The Canons of the Episcopal Church and of the Diocese of New York require an annual audit of the books of account of all congregations and institutions. The Canons require that the annual audit be submitted to the Controller's Office [1047 Amsterdam Ave, New York, NY 10025] by September 1 of the following year.
Any person handling the monies or investments of a congregation should welcome the annual audit for at least the following reasons:
- To ensure that the assets of the congregation are being properly managed
- To improve internal controls and procedures where needed
- To demonstrate to the Vestry and the congregation that funds are being handled by good and accountable stewards.
While the National Canons require a CPA audit, each Diocese has flexibility to set a different standard for smaller congregations.
The Trustees of the Diocese of New York require full, certified financial statements from all congregations with more than $400,000 of Normal Operating Income (as of May, 2019). A compilation or a review does not satisfy the audit requirement. The required disclosures consist of
- The auditor's opinion
- Statement of financial position (balance sheet)
- Statement of activities (revenue & expense statement)
- Statement of cash flows
Congregations with less than $400,000 of Normal Operating Income may use the Alternative Audit Procedure (see right sidebar) approved by the Trustees of the Diocese. While any competent person who is not involved with the financial administration of the congregation may do the audit procedure, the Controller's office has a list of people available to conduct the Alternative Audit Procedure.
Congregations eligible for the Alternative Audit Procedure need to send the Controller's office the completed three-page form, plus any extra pages of notes or recommendations. An opinion, "auditor's certificate" or any other document will not satisfy the audit requirement.
The Controller's office has also prepared an annotated version of the Alternative Audit Procedure (see right sidebar) with explanations of the questions that may not be self-explanatory.