefore, the importance of finance, its adequacy to the
church and how these are managed and controlled has led to the
topic of the study financial record-keeping of religious organizations,
a case study of Catholic Church in Enugu Diocese.
1.2 STATEMENT OF THE PROBLEM
Many religious organizations are now being faced with the
problem of finance, the inadequacy of funds to carry outs their
religious rites. Catholic churches are not an exception as most of the
churches are incapacitated in terms of fund, yet there are several
sources of finance but the church seems not to meet up its financial
demand. For good financial records, there must be a well developed
financial decision and reporting procedures and financial control
being used or operated.
It is based on this, that the researcher topic is chosen to asses
the financial record keeping of religious organizations taken into
consideration, Catholic Church in Enugu Diocese so as to know how
the church manages and controls its fund and to suggest ways they
can be improved for a better result.
1.3 OBJECTIVES OF THE STUDY
The main purpose of this research work is to determine the
financial record keeping in use for Catholic Churches in Enugu
Diocese and appropriateness of the financial management and
control. The research work will attempt to provide an in-depth
information on the financial record-keeping of religious organizations
of the Catholic Churches in Enugu Diocese. Specifically, the study is
intended to find the followings:
1. Whether there is effective financial control or not.
2. To know the financial decision making procedure and who
takes the responsibility.
3. To find the financial reporting and accounting records being
used by the Catholic Churches in Enugu Diocese.
1.4 RESEARCH QUESTIONS
In the course of solving the problem of insufficient fund for the
churches, the following questions arose:
1. How are the accounting procedures being used?
2. Are proper accounting records being kept?
3. Is the church observing any accounting manual?
4. Who are responsible for taking financial decisions and plans?
1.5 STATEMENT OF HYPOTHESES
The researcher formulated the following hypotheses:
Hi: There is a significant relationship between the proper financial
records and accounting records of the catholic churches as a
means of controlling expenditure.
H2: Budgetary accounting records are effective management
strategy.
H3: The Catholic Church accounting records keeping is in
conformity with the Diocesan Accounting Manual.
H4: Authorization and control of Catholic Church expenditure are
vested on the church management team.
1.6 SCOPE OF THE STUDY
Any analysis of the appropriateness of financial management
and control and how the funds are being administered and its
adequacy to the individual churches form the basis for research work.
However, the scope of inquiry for this study is based on the
Catholic Diocese of Enugu and some selected parishes like St. Jude
Jude’s Catholic Church Parish 9th Mile Corner, Ngwo and Our Lady of
Lourdes, Imezi Owa for the analysis. The reason being that Catholic
Churches are the same everywhere and indeed in all the parishes
and they also follow the same doctrine and system of operation,
therefore covering all the parishes will be a waste of time and will
make no difference.
1.7 LIMITATIONS OF THE STUDY
One of the limitations of this study is the transportation cost
incurred in visiting the Dioceses, as most times, the priest or the
financial administrators of the dioceses were met absent, therefore,
the researcher has to repeat the visit so as to get the information
required.
Also, much time were wasted in the process of collecting the
necessary data for the study as those responsible to divulge the
information were so reluctant, therefore the researcher/writer waited
for some information that could be gotten concerning the study.
Those times wasted in waiting for the collection of data would have
been used by the researcher to meet up or acquire knowledge on the
study in view or related study.
Besides, the greatest limitation to the study has been the
inability to collect data for the study. Apart from having no related
work done on the topic, the researcher could not easily get the
information for the study. Though, some of the data were gotten later,
the researcher did not find it easy, but managed to get small data for
the analysis.
1.8 SIGNIFICANCE OF THE STUDY
The study is set out to determine the ”financial records keeping
of religious organizations”: A Case Study of Catholic Churches in
Enugu Diocese. It shows at a glance and most importantly, the
overview of the financial records, the financial control, the accounting
system and procedure and indeed financial decision and reporting of
the catholic churches. There is no doubt that the study will benefit not
only the Catholics but also other Christians and other religious
organizations to borrow a leaf from the church so as to maintain a
sound financial system in their various religious groups. Also, the
study will help to remove the misconception from the minds of some
people that church leaders spend church’s fund anyhow. Also, the
analysis and recommendations on this study will go a long way to
alleviate this.
In essences, the study will be beneficial to students of finance
and accounting so as to enlighten them more on finance and
accounting system of religious organizations. It will also serve as a
reference point for further studies.
1.9 DEFINITION OF TERMS
1. FINANCE: A body of principles and theories dealing with
raising, investing, managing and employing funds by individuals
and organizations in the private and public sectors. Financial
managers can take three main decisions; finance, investing and
dividend decisions.
2. FUNDS: This is regarded as cash or its equivalent, example
cheques, drafts, money orders, etc. The term may be used to
include securities which have a ready market and can be
quickly liquated.
3. FINANCE COMMITTEE: This is an association where those
involved or are specialized in finance shall have power to
supervise the financial affairs of the corporation or organization
and shall report to the board from time to time whenever it shall
be called upon to do so.
4. APOSTOLIC SEE: This sometimes was a see ruled by one
of the apostles but now it refers for Rome, the city of the Pope,
which her rules as Bishop of the Diocese of Rome. This term
also applies to governing bodies of the church with official
governing bodies in the Vatican, the branch of the Roman Curia
which cut only under the authority of the Pope.
5. ECCLESTICAL: This adjective simply means ”of pertaining to
the church” thus, there are ecclestical courts, calendars,
honours, laws (of Canon Law) jurisdiction, studies and others. It
is derived from the Greek word “ecclesia”
6. TEMPORAL GOODS: This are created materials and extended
to creatures and possession that can acquire such as money,
precious items. Temporal goods are used only for those
purposes to the teaching of Christ the Lord.
7. JURIDICAL PERSONS: This is the public power granted by
Christ or by His Church Canonical Mission of favoring the
baptized. This power is referred to that belonging to the church
as a perfect society, whereby the church affects a rule for the
spiritual goods of its members. In matters referring to salvation,
it is the right of a person or agency, to pass or apply a given law
in a specific situation.
8. PRESCRIPTS: This is a written reply of a religious supervisor
to a request report or question. In the make of it, it repeats the
request and facts together with the reasons and then offers the
answers with the conditions. It is the usual form through which
dispensation are granted or derived.
10. CLERGY: Any clerical person but not reverend sisters.
11. DIOCESAN BISHOP: Bishop of the Diocese is different from
Monks and Abbot e.g. M.U Eneje.
12. EPISCOPAL CONFERENCE: Conference of the Popes.
13. MENDICANT RELIGIONS: Religions that live on begging.
REFERENCES
Emekekwue; P.E (1993), Principles of Public Finance, Kinshasa-
Zaire, African Bureau of Educational Sciences Special Agency of the Organization of African Unity, P.1
Melicher, and Welshans (1986), Finance: Introduction to Markets, Institutions and Management, 8th Edition, Ohio, South West Publishing Company.
Osisioma, B.C. (1996), Studies in Accountancy: Text and Reading,
Enugu, Acene Publishers Limited, P.63.
Oye, A. (2002), Financial Management, Papa Ajao Mushin Lagos, EL-Toda Ventures Limited, P.7
The New Catholic Encyclopedia (1967), The Catholic University of America Washington D.C, Printed in America, P.64
Ubesie, M.C (1998), Advanced Financial Accounting, Enugu, Computer Edge Publishers, P. 97
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 BACKGROUND OF THE STUDY
A. ORIGIN OF CATHOLIC CHURCH IN NIGERIA
The Roman Catholic Mission came to Nigeria via Dahomey
(presently the Federal Republic of Benin), the Italian Roman Catholic
Father Borghero stationed at Whydah in Dahomey. In 1860 he visited
Abeokuta and Lagos, the freed slaves from Brazil had settled in
Lagos and were mostly Roman Catholic, Father Borghero landed in
Lagos in 1862 and was surprised at the number of Brazilians who at
some time in their history had been baptized in the Roman Catholic
Church. At this time, it was impossible to make Lagos autonomous as
a mission station with resident priest; thus Lagos was treated as an
out station of Whydah in Dahomey. Hence, with in ten years of Father
Borghero’s visit to Nigeria, the Roman Catholic Church in Nigeria had
become so well established that it was separated from the Roman
Catholic Church in Dahomey.
However, in 1868, Father Pierre Bouche arrived as the first
resident priest of this mission in Nigeria. A Chapel was built and in
1869, two Irish brothers started a school in Lagos. From these
beginning, the Roman Catholic Church in Nigeria was spread and by
1885, this chuch had gone further inland, thanks to Father Lutz who
worked around Onitsha. Another missionary important in the spread
of Catholic Church in Nigeria was Bishop Shanahan from Ireland.
B. THE HISTORY OF CATHOLIC CHURCH IN IGBO LAND.
The first Catholic Missionaries came to Eastern Nigeria in 1885
with Holy Trinity Onitsha as centre; these French Holy Ghost
Missionaries spread the faith to Nsugbe, Aguleri, Nkwelle, Ossamari
and Igbariam. They defied all hardships and continued the push into
th hinterland, sowing more seeds of faith in Christ among the peoples
of Eastern Nigeria. The pioneers were Father Lutz, Horne, Buben
Dorf, Lejeune and Brother Herman Lean Sotto and David. Indeed,
the problems and difficulties faced by the pioneer missionaries were
almost insurmountable. At that time, the first missionaries landed at
Onitsha in November 1885, there were only few Igbo men who could
speak and understand English, so communication problem posed a
major obstacle between the early missionaries and their hosts who
were given frontal attack by the establishment of schools where the
peole studied how to read and write and the products of these
schools became interpreters for the missionaries. The interpreters
became teachers and Catechists, and it was only after the civilian war
85 years after the advent of Catholic Missionaries that the roles of
interpreters phased out as indigenous clergy came on the scene to
take over from expatriate mentors.
Other problems were the double standards of some Catholics
who though baptized and even received the Holy Communion yet
indulged in pagan rituals like Odo, Omobe, Ibuno etc. There were
also neo-paganism which as the most common among the so called
elites who think that by reverting to pagan practices and idol worship,
they were preserving their culture. However, the missionaries
preached against traditional worship, burial ceremonies, title taking,
oracular consultations, polygamy, killing of twins, masquerading,
native dancing and even body painting with idigo and clam-wood.
Again, there were serious rivalries between the missionary bodies
and Protestants and that of Catholics over who could convert more
followers and thus generate influence. Though there were no bloody
clashes but the rivalry almost took the form of struggles to acquire
more lands for mission, to establish schools and to organize more
social Christian activities.
2.2 THE GROWTH OF CATHOLIC CHURCH IN ENUGU
DIOCESE
It was on November 21, 1962 that Enugu was declared a
diocese by His Holiness, Pope John XXIII and John Cross Anyogu
was appointed its first bishop of Enugu Diocese on January 15, 1963,
before this, the coming of Catholicism was thoroughly prepared for in
Enugu area even before the actual coming of Christian missionaries.
The people spontaneous hospitality, the irreversible process of
communication in consciousness in every community, the over
simplicity and in humility of the normal man of the area and their
transparent openness to truth are few of the wonderful work of the
Word of God written in the hearts of men. A witness was noted to this
century in making world know that “zoning system” initiated by Iva-
Valley in 1956 by the Parish Priest, Father Michael Eneje has
become one of the most effective modern evangelization strategies
for reaching every person and getting all Catholics committed to true
Christians in Igbo land.
Moreso, the growth and the future of the church especially the
second century Christianity in Enugu diocese has a very solid
foundation in that its youths is a group of committed enthusiastic and
selfless Christians. This dedication became very apparent during the
visit of Pope Paul II in Nigeria in 1982. The youths worked so hard to
prepare the Enugu Airport that the Pope was compelled to change his
protocol in order to show appreciation for the marvelous arrangement
made in the airport by the diocese and indeed the whole Nigerians
prepared so much for the coming of the Pope for the second time in
Nigeria. The coming of Pope John Paul II the second time in Nigeria
was the beatification of Rev. Father Michael Cyprian Iwene Tansi at
Oba in Anambra State on 21st of March 1998. The visit was so
wonderful and Enugu Diocese prepared in a special way for the visit.
However, the theology of incarnation is so favorite theme of the
diocese and the Catholics of the diocese having a saying that the
church is never a tenant in any part of the world but rather a landlord.
We can say that Jesus Christ is actually structurally incarnated in the
diocese when we think of the numerous ecclesiastical establishment
such as Sacred Heart Seminary Nsude, St. John’s Cross Seminary
Nsukka, Novitiates Missionaries, The Institute of Ecumenical
Educational Thinkers Corner, Leadership Training Camp Awhum,
The Spiritual House of Philosophy at Isienu, the theological faculty of
Bigard Mermorial Seminary Enugu and the Pastoral Centre, Ugwu di
nso at Eke in Udi Local Government Area.
Indeed, the diocese was the first catholic diocese in Nigeria to
organize and hold a synod and from the synod diocese; one can see
the far-reaching theological decisions of the diocese which now
paves the way to a smooth flow over into the theological life of the
second century, making solid foundation for the future of Christianity
in Igbo land.
In its administrative affairs, the diocese has witness changes in
the appointment of its Bishop (Babalola, 1976:67). As at November
12, 1962, when Enugu was made a diocese by His Holiness Pope
John XXIII, John Cross Anyogu was appointed its first Bishop on
January 15th 1963 after the death of Bishop Anyogu, no new bishop
was immediately elected or appointed, instead the administration of
the diocese was left in the hands of a vicar general in the person of
Monsignor S.N Ezeanya – a position he occupied till 1971, His
Holiness Pope Paul VI of Blessed Memory transferred Rt. Rev. Dr.
Godfrey Mary Paul Okoye, C.S.S.P, former Bishop of Port Harcourt to
Enugu Diocese. He took possession of the see canonically on 17th of
March 1971 with the death of Bishop Godfrey Mary Paul Okoye, the
seat of the bishop was vacant. It was Rt. Rev. Michael .U.
Eneje who succeeded the late Bishop Okoye and now former Bishop
of Isele-UKu diocese has been transferred to Enugu as the new
bishop of Enugu Diocese Rt. Rev. Dr. Anthony Okonkwo Gbuji to
administer its affairs.
2.3 THE ADMINISTRATIVE SET UP OF THE DIOCESE
According to Eneasota (1985:35) that Catholic Church has an
inherent right, independently of any secular power to acquire, retain,
administer alienate temporal goods in pursuit of its proper objectives.
These proper objectives are principally the regulation of divine
worship, the provision of fitting support for the works of the sacred
apostolate and charity especially the needy. According to Code of
Cannon Law (1967:135), the universal church and other public and
private juridical persons are capable of acquiring, retaining,
administering ands alienating temporal goods in accordance with the
law under the supreme authority of the Roman Pontiff, ownership of
goods belong to that juridical person which has lawfully acquired
them.
In every diocese, there is to be a special fund which collects
offerings and temporal goods for the purpose of providing in
accordance with CAN 281, for the support of the clergy who serve the
diocese, unless otherwise catered for where there is yet no properly
organized system of social provision for the clergy, the Episcopal
conference is to see that a fund is established which will furnish
adequate social security for them. To the extent that it is required, a
common reserve is to be established in every diocese by which the
Bishop is enabled to fulfill his obligations towards other persons who
serve the church and to meet various needs of the diocese this can
also be the means by which wealthier dioceses may help poor ones.
In carrying out acts of administration which in the light of the
financial situation of the diocese, are major importance, the diocese
Bishop must consult the finance committee and the college of
consulters. For acts of extraordinary administration, except in cases
expressly provided for in the universal law or stated in the documents
of foundations, the diocesan bishop needs the consent of committee
and of the college of consulters. It is for the Episcopal conference to
determine what are to be regarded as acts of extraordinary
administration.
The administration of ecclesiastical goods pertains to the zone
with the direct power of governance over the person to whom the
gods belong, unless particular law or statutes or legitimate customer
state, otherwise and without prejudice to the right of the ordinary to
intervene where there is negligence on the part of administrators.
Where no administrators are appointed for a public juridical
person by law or by documents of foundations or by its own statutes
the ordinary to which it is subject to appoint suitable persons as
administrator for a three year term. The same persons can be re-
appointed by the ordinary. Every juridical person is to have its finance
committee or at least two counselors, who are to assist in the
performance of the administrator duties, in accordance with the
statutes.
2.4 THE DIOCESAN FINANCIAL MANAGEMENT PROCEDURES
Management is the process of converting information into
action (Olademeji, 1985:25). Effective internal control should be part
of the management function for an organization to be run as effective
as and efficient at the same time. The responsibilities of the finance
manager fall into three broad areas, provision, allocation and control
of financial resources to enable the organization to achieve its
objectives. Having secured the necessary financial resources
whether raised from internally generated sources or from external
sources, the financial manager needs to ensure that the fund are
allocated to their most efficient and productive uses.
Consequently, to ensure a proper and correct administration of
temporal diocesan ordinaries (or their equivalents) there should be
established, financial committee or council as presented by Cannons
(492-494). These committees or councils are to fulfill their task with
the greatest possible transparency and responsibility and that they
send to the Holy See annually detailed and precise report, concerning
the subsidies received from agencies of organizations and the
manner they are to be utilized.
The administrators of the church are to render financial account
annually to the diocesan ordinary and also to the faithful of the use
that has been made of the goods which they have offered to the
church in accordance with the norms established by particular law.
More so, the Parish Finance Council and Parish Pastoral
Council are responsible for the financial management of the church.
With the establishment of parish finance council in the diocese in
compliance with Canon 537, it states that each parish is to have
financial council as follows:
- Parish Finance Council is therefore obligatory in all parishes
irrespective of the size and value of the temporal goods they
possess.
- It prepares budgets of anticipated income and expenditure for
the forthcoming financial year which shall be submitted to the
diocesan Bishop before 31st October, of the proceeding year. A
budget system is planning for the futures even parishes with
meager can reduce finance of the church with the budget, the
parish budgeted estimate must be presented by the parish
finance council in joint meeting of the two for discussion and
approval. The two bodies should in this joint meeting draw a
proper parish policy guidelines to guide the Parish Finance
Council in the preparation of the current budget committees in
conformity with the diocesan outlines and directives.
- It prepares the annual financial report which shall be submitted
to the diocesan bishop. The annual financial reports consist of
(a) income and expenditure account (b) receipts and payment
account (c) balance sheet of the parish and all parish projects.
- It maintains proper books of accounts of all receipts and
payment, assets and liabilities of the parish and all the parish
projects.
- It advises an appropriate investment of some money not
immediately needed avoiding recklessness in such investment.
- It maintains parish fixed assets register to include all parish
properties.
- It helps the parish to observe the social doctrines of the church
regarding labour relations and social security of personnel
employed in the parish (like the catechist, the cook, watchman,
washer man and gardener etc.
- It reconciles parish bank accounts quarterly.
- The number of the parish finance council may on invitation
assist the parish priest in the maintenance of accounts, cash
and bank books, preparation of payment voucher or petty cash
and 6 months bank reconciliation statement.
- It organizes the collection of accounting, banking and recording
of all collection other than collection on account B.
- It monitors the budget and reviews its performance and takes
immediate remedial actions to forestall any unfavourable
deviation from approved budget plan.
- it sanctions the preparation of supplementary estimates for
expenditure above amount already approved in the budget and
obtains the approval of the parish pastoral council and parish
finance council before any expenditure budget.
However, the congregation to evangelization of peoples in
Rome has instructed the entire diocese to comply to Cannon law in
respect of:
- Proper administration and safe guarding of eccelestical goods
(Cannon 1277, 1284 etc).
- Offering the ecclesial community and guarantee of
transparency and of the faithful administration of church goods
(Cannon 1287B).
- Preparation of Audited Financial Report to the diocesan
ordinary thence to the Holy See.
Rendering an account to the faithful of the goods which they
have offered to the church in accordance with the establishment of
parish by particular law.
2.5 THE CONCEPT OF FINANCIAL RECORD-
KEEPING/EVOLUTION OF RECORD KEEPING
The origin of recording according to Okafor et al (1996:1) can
be traced back to ancient civilization in Babylon, Egypt, Rome and
Greece. Early Babylonians had begun by 4500BC, to levy and collect
taxes and records the receipts and disbursements. The development
of “papyrus” and “calamus” as paper and pen respectively by early
Egyptians is a great impetus to record keeping.
Before the advent of writing, man could talk and could express
himself in drawing but he could not write. Therefore, record keeping
could be dated back to about 300BC with the discovery of
“hieroglyphics and cuneiform” writing by early Egyptians and
Babylonians respectively. The introduction of the decimal system by
the Arabs as early as 850AD greatly enhanced the development of
recording keeping.
The emergency of money as a medium of exchange has
provided impetus for development of accounting and record keeping
(Okafor, 1996:1). It becomes necessary to record business events on
monetary aspect rather than on physical quantities. Moreover, the
industrial revolution of 18th century which brought about ample growth
in the world trades and industry provided an important stimulus to
accounting and record keeping.
The businesses have been on continuous growth and
expansion, resulting in increased need for information through proper
recording. Before this era, businesses were on small scale and
individual proprietors were so personally involved in the business tat
the need for information was less required. The industrial revolution
was in effect the basis of the modern business enterprises ranging
from partnership to joint stock companies. In view of Okpe (1998:1),
described business organization as the vehicle for mobilization of
funds and human resources”. He further stressed that it involves the
principle of stewardship or accountability which marks a step further
in the development of accounting and record-keeping.
There is great need for effective and efficient communication
network between the enterprises and the interested parties especially
for showing how the resources are utilized.
In the opinion of Okpe, (1998:1), he stressed that of the man or
an entity just going into business, experience has clearly indicated
that an adequate record keeping system helps to increase the
chances of survival and reduces probability of early failure. Similarly,
for established industrialist, it has been clearly demonstrated that a
good record keeping system increases his chances of staying in
business and or earning desirable profits.
Record-keeping can help owner managers of small enterprises
keeping their business on a sound basis.
2.6 THE NATURE AND CHARACTERISTICS OF FINANCIAL
SYSTEM OF NON-PROFIT ORGANIZATIONS
The non-profit making organizations are established mainly to
render services and not to make profits (Freeman, 1988:14) the
objectives of most non profit organizations are to provide as many
goods or as much service each year as their financial and other
resources permit. They typically operate on a year-to-year basis,
raising as much financial resources as possible and expending them
in serving their constituency. The non-profit organizations include a
wide variety of organizations in the present social and economic
environment. They include government units – Federal, State and
other educational institutions, hospitals and health care organizations,
voluntary association, research organizations, foundation and other
social and cultural organizations.
According to Freeman (1988:16), he observed that financial
management of a non-profit organization typically focuses on
“acquiring and using financial resources upon sources and uses of
working capital, budget status and cash flow rather than on net
income or earning per share”. There is no profit motive and there is
no individual share holders to whom dividends are paid.
In essence, businesses are organized for profit, the church for
Christian services. Again businesses may be re-organized, sold or
liquidated, churches are difficult to re-organize or liquate and their
properties are rarely considered as cash assets. The use of funds is
restricted when given by donor for specific purpose. In other words,
some assets are restricted for a particular purpose like in a club, the
members may be assessed for certain capital improvements such as
the construction of a swimming pool, the proceeds from the
assessment will be set in a restricted fund to be used only for that
particular purpose.
In view of James et al (1976:24) in their handbook titled “The
Modern Accountant Handbook” the measurement of the benefits
resulting from sacrifices of the non-profit organizations are much ore
difficult since the attainment of goals can be measured only in term of
“performance” to compare to that of commercial enterprises which
can be measured as net income. The commercial organizations do
have the responsibilities to report on the stewardship of their
resources, the emphasis of their accountability is on the utilization of
the resources to earn a profit. But in non-profit organization, the
emphasis is placed on accountability and stewardship.
It is important to understand that the standard of reporting for
non-profit organizations have developed differently from commercial
accounting standards because there is a difference in emphasis in
the objectives for recording the date and because of legally binding
restrictions in non-profit organizations which have no real counterpart
in business enterprises. One of the characteristics of non-profit
organization is that those contributing financial resources to the
organization do not necessary receive or proportionate share of its
goods or services (Freeman, 1988:40).
The non-profit organizational financial reporting should provide
the economic resources, obligations and net resources of an
organization and the effects of transactions, events and
circumstances tha change resources and interests in those resources
(Harry, 1993:16). The performance of an organization during a
periodic measurement of the changes in the amount and nature of
the net resources of a non-business organizations, and information
about its service efforts and accomplishment provided that the
information most useful in accessing its performance. How an
organization obtains and other factors that may affect an
organization’s liquidity should include an explanations and
interpretation to help users understand financial information provided.
In relation to James et al (1976), the objective of record keeping
and the presentation of data is to make available meaningful financial
information. This requires appropriate and adequate disclosure of the
information required by the users of financial data. The purpose of
preparing and presenting such data are comparable to the purposes
of presenting financial statements for commercial profit seeking
corporations.
Because of both and special nature of the data required and
historical developments specialized accounting principles and
reporting practices can and, in a number of instance, do differ
materially from the principles and reporting practices of commercial
organizations.
The emphasis in a non – profit organization accounting is on
“stewardship” rather than on matching cost with revenues. This
emphasis arises from the fact that non-profit organizations receive
funds for which they must maintain accountability. This takes the form
of general accountability and specific accountability. The non-profit
organization (school or colleges, church, hospital, community funds
etc) are established to carry out special functions and to meet the
designed objectives of the organizations. The organizations have the
general accountability to use the funds and resources it receives for
the established objectives. In some cases, funds are contributed for
use in a specific accountability to be certain that the specific
requirements on the donor are carried out.
The general characteristics of recording and reporting data for
the various types of non-profit organizations are similar; the historical
development of accounting principles and procedures has resulted in
a variety of record-keeping procedures and forms of presentation of
the financial data. Recognizing the need for uniformity in reporting
some of the organization groups (e.g. colleges and universities,
hospitals, states and local government, churches, voluntary health
and welfare organizations) developed manual doe use by their
groups.
2.7 THE CHURCH ACCOUNTING MANUAL
In the opinion of Harry (1993:20) the general accounting
manuals includes a general description of the overall accounting
system, the charts of accounts, numbering scheme, account
description and if desired the general accounting principles and
policies being followed. Parts of the general accounting manual are
usually included in the user manual to provide account coding
information to outside department such as purchasing, receiving and
others to code transaction documents or otherwise providing
accounting information a more complete manual containing a section
of accounting principles and general procedures.
The accounting manual may contain copies of reports, and
accounting statement produced by the system. The user manual is
most useful in interpreting where non accountants initiate or prepare
original accounting forms or documents that provide accounting
information to the general accounting operations. The users’ manual
has a listing of income and expense account numbers and codes and
descriptions and use of accounting forms. It can be used as a training
tool for non accounting supervisors, secretaries and others who are
involved in adding or checking data on accounting input documents.
However, the 1998 annual budget estimate of the catholic
diocese of Enugu suggested that the following items should be
guided by a church accounting manual:
1. Revenue Receipts:
A. Income Accounts
Various sources:
i. Zonal Contributions
ii. Harvest and bazaar proceeds (90%)
iii. Sales of cards, forms, certificates, bulletins
iv. Sales of fixed assets.
v. Other sales.
B. Income Accounts
Investment income
i. Dividends
ii. Interests on bank deposits
C. Income Account A.
Donations and levies
i. Diocesan levies
ii. Parish donations and gifts (non-capital)
iii. Parish Approved levies (non capital)
D. Income Account A.
Trust and Loans
i. Scholarships
ii. Non capital loans receivable
iii. Major seminary support
iv. Minor Seminary support
v. Seminarians on Apostolic work
vi. Non capital diocesan grants
E. Description
Income Account B.
i. Offering collections
ii. Mass stipends
iii. A.M.C
iv. Stole fees
v. 10% Harvest and Bazaar proceeds
F. Special Collections
Income Account
Diocesan Collections
i. Cathedraticum
ii. Diocesan Day
iii. Pentecost Week
iv. Vocation week
v. Lenten fast
vi. Catechetical week
vii. Bible week
viii. Any other specify
Pontifical Collections
i. Holy Child
ii. Seminary/Good Shepherd
iii. World Communication Day
iv. Peter Pence
v. Mission Sunday
vi. Holy land
vii. Youth Day
viii. Any other (Specify)
Sub-Total Pontifical Collection
National Collections
i. CIWA
ii. AECAWA
iii. CSN
iv. Abuja Sec. Complex
v. Rwanda
vi. Any other (Specify)
Sub-Total National Collections
Local Collections
i. Armed Forces and Remembrance Day
ii. Any Other (Specify)
Sub-Total Local Collections
Total special collections
(i) to (ii)
Parish Project Receipts
E.g. Project A: Rental Income
Project B: Hiring Receipts
Project C: Transport Receipts
Project D: School fees
Project E: Poultry Receipts
Total Parish Project Receipt
2.8 FINANCIAL DECISION MAKINGS PROCEDURES IN
RELIGIOUS ORGANIZATIONS
The financial decision making in religion organizations like
Christian religions is being taken by the church officials in charge of
finance with the overall conclusion by the pastor or priest for the
particular church. Before any expenses or project is to be executed,
the priest in conjunction with finance council will deliberate on it and
decide the amounts that are to be expended. This forms a basis for
controlling excessive spending and relating actual income to it
expenditure. Most of the churches operate a bank account of which
the priest or the pastor forms the signatory to the account along with
the person that handles the cash. Thus financial decision making in
religious organizations involves taking risks.
According to Anyafo (1997:25) in his book “God’s People
Finance”, decision making is not an easy task, it is even more difficult
when it has to do with money. We are talking about financial
derivation by risk taking. Financial decision making is made most of
the time under conditions of uncertainty. Because of uncertainty of
outcome, there is risk. A systematic approach to solving decision
problems under conditions of uncertainty is referred to as decision
analysis (Anyafo, 2001:8). It seeks to prescribe a decision for the
individual that is consistent with his or her preferences and attitude
towards risks.
Real life decision problems; financial or otherwise involves the
selections of a course of actions from among two or more
alternatives. This can be classified into two or more categories:
i. Decision-making under uncertainty: This entails the selections
of a course of actions when we do not know the certainty the
results that each alternative action will yield. However, it is
assumed that the outcome of whatever course of action we
selected is affected only by chance and not by an opponent or
competitor.
ii. Decision-making under conflict: This is similar to decision
making under uncertainty in that we do not know with certainty
the result each available alternative course of action will yield.
However, the reason for this uncertainty is different in the case
of decision making under conflict. In such cases, we are in
effect confronted by one or more opponents or competitors.
The outcome of our chosen course of action depends on
decisions made by our opponents. Decision problems of this
type fall under the discipline known as game theory.
Because Satan is an opponent, the Christian is confronted most
of the time with decision making under conflict. Nevertheless, the
bible assures that you are of God, little children, and have overcome
them; because greater is He that is in you than he that is in the world
(1 John 4:4). The Christian is well equipped to take risk because
greater is Jesus Christ that is in Him than Satan that is in the world.
Making money involves risk-taking of some degree. Every child or
God has the privilege of transferring these risks to Jesus Christ who
stretches out His hands to take over the risks with the words come
unto me, all ye that labour and are heavy laden, I will give you rest
(Matthew 11:28).
However, the financial decision making in Catholic Church is
being taken by the Parish Finance Councils of the parish with the
parish priest as the chairman. The Parish council decides the
financial strength of the parish by consulting the Finance Committee
and discusses all financial prospects of each organization or society
that make up the parish and act accordingly. Thus, the Parish Council
calls for tenders, selects and approves one and authorizes treasurer
and parish priest to pay on completions of the project. The parish
finance council discusses relevant issues concerning the church with
the parish priest and decides how the matter will be solved financially.
In other words, the parish priest does not have sole authority to the
church’s funds but takes directives or works along with the parish
council on issues concerning finance. Because of the vital importance
of the financial decisions to the church. It is essential to set up a
sound and effective organization for the finance functions. The
ultimate responsibility of carrying out the financial functions lies with
the Bishop see the fig below:
BISHOP
FINANCE COMMITTEE PARISH COUNCIL
FINANCIAL ADMINISTRATION
i. Bishop: Is in charge and responsible for all financial state of
the diocese. He oversees dioceasan financial council and the
parish council.
ii. Parish Council: it is made up of all elected station council
representative, elected presidents of societies that operate at
the parish level ands reverend father’s representatives. The
Reverend Father is the head of the parish priest as regards the
financial state of the parish.
iii. Finance Committee: Seeks means of generating funds to
parishes. It advises the parish priest on how to use the funds,
where to use the funds, when to use it and how much to use for
the benefit of the parish.
iv. Financial Administrator: In charge of the Cathedral and also
its financial record-keeping. According to Code of Cannon Law,
(492-494), the finance committee is established in each diocese
to be presided over by the diocesan bishop or his delegate.
Besides this function entrusted to it in book v on the temporal
goods of church, it is the responsibility of the finance committee
to prepare each year a budget of income and expenditure over
the coming year for the governance of the whole diocese in
accordance with the direction of the bishop. It is also the
responsibility of the finance committee to account at the end of
the year for income and expenditure. The financial director is
also appointed in each diocese by the bishop, after consulting
the college of consulters and the finance committee. It has its
responsibility under the authority of the Bishop to administer the
goods of the diocese in accordance with the plan of the
payments from the diocesan funds which the bishop or his
delegates have lawfully authorized. At the end of the year, the
financial administrator must give the finance committee an
account of income and expenditure.
2.9 FINANCIAL CONTROL: INTERNAL AND EXTERNAL
The establishment of church is mainly channeled towards
bringing souls to God and not for profit making (Olademej, 1985:35).
Though the fund for managing its affairs has to be controlled, there is
the necessity for an effective approach to the exercise of appropriates
and effective controls over the finance of the church. Control is a
management activity of comparing actual output or performance with
pre-determined or planned situation and analyzing any differences for
purpose of managerial corrective actions and co-ordination. Such
controls are of two types viz.: internal controls and external controls.
Internal control must be such that it will establish the credibility
and project the image of the church as semi-autonomous
organization able to plain their financial programmes and collect and
disburse their monies in a controlled and systematic manner
designed to achieve their objectives without waste or loss and at a
minimum cost. Millichamp (1986:42), internal control system is
defined as the whole system of controls, financial and otherwise
established by the management in order to carry on the business of
the enterprise in an orderly and efficient manner, ensure adherence
to management policies, safeguard the assets and secure as far as
possible the completeness and accuracy of the record. The individual
components of an internal control system are known as “control”.
More so, a good system of supervision and control over church
fund is necessary in order to be able to prevent fraud and detect
errors as soon as possible. They advocated for the appointment of
church auditors both internal and external. The duties of the
accountants will not stop with the preparation and submission of
income and expenditure accounts but also must find the best way to
present and communicate to members the financial statement of the
church at various levels of expenditures and to the appropriate
bodies.
It is however, pointed out that managers should see that money
is being expended in a systematic way and should make sure that
church items are not consumed too fast. Thus, for financial control
purpose, the manager or whoever is in control of church’s fund
should try to control cost by eliminating unnecessary spending and
making sure that money donated by people are judiciously utilized for
the purpose it was received.
In essence, the existence or effective internal and external
control of this nature should be of considerable importance to the
progressive development of sound financial management. The most
important to the internal financial control fund in catholic churches are
the preparation of annual and supplementary estimate of income and
expenditure and the operation of a system designed to ensure that
actual expenditure does not exceed the approved estimates. Also,
that of revenue reaching the budgeting figure so that the finance of
the church will be well managed.
Each individual parish in the diocese sends their yearly budgets
to the diocese. In the parish level, there is internal control where the
financial secretary collects, records and deposits money into the bank
account of the parish. The parish priest and treasurer or one other
person are the authorized signatories to the account. Also another
form of internal control is the appointment of financial committee who
have special responsibilities for the maintenance of effective system
of financial control.
In terms of external control, the diocese controls over the
finances of the parishes. Each parish priest is expected to present an
annual budget of his parish to diocese, and also expected to render
an annual or semi-annual account of all income and expenditures of
the parish. The parishes should be encouraged to stand on their own
feet and prove that they have demonstrated a sound understanding
of their financial responsibilities and of public accountability.
2.10 FINANCIAL REPORTING AND ACCOUNTING RECORDS IN
CATHOLIC ORGANIZATIONS
In “Government and Non – profit Accounting Theory and
Practice by Freeman Craig and Lynn (1988:50) the authors stipulated
that the financial reporting of non profit organization each included
religious organization (church) emphasized that such reporting should
provide the following information:
- The economic resources, obligations and net resources of an
organization and the effects of transactions, events and
circumstances that change resources and interest in those
resources.
- The performance of an organization during a periodic
measurement of the changes in amount and nature of the net
resources of a non-business organization and information must
be useful in assessing its performances.
- How an organization obtains and spends cash or either liquid
resources, its borrowing and repayment of debt and others
factors that may affect an organization’s liquidity should include
explanations and interpretation to help user understand
financial information provided.
According to encyclopedia of accounting system volume 1, a
simplified treasurer’s financial report is prepared at the close of each
month to provide each member of the board of trustee with monthly
information on the cash transactions of the various funs. Certain
trustees may feel that knowledge of the amounts received during the
month, the disbursement made during the months, and the balance
on hand at the end of the month is sufficient. A balanced sheet is
prepared at the close of each month to provide on comparative basis
monthly information on the assets, liabilities and fund balances so
that the current financial standing of the entire church organization
may be determined.
More so the accounting system of a religious organization
(church) involves financial activities that are performed by the
treasurer, the financial secretary and other committees. The treasurer
keeps or oversees the keeping of the financial records, but is not
usually burdened with details, especially the counting of collections
opening of pledge envelopes and the like. He prepares or has
prepared the quarterly statements on pledges and also monthly
reports of receipts, expenditures and assets and liabilities to the
board of trustees and he also signs cheques. The financial secretary
on the other hand usually handles all accounting and book keeping
matters fund in non profit organization accounting is a self contained
accounting entity with its own assets, liabilities, revenue, expenditure
or expense and fund balance or other equity accounts and within its
own ledger.
A church as a religious organization is established mainly to win
souls to Christ and not for profit making. Therefore, a church is not
supposed to have profit and loss account but an income and
expenditure account with a balance sheet. This then means that the
system of accounting that is involved is a receipt and a payment
account.
In addition, all those engaged in the finance of the church – the
church stewards, the treasurers, the book keepers, and ministers
should be guided how to keep accounts of funds raised by the church
and how to manage them. For good accounting process, the book
keeping of church funds will not be complete without the cash book,
the ledger, the journals, analysis book, petty cash book or imprest
books. At the end of the period, the treasurer or whoever is in charge
with the book keeping will prepare an income and expenditure
account.
In a religious organization (church) the financial reporting in
Catholic church is done in parish level and also in diocesan level
where the financial secretary reports all financial mattes to the Parish
Priest who in turn reports to the Bishop at the diocesan levels. The
Parish priest relays and reports all financial records of the parish to
the bishop. The accounting is the guide post for managements. Every
religious organization should know the financial implications of its
operations. The financial scope is kept by the accounting system, it
points on the problems faced or likely to be faced. The accounting
system identifies and gathers data. In every parish there is parish
council account that is all monies belonging to the parish house
account like offertory collections, stole fees, stipends and other
sources.
It is the responsibility of the Diocesan Bishop through the
diocesan finance council to audit annually the financial reports of
every parish and parish projects. Also, it is the responsibility of the
diocesan finance council to audit the financial council to audit the
financial report of the bishop house, the diocesan secretariat and
diocesan project. It is the consolidation of the diocese proper and
parishes’ financial report that it sent to Rome annually at a particular
time as stipulated by the congregation for Evangelization of Peoples.
With the establishment of Parish Finance Council in the
Diocese in compliance with Cannon 537, these councils are obliged
to fulfill their tasks with the greatest possible transparency and
responsibility (Cannon 1281-1289). They are to send report
concerning all incomes received from all sources and the manner of
their utilization, the financial report must be signed by the priest, his
assistant and by all members of the Parish Finance Council. For
uniformity and comparative purposes, the congregation for the
Evangelization of People has proved suggested outlines to be
followed for diocesan financial reports.
However, for the accounting record-keeping of the church te
code does not prescribe any norm on the system to be adopted from
common experience, no one system of rendering accounting is
perfect. Not to have a system at all would amount to culpable
inexcusable grievous fault.
Some dioceses in Nigeria adopt central fund system. Adequate
funds are then made available to the priests on pastoral duties in the
diocese from the centre. Many dioceses, it appears, are not satisfied
with these systems/records which entail levying every parish and
institution in the diocese on an agreed basis. Besides, how does one
calculate what is adequate for a given parish?
Moreover, in this system, priests are normally placed on
salaries just like civil servants. This system of salaries to priest is very
odious to many because of many obvious disparities in status and
abilities of priest and above all the inequalities in the parish stations.
Another system very much in vogue is the budgetary system. In
this, the Parish Finance Council with their pastor draw up an annual
budget in which every item of income and expenditures are paid to
the diocesan common fund. Thus, for the parish accounting books
and records and returns, the parish accounting books and records to
be kept by the parish are classified into two:
i. Account B - For priest
ii. Account A - For Parish Finance Council
For the Account A; books, records and returns, the sample formats
are distributed and they are:
a. Account A: Parish Income day and analysis book,
b. Account B: Parish expenditure and somebody daily analysis
book,
c. Account A: Cash and bank book,
d. Account A: General Ledger,
e. Official Receipts books,
f. Official payments voucher or petty cash voucher,
g. Parish Fixed Assets Register and Inventories,
h. Account A: Quarterly Remittance Returns,
i. Account A: Monthly Financial Returns,
j. Account A: Parish Bank Reconciliation Quarterly Statement.
For the Account B: books, records and returns (for priests), the
sample;
a. Account A: Income day and analysis book,
b. Account B: Priest Maintenance Expense Day and Analysis
Book
c. Account B: Cash and Bank Book.
d. Payment Voucher.
e. Account B: Monthly Financial Returns.
f. Account B: Banks Reconciliations Statement
REFERENCES
Anyafo, A.M.O (1997), God’s People’s Finance, UNEC Enugu, Banking and Finance Publication, P.25
Anyafo, A.M.O (2001), Investment Risk Evaluation: The Statement of Arts in Investment and Project Analysis, UNEC Enugu, Banking and Finance Publication, P.8
Babalola, E.O (1976) Christianity in West Africa (A Historical Analysis) Ondo, Bamigboye and Co Press (Nig.) Ltd.
Cannon Law Society of Great Britain and Ireland (1976), The Code of Cannon Law, India Theological Publication, pp, 60-70.
Emekekwue, P.E (1993), Principles of Public Finance, Kinshasa Zaire, African Bureau of Educational Sciences Special Agency of the Organization of African Unity. P.1
Eneasato, M.O. (1985) Advent and Growth of Catholic Church in
Enugu Diocese, Enugu, Jet Publishers Nigeria Ltd. P.35
Freeman, J.R. et al (1988), Government and Non-Profit Accounting Theory and Practice, 3rd Edition, New Jersey, Prentice Hall, pp. 14 -16
Harry, L.B. (1993), Design and Maintenance of Accounting Manuals, Second Edition, USA, John Wiley and Sons Inc. pp.16 - 20
James, D.E and Horner A.B. (1976), The Modern Accountants Handbooks, USA, Jersey Inc. p.24.
Jerome, K.P. (1979) The Encyclopedia of Accounting System, New York: Litton Educational Publishing Inc.
Millichamp, A.H. (1986), Auditing: An Instructional Manual for Accounting Students, 5th Edition, London, D.P. Publication Limited
Okafor, K.O and Okoye E.I. (1996), Principles and Practice of Financial Accounting, Nkpor, Baset Printing and Publishing Limited, P.1
Oye, A. (2002), Financial Management, Papa Ajao Mushin Lagos, El-Toda Ventures Limited, p. 7
Okpe, I.I (1998), Principles and Practice of Book Keeping and
Accounts 1, Enugu, Ochumba Printing and Publishing Limited, p.1
Olademeji, A. (1985), Financial Management of Local Government in
Nigeria, Ibadan, Fourth Dimension Publishers, P. 25 Osisioma, B.C. (1996), Studies in Accountancy: Text and Reading,
Enugu, Acene Publishers Limited, P.63
Ubesie, M.C. (1998), Advanced Financial Accounting, Enugu, Computer Edge Publishers, P. 97
CHAPTER THREE
RESEARCH METHODOLOGY AND DESIGN
3.0 INTRODUCTION
This chapter deals with the methodology used by the
researcher in the course of the study. It shows the design of the study
as well as the instrument of the survey or data collection or sources
of instrument as contained in this chapter.
The basis of this research work is the study of financial book
keeping in religious organizations. A case study of catholic churches
in Enugu Diocese. Because the researcher has no definite figure,
validation was resorted to in order to test the instrument and this was
also used in determining the sample size and this chapter discusses
the statistical method of data analysis.
3.1 SOURCES OF DATA COLLECTION
The researcher’s main source of information for this study was
based mainly on secondary and primary sources, and the use of
finance and accounting textbooks and other religious textbooks.
Primary data are those first hand information sourced purposed for
the work at hand. As already stated above, primary data were
sourced using the two instruments of questionnaire and oral
interviews. The researcher designed a wells structured multiple
choice questionnaire for the church leader. There were personally
administered by the researcher. The questionnaires were collected
later as some of the respondents could not give the information
easily, they were so reluctant and skeptical to divulge the information.
Some of the questionnaires were answered while some were
returned. However, direct and close-ended questionnaires were
asked for simple and direct responses which the respondent could
not easily avoid. The oral interview served as a follow up to the
questionnaire which makes the respondents to explain certain
questions in detail. The researcher met the respondents face-to-face
and necessary questions were asked.
3.2 DATA COLLECTION METHOD
The researcher used personal interviews and discussion with
some church officials who were reluctant to disclose the information.
It was not easy for the researcher to collect data as some of the
church leaders confronted with the topic, saw it as being irrelevant
and uncalled for, but the researcher managed to get some of the
information.
More so, the researcher used questionnaire which was well
designed and structured. Also the researcher made use of the library
research where textbooks in accounting and finance were used.
There has not been any research work carried out on this study; the
researcher decided using any related text on the topic.
3.3 POPULATION AND SAMPLE SIZE
The population for this research work was based on the
diocese as a whole. The sample size was based on selected
parishes. The researcher distributed 63 questionnaires of which 50
respondents were gotten or received and 13 were returned back
unattended. Equally, oral interview which serves as a follow up to the
questionnaire were asked and defined by the researcher to the
appropriate respondents.
However, the total number of parishes in Enugu Diocese is 75.
Thus the formula for determining the sample size using Yaro’s
Yamen’s formula:
n = N 1 + N(e)2
Where:
n = sample size
N = Population size
e = proportion of sampling error put at 0.05 level of
significance
1 = Constant
n = ?
N = 75
e = 0.05
Note: The choice of 0.05 level of significance (i.e. 95% confidence
limit) is purely an executive decision of the researcher.
Substituting the above values into the formula, we have:
75 1+ 75 (0.05)2
75
1.1875 = 63
n = 63
3.4 METHOD OF DATA ANALYSIS
The researcher administered questionnaire and used
percentages to analyze the data. The researcher also used a test of
hypotheses where chi-square were used to determine if there is
significant difference between the financial and accounting records of
the church to its expenditures and to verify if budgetary system as a
form of financial control is dependent on good financial management,
etc. Thus, the research questions and distributed questionnaires of
which some of the questions were picked and analyzed.
3.4 RE-STATEMENT OF HYPOTHESIS
The hypothesis is a tentative statement of conclusion. It is a
statement of claim which is to be proved right or wrong having
confirmed with facts.
Ho: Null hypothesis – This is a statement of claim which is to be
proved right or wrong having confirmed with facts
Hi: Alternative hypothesis: - This is a hypothesis that will be
accepted if the null hypothesis is rejected.
i. There is significant relationship between proper financial and
accounting records of the church to its expenditures.
ii. Budgetary system as a form of financial control is independent
of good financial management.
iii. The Catholic Church accounting records keeping is in
conformity with the Diocesan Accounting Manual.
iv. Authorization and of Catholic Diocesan Expenditures are
vested on the church management team.
3.6 STATISTICAL METHOD OF DATA ANALYSIS
Having collected the various data, they were collected and
analyzed based on the analytical statistical method of testing
hypothesis, the chi-square (X2) test which included the tests of
independence and relationship/homogeneity. Thus the formula is:
X2 = (O – E)2 E
Where
X2 = Chi-square
O = Observed data
E = Expected data
(D.F) = Degree of Freedom
DF = (C-I) (R-I)
Level of Significance = 5%
This was used by the researcher in order to determine whether
the incidences were by chance or statistically significant. This made it
possible for the researcher either to accept the null hypothesis or
reject it.
DECISION RULE:
Reject Ho if calculated value is greater than critical table of
values, otherwise accept Ho.
Furthermore, each of the aforementioned hypotheses were
analyzed using the responses from interviews, research questions
and questionnaires.
REFERENCES
Baridam Don M. (1995), Research Method in Administrative Science, Second Edition, Choba, University of Port Harcourt Publishing House.
Ogunbiyi, M.B (1992), Understanding Researcher in the Social Sciences, Ibadan, University Press PLC.
Yamane, (1964), Statistics: An Introductory Analysis, Third Edition, New York: Harper and Row Publishers (1964).
CHAPTER FOUR
ANALYSIS OF RESEARCH RESULTS
4.1 PRESENTATION AND ANALYSIS OF DATA
Having collected the necessary data, the researcher has
adopted a systemic approach to analyze the data. Some of the
questions in the questionnaires distributed were examined to
evaluate the frequency of responses and what they reveal concerning
the financial record keeping of religious organization in relations to
Catholic Church in Enugu Diocese.
The answers to the research questions were analyzed using
simple percentages. The calculations of the percentages were done
based on 50 successfully completed questionnaires.
Those who had the same opinion to each type of question
asked wee placed over the total number of respondents and thus
multiplied by hundred.
Thus, we have,
Percentage Response:
Frequency of each type of opinion X 100 Total of Respondents 1
4.2 ANALYSIS OF QUESTIONNAIRES
Here, the answers to the question in the questionnaire were
represented in a table showing the number of respondents and their
percentages.
4.2.1 PARISHES RETURN TO THE DIOCESES
When respondents were requested to indicate how often
parishes make returns to the diocese, out of 50 respondents 15 or
30% indicated making yearly return to the diocese yearly, 15 or 30%
returns quarterly 15 or 30% making their returns semi-annually. Only
5 or 10% shows that parishes makes their returns occasionally, it all
shows that parishes makes annual returns yearly, quarterly and semi-
annually to the process.
TABLE 4.2.1
PARISHES RETURNS TO THE DIOCESE
Types of Returns No of Respondents Percentage
Yearly 15 30
Quarterly 15 30
Semi-annually 15 30
Occasional 5 10
Total 50 100
Source: Data from field Survey 2009.
4.2.2 HOW THE CHURCH KEEPS ITS MONEY
Table 4.2.2 presented the responses cncernng how the church
keeps its money. The responses revealed tha seven (7) respondents
or 14% of the sample showed that the church’s money is kept with
the parish pries, while thirty (30) respondents or 60% of the sample
indicated tha the church’s money is kept in the bank. From this, it is
easily noticeable that the church keeps its account in the bank. Also
thirteen (13) respondents or 26% of the sample believed that the
church lends its money to those in need.
Description No of Respondents Percentage
With the parish priest 7 14
In the bank 30 60
Lending to those in
need
13 26
Total 50 100
Source: Data from field survey 2009.
4.2.3 PEOPLE THAT FORM THE SIGNATORIES TO THE
CHURCH’S BANK ACCOUNT
From the responses received on the number of people that
form signatories to the church’s bank account, the table 4.2.3 shows
that four (4) people said that only the parish priest forms a signatory
to the church’s bank account. This number represented 8 percent
(8%) of the total respondents. On the other hand, six (6) people
agreed that the parish priest and his assistant form the signatories to
the account showing twelve (12%) of the total respondents. While
forty (40) people were in support that the parish priest, the treasurer
and any other person authorized or appointed by the Parish Finance
Council form the signatories to the account of the church in the bank.
This represents eighty (80%) of the total respondents showing that
the there people form signatories to the bank account.
In essence, the parish priest or his assistant does not deal with
the church’s money and however, they do not form signatories to the
account alone.
TABLE 4.2.3 PEOPLE THAT FORM SIGNATORIES TO THE
ACCOUNT
Signatories No of Respondents Percentage
Parish Priest 4 8
Parish priest and his
assistant
6 12
Parish priest,
Treasurer and any
other person
authorized.
40 80
Total 50 100
Source: Data from field survey 2009.
4.2.4 AUTHORIZATION OF CHURCH’S EXPENDITURE
The table 4.2.4 below indicates that 12% or 6 respondents out
of the chosen sample agreed that parish priest authorizes the
expenditure while thirty (30) or 60% of the respondents showed that
the Parish Finance Council authorizes the church’s expenditure. On
the other hand, seven (7) or 14% of the respondents each believes
that the building committee and Laity Council authorize the
expenditure of the church’s funds.
TABLE 4.2.4 AUTHORIZATION OF CHURCH’S EXPENDITURE
Authority No of Respondents Percentage
Parish Priest 6 12
Parish Finance
Council
30 60
Building Committee 7 14
Laity Council 7 14
Total 50 100
Source: Data from Field survey 2009.
4.2.5 METHOD USED AS GOOD FINANCIAL MANAGEMENT
The response on the method the church uses or adopts to
ensure good financial management is presented in the table 4.2.5
below. From the result, it indicates that twenty (20) or 40% of the
respondents adopts the method of budget control system. While
eighteen (18) or 36% of the respondents show that expenditure are
discussed by the Parish Finance Council. There was twelve (12) or
24% of the respondents that believes that the parish priest can incur
any cost.
TABLE 4.2.5 METHOD USED AS GOOD FINANCIAL
MANAGEMENT
Methods No of Respondents Percentage
Budgetary system 20 40
Parish Finance
Council Discusses
expenditure to incur
18 36
Parish Priest incurs
any cost
12 24
Total 50 100
Source: Data from field survey 2009
4.2.6 HOW THE CHURCH’S FUND ARE ACCOUNTED FOR
The respondents were asked on how the church’s fiund are
being accounted for, that is their sources of funds like launching,
donations, special thanksgiving and others.
From the table 4.2.6, the researcher was able to observed that
eighteen (18) or 36% of the respondents each agreed that the fund id
accounted for by making oral announcement and statements of
accounts. While nine (9) or 18% showed that the fund is accounted
for by the issuance of receipts. The remaining five (5) or 10%
indicates no records.
TABLE 4.2.6 HOW THE CHURCH’S FUNDS ARE ACCOUNTED FOR
Description No of Respondents Percentage
Oral announcements 18 36
Statements of
accounts
18 36
Issuance of receipts 9 18
No records 5 10
Total 50 100
Source: Data from field survey 2009.
4.2.7 MAINTENANCE OF PROPER BOOKS OF ACCOUNTS
From the responses received on whom maintains the proper
books of accounts of the church, table 4.2.7 below indicates that
thirty-five (35) or 70% of the respondents agreed that the Parish
Finance Council maintains the proper books of accounts of the
church. Six (6) or 12% shows that the treasurer maintains the proper
record keeping, five (5) or 10% indicates that the parish priest
maintains the accounts. While the remaining four (4) showed that the
financial secretary maintains the proper books of accounts or record
keeping.
TABLE 4.2.7 MAINTENANCE OF PROPER BOOKS OF
ACCOUNTS
Maintenance No of Respondents Percentage
Parish Finance
Council
35 70
Treasurer 6 12
Parish Priest 5 10
Financial Secretary 4 8
Total 50 100
Source: Data from field survey 2009.
4.2.8 TYPE OF ACCOUNTING SYSTEM IN USE
In order to determine the type of accounting system used by the
church, table 4.2.8 presents an immediate picture. Out of the fifty (50)
questionnaires distributed, fifteen (15) or 30% of the respondents
showed that the church uses income and expenditure account,
fourteen (14) or 28% agreed that the church operates receipts and
payment account while thirteen (13) or 26% of the respondents said
that they keep balance sheet, while the remaining eight (8) or 16%
indicated that the church keeps profit and loss account.
TABLE 4.2.8 TYPE OF ACCOUNTING SYSTEM IN USE
Types No of Respondents Percentage
Income and
expenditure account
15 30
Receipt and payment
account
14 28
Balance sheet 13 26
Profit and loss
account
8 16
Total 50 100
Source: Data from field survey 2009.
4.2.9 PREPARATION OF BUDGET
Table 4.2.9 below depicts that forty-five(45) or 90% the total
respondents showed that the church prepares budget while five (5) or
10% of the total respondents indicates that the church do not prepare
budget.
TABLE 4.2.9 PREPARATION OF BUDGET
Opinions No of Respondents Percentage
Yes 45 90
No 5 10
Total 50 100
Source: Data from field survey 2009
4.2.10 AUDITED ACCOUNT
The results from the respondents on whether the church
account is audited, thirty-five (35) or 70% of the total respondents
agreed that account of the church is being audited while fifteen (15)
or 30% did not agree and believed that the account is not audited.
TABLE 4.2.10 AUDITED ACCOUNT
Opinion No of Respondents Percentage
Yes 35 70
No 15 30
Total 50 100
Source: Data from field survey 2009
4.2.11 OBSERVING CHURCH ACCOUNTING MANUAL
The table 4.2.11 below shows that 70% or 35 of the
respondents of the chosen sample agreed that the catholic churches
observes her use of accounting manual properly, while 30% or 15 of
the respondents were of the negative opinion that Catholic Churches
observe the use of accounting manual.
TABLE 4.2.11 OBSERVING CHURCH ACCOUNTING MANUAL
Opinions No of Respondents Percentage
Yes 35 70
No 15 30
Total 50 100
Source: Data from field survey 2009
4.3 TESTING OF HYPOTHESES
Hypothesis being a tentative statement of conclusion is a
statement of claim which is to be proven right or wrong having
confirmed with facts. There are four hypotheses to test.
4.3.1 HYPOTHESIS I
THERE IS SIGNIFICANT RELATIONSHIP BETWEEN THE
PROPER FINANCIAL AND ACCOUNTING RECORDS AS A
MEANS TO CONTROL EXPENDITURE.
When respondents were asked whether proper financial and
accounting records of church’s expenditure shows a good financial
control or whether it deters it financial capacity, their responses were
as well revealed in table 4.3.1
TABLE 4.3.1
CONTINGENCY TABLE ON PROPER RECORD KEEPING
AS A FINANCIAL CONTROL
TOTAL
Opinion O e f %
Accountability 40 13 53 84
Ill-management 10 - 10 16
Total 50 13 63 100
Source: Data from field survey 2009
These constituted sixty-three (63) respondents whose
responses were used for analysis and for test of hypothesis. Their
responses on whether proper record keeping or accountability has a
significant difference to its expenditure has been presented in table
4.3.1. The table revealed clearly that eight-four percent (84%) of the
respondents in the church which is made up of fifty-three were in
favor of the idea that proper record keeping has no difference to its
expenditure while sixteen percent (16%) of the respondents which
constituted the church members where therefore not in favour of the
idea. A 5% level of significance and a chi-square test revealed that
there was no significant difference between the financial and
accounting record of the church to its expenditure.
HYPOTHESIS II
4.3.2 BUDGETARY SYSTEM AS A FINANCIAL MANAGEMENT
STRATEGY
On the questions of budgetary system as a financial
management strategy, the church leaders were asked whether
budgetary system is a good financial management strategy or
whether the church incurs cost as they arise. Their responses were
shown or revealed in table 4.3.2
TABLE 4.3.2
CONTINGENCY TABLE ON BUDGETARY SYSTEM AS A
FINANCIAL STRATEGY
TOTAL
Opinion O E F %
Budgetary 30 12 42 67
Extravagant 10 11 21 33
Total 50 23 63 100
Source: Data from field survey 2009
The responses obtained from the church leaders on whether
budgetary system is a financial management strategy has been
presented in table 4.3.2. The study revealed that forty-two
respondents (67%) were in support or in favor that budgetary system
ensures a good financial management. Only twenty-one respondents
which constitute thirty-three percent (33%) were against the idea.
A chi-square test of independence at 5% level of significance
showed that budgetary system as a form of financial control is
dependent on good financial management.
However, the calculations of the hypotheses are shown
below.
HYPOTHESIS I
Table 4.3.1: The concern here was whether any significant
relationship existed between the proper financial and accounting
records of the church to its expenditure and hence the null
hypothesis.
HO: There is no significant relationship between the proper financial
and accounting records of the church to its expenditure.
Test Statistics:
(1) Applicable test statistics is the chi-square test formula given by:
X2 = (O – E)2 E
Where O = Observed frequencies
E = Expected frequencies
(ii) From table 4.3.1,. the expected frequencies were for
accountability thirteen (13) and ill-managements none while the
observed frequencies were accountability forty (40) and ill-
management ten (10).
(iii) Chosen level of significance: = 0.05
(iv) Degree of Freedom for 2 X 2 contingency table given by the
formula (C-I) (R-I).
Where C = Number of columns
R = Number of rows
i.e. (2-1) (2-1) = 1
(v) From table of critical values of the chi-square distribution, (See
Appendix C) the critical value for I degree of freedom at 0.05 of
significance X2 0.05 = 3.841.
Applying the formula:
X2 = (O – E)2 E
= (40-30)2 + (10 – 0)2 13 0 = 56 + 0
= 56
Calculated X2 = 56
Decision: Since X2 (calculated) 56 is greater than critical value X2
0.05 D.O.F = 3.841, we reject HO, and conclude that there is
significant relationship between proper financial and accounting
records of the church and its expenditure that is they work together,
the expenditure is curtailed and proper accounting and financial
record kept.
HYPOTHESIS II
The relevant test of concern to the researcher was that of
independence that is whether preference budgetary system as a form
of financial control is dependent on good financial management.
HO: Preference for budgetary system as a from of financial control
is in dependent of good financial management.
TEST OF STATISTICS
(i) This is a test of independent and the applicable test statistics is
chi-square test formula which is given by:
X2 = (O – E)2
E Where O = Observed frequencies
E = Expected frequencies
(ii) The expected frequencies as shown in table 4.3.2, for
budgetary system, it was twelve (12) and extravagant ten (10)
while the observed frequencies were thirty (30) for budgetary
system and ten (10) for extravagant.
(iii) Level of significance = 0.05
(iv) Degree of freedom = 1
(v) Critical value of DFs = 1 at 0.05 level of significance
X2 0.05, df = 3.841
Apply the chi-square formula:
X2 = (O – E)2 E = (30 – 12)2 + (10 – 11)2
12 11 = 27 + 0.09 = 27.09
DECISION
Since X2 (calculated) 27.09 is greater than the critical value X2
0.05 df1 = 3.841 we reject the null hypothesis and conclude that
preference for budgetary system as a form of financial control is not
independent of good financial management, therefore, they are
related and works hand in hand. A good financial management entail
having a budgetary system.
HYPOTHESIS III
H3: The Catholic Church accounting records keeping is in
conformity with the Diocesan accounting manual.
HO: The Catholic Church accounting records keeping is not in
conformity with the Diocesan accounting manual.
TABLE 4.3.3
The contingency table for testing hypothesis three of the
research question is derived from table 4.2.7.
TABLE 4.3.3
COMPUTATION OF OBSERVED AND EXPECTED FREQUENCY
TOTAL
Opinion O E O – E (O – E)2 (O – E)2
E
Parish Council 35 13 22 483 37.2
Treasurer 6 13 -7 49 3.8
Parish Priest 5 13 -8 64 4.9
Financial
Secretary
4 13 -9 81 6.2
Total 100
Source: Data from field survey 2009
(O – E)2 + (O – E)2
E E
i.e. (35 – 13)2 + (6 – 13)2 + (5 – 13)2 + (4 – 13)2
13 13 13 13
= 37.2 + 3.8 + 4.9 + 6.2 = 52.1
DF (Degree of Freedom) = (C-I) (R-I)
= (2 – 1) (4 – 1)
= 1 X 3
= 3
Critical value of X2 at 0.05 and d at 3 is 7.6147.
DECISION RULE
Since X2 computed is 52.1 is greater than X2 critical value of
7.6147. We therefore reject the null hypothesis and conclude that
Catholic Church accounting records keeping is in conformity with the
diocesan accounting manual.
TEST OF HYPOTHESIS
H4: Authorization and control of (Catholic Church) Diocesan
Expenditure are vested on the church management team.
HO: Authorization and control of (Catholic Church) Diocesan
Expenditure are not vested on the church management team.
The contingency table for testing this hypothesis four is derived
from table 4.2.4 of the research work.
TABLE 4.3.4
COMPUTATION OF OBSERVED AND EXPECTED FREQUENCY
TOTAL
Opinion O E O – E (O – E)2 (O – E)2
E
Parish Council 6 13 -7 49 3.77
Parish Financial
Council
30 13 17 289 22.23
Building
Committee
7 13 -6 36 2.77
Laity Council 7 13 -6 36 2.77
Total 100
Source: Data from field survey 2009
OR
(O – E)2 + (O – E)2
E E
i.e. (6 – 13)2 + (30 – 13)2 + (7 – 13)2 + (7 – 13)2
13 13 13 13
= 3.77 + 22.23 + 2.77 + 2.77 = 52.1
DF (Degree of Freedom) = (C-I) (R-I)
= (4 – 1) (2 – 1)
= 3 X 1
= 3
NOTE: Critical value of X2 at 0.05 and df at 3 is 7.6147.
DECISION RULE:
Since the calculated value is 31.54 is greater than the critical
value of X2 being 7.6147, we reject the null hypothesis and conclude
that authorization and control of catholic diocese expenditure are
vested on the church management team.
CHAPTER FIVE
SUMMARY, RECOMMENDATIONS AND CONCLUSION
This chapter presents a resume of the findings conclusion
arrived at by the researcher and some recommendations regarding
the form of financial record-keeping the church should employ where
appropriate, so as to meet up to its financial needs.
5.1 SUMMARY OF MAJOR FINDINGS
Having analyzed the questionnaires, some of the major findings
on the research work are:-
5.1.1 The study revealed that parishes make returns to the diocese
yearly, semi-annually and also on quarterly basis so as to
ensure that proper accounts are kept and returns are made
when appropriate.
5.1.2 The study showed that the church keeps its money in eth bank
and otherwise operates bank accounts. It does not leave it
money with the priest. Only the money collected from the
offertory is used for the welfare of the priest.
5.1.3 As the church keeps it money in the bank, it was observed that
only three people form the signatories to the account;
comprising the parish priest, treasurer and any other person
that may be authorized by the council. The priest does not form
only the signatory as well as its assistant, this will ensure that
the members of the Parish Finance Council is made aware
when any money is to be deposited or withdrawn from the
church’s bank account.
5.1.4 The study revealed that only the Parish Finance Council which
the parish priest is the chairman authorizes the expenditure to
be made by the church, he works in conjunction with the Parish
Finance Council to ensure that the money available are utilized
in the appropriate ways.
5.1.5 In order to ensure a good financial management, it was
observed that the church adopts budgetary system so, as to
curtail its expenditures. Also in line with the budgetary system,
the Parish Finance Council discusses any expenditure to be
incurred and approves the budget.
5.1.6 The accountability of the church’s fund is important and the
members of the church are always notified on any amount
realized for its growth. This is done either by oral
announcement by a member of the Parish Finance Council or
by preparing a statement of account. In short, the two of them
work together.
5.1.7 The study revealed that only the Parish Finance Council
maintains proper books of account of the church and also are in
custody of them.
5.1.8 It was revealed that the accounting systems in operation by the
church are income and expenditure, receipt, payments and
balance sheet. These form the basis for financial statement
analysis. There is no profit and loss account for the church
because it is not profit-oriented.
5.1.9 The study revealed that the Catholic Church prepares budget
which can be made quarterly, semi-annually and yearly. This is
used to curtail incurring expenses higher than the actual money
at hand. Indeed, the church operates a surplus budget where
revenue is always greater than the expenditure.
5.1.10 According to the study, the church’s account is being
audited. It is the responsibility of the Diocese Bishop through
the Diocesan Finance Council to audit annually the financial
reports of every parish and parish projects. Also, it is the
responsibility if the Diocesan Financial Council to audit the
financial reports of the Bishop’s house, the Diocesan secretariat
and the Diocesan projects.
5.1.11 From the test of hypotheses 1, the study revealed that the
church keeps proper record of its account that is there is
accountability and responsibility, every member of the Finance
Council has to give account of the money entrusted to him.
There is no room for siphoning church’s fund into personal
pockets or not managing the church’s money properly. A test of
significance revealed that there is no difference between proper
financial record keeping and its expenditure. A good record
keeping or accountability reduces the church’s expenditure
because each amount has to be accounted for.
5.1.12 The study revealed that majority of the churches adopts
budgetary system as a financial management strategy. As
finance is a major problem of religious organization, the church
deems itr necessary to make yearly budghet before expenses
are incurred. This budget is normally reviewed by the Parish
Finance Council to curtail extravagant spending by the church.
A chi-square test of independence showed that preference for
budgetary system is dependent on a good financial
management. This means that budgetary ensures good
financial management.
5.1.13 Findings from hypothesis three: The chi-square test of the
hypothesis three revealed that accounting records keeping is in
conformity with the diocesan accounting manual. This shows
that the financial record keeping of the church is in consonant
with the accounting records keeping of the church as shown in
table 4.2.7.
5.1.14 The study revealed that only the Parish Financial Council
which the parish priest is the chairman authorizes the
expenditure to be made by the church and this is proved by
testing hypothesis four of this research question by accepting
the alternative that authorization and control of Catholic Church
expenditure is vested on the management team of the church.
5.2 OTHER FINDINGS
1. Every parish must send its annual financial statement to reach
the Diocesan Finance Council before 28th February of the year
following the end of the financial year.
2. The parish annual budget brings together estimated or
proposed expenditure (recurrent expenditure) to be incurred by
the budget period (1st January to 31st December) and a capital
to attain a given objective(s).
3. The Parish Finance Council shall from the month of July send
budget call to zone, societal organizations and pastoral council
in the parish for inputs into next financial year’s budget of
income and expenditure both recurrent and capital.
4. The church adopts or uses security documents which
comprises of official receipt books, payment vouchers/petty
cash vouchers.
(a) The official receipt book shall be serially numbered, issued
serially, entered in receipt book register and shall be kept in
safe custody by the parish priest.
(b) The payment voucher/petty cash voucher shall be serially
numbered, issued serially, if in a book form shall be entered in
payment voucher register and kept in after custody by the
parish priest.
5. The approved budget estimate now called the Annual Approved
Budget is signed by the parish priest, assistant parish priest,
secretary to the Parish Finance Council, the vice chairman of
the parish, pastoral council and the secretary of the parish
pastoral council and is sent to the diocesan bishop through the
diocesan finance administrator.
6. The accounting system for those in institutions, hospitals or
projects and those on salaries should have governing council
which must include a diocesans representative. They should
send approved budget to the diocesan finance council and it is
returned at the half of the year.
7. The researcher observed from the information in table 4.2.11
that the Catholic Churches in Enugu Dioceses adopt the use of
accounting manual.
5.3 RECOMMENDATIONS
Having highlighted some of the major findings it would be
appropriate and logical to tender the following recommendations for
achieving effective financial record keeping.
1. There should be an in-built and automatic feedback network
embedded in the system-both financial and administration. This
will make for quick responses to current issues requiring
management attention.
2. The church should consider computerizing its affairs and
documents since it is large in size and controls many parishes.
3. The line of authority for expenditure should be explicitly defined
and strictly adhered to. Funds should as much as possible be
applied to what they are meant for, to ensure the growth of the
church.
4. The issue of internal control system should be properly
addressed.
5. There should also be a management supervision and review of
expenses.
6. Also chartered accountants and accountants who are experts in
the areas of accounting and management of fincance should
help to the system the more.
5.4 CONCLUSION
The inefficient financial management hampers the performance
and threatens the existence of any organization be it business or
religious organizations, that is why the study of this is very important
and constitutes one of the major reasons the researcher wants to
know if such exists in religious organization.
A lot of muddling up is seen in some churches (and of course in
every non-business organization). Personal interests tend to over-ride
the parish management of the church. Indeed, the church just as any
other non-business organization is regarded to be very poor;
everything associated with it is equally poor. But when you take a
critical look at the make up of the church funds, you will believer that
it has various sources of funds, the problem being the cost it incurs
and control of such funds.
Nevertheless, the system of operation, that is the financial
record-keeping of Catholic Church is said to be good, after going
through the analysis and system of their operation. The church is a
well organized body and takes authority based on their hierarchy.
The man at the apex of the Catholic churches, the Pope gives
orders and directives on how the churches are to be run financially
and otherwise. The other leaders of the church like the Bishops and
priest work along with the law guiding the church and administer its
affair in truth and in faith.
However, the church being a large organization should adopt a
computerized system of account and where such exists should be
properly maintained. On the issue of auditing the account, the charted
accountants and the accountants who are experts in these areas
should be properly maintained. On the issue of auditing the account,
the charted accountants and the accountants who are experts in
these should help to guide the system.
BIBLIOGRAPHY
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Baridam Don M. (1995), Research Method in Administrative Science, Second Edition, Choba, Port Harcourt: University of Port Harcourt Publishing House.
Cannon Law Society of Great Britain and Ireland (1976), The Code of
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Emekekwue, P.E (1993), Principles of Public Finance, Kinshasa Zaire, African Bureau of Educational Sciences Special Agency of the Organization of African Unity.
Eneasato, M.O. (1985) Advent and Growth of Catholic Church in
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Computer Edge Publishers.
APPENDIX A Department of Accountancy
School of Post-Graduate Studies Faculty of Business Administration
University of Nigeria Enugu Campus
1st Dec., 2008. Dear Sir/Madam,
QUESTIONNAIRE
I am a post-graduate student of University of Nigeria, Enugu
Campus in the Faculty of Business Administration, Department of
Accountancy, carrying out a research work on financial record-
keeping of religious organizations. A Case Study of Catholic
Churches in Enugu Dioceses.
Through this medium, I forward with this letter a copy of the
attached questionnaire for you to complete. Kindly help in this
important research by supplying honest answers to the questions as
contained here in. the answers will help us to offer some useful
suggestions for future improvement and reliability on the research
work. Every information provided will be treated with strict confidence
and used purely for academic purposes.
God bless you and thanks for your co-operation.
Yours faithfully,
……………………………
Ozotamgbo Christopher O.
Researcher
APPENDIX B
INSTRUCTION: Please fill in the information and tick like this ( ) in
the blank spaces provided for each question as appropriate.
1. As part of financial control, how often do the parishes make
return to the diocese?
(a) Yearly ( ) (b) Quarterly ( )
(c) Semi-Annually ( ) (d) Occasionally ( )
2. How does the church keep its money?
(a) With the parish priest ( )
(b) In the bank ( )
(c) Through lending to those in need ( )
3. If in the bank, how many people form the signatories to the
accounts?
(a) Parish priest ( )
(b) Parish priest and his Assistant ( )
(c) Parish priest, treasurer and any other person authorized ( )
4. Who authorizes the expenditure of the church?
(a) Parish priest ( )
(b) Parish Finance Committee ( )
(c) Building Committee ( )
(d) Laity Council ( )
5. What method does your church use to adopt as its financial
management?
(a) Budgetary system ( )
(b) Expenditure is discussed by parish finance council before it is
incurred ( )
(c) Parish priest incurs any cost ( )
6. How is donation received, launching fund or special
thanksgiving offering accounted for in the church?
(a) Oral Announcement ( )
(b) Statement of Accounts ( )
(c) Issuance of Receipt ( )
(d) No record ( )
7. What type of accounting system is kept by the church?
(a) Income and expenditure account ( )
(b) Receipt and payment accounting ( )
(c) Balance Sheet ( )
(d) Profit and Loss Account ( )
8. Who maintains proper book of accounts of the church?
(a) Parish priest ( )
(b) Treasurer ( )
(c) Parish Finance Council( )
(d) Financial Secretary ( )
9. Does the church prepare budget?
(a) Yes ( )
(b) No ( )
10. If yes, who makes and initials budget?
(a) Parish Priest ( )
(b) The societies/association leaders ( )
(c) The church committee ( )
(d) Parish Finance Council ( )
11. Do you prepare financial account?
(a) Yes ( )
(b) No ( )
12. If yes, is the account being audited?
(a) Yes ( ) (b) No ( )
13. If yes, what is the nature of the audit?
Please specify………………………………….……………………
…………………………………………………………………………
14. Is the church observing any accounting manual?
(a) Yes ( )
(b) No ( )
15. If yes, what are the make up?
Please specify………………………………….……………………
…………………………………………………………………………
16. Is the financial reports of the church being signed?
(a) Yes ( )
(b) No ( )
17. If yes, who signs the reports?
(a) Diocesan Ordinaries ( )
(b) Member of Finance Committee ( )
(c) Parish Finance Committee ( )
(d) Parish Priest and his assistant ( )
(e) All of the above ( )
18. Do you think that proper financial and accounting recording of
the church’s expenditures and its projects ensure a good
financial control or does it deter its financial capacity?
(a) Proper financial records entail good accountability of the church
funds ( )
(b) Deters financial capacity of the church ( )
19. What method do you use in collecting members contributions?
(a) Through church wardens ( )
(b) Through membership cards ( )
(c) Through addressed envelopes ( )
(d) All of the above ( )
20. Under the issue of inadequacy of funds in religious
organization, would you prefer your church to adopt a
budgetary system as a method of financial management or
would you prefer them to incur any cost as they arise?
(a) Prefer budgetary system ( )
(b) Satisfied with the method of incurring cost as they arise ( )